One of the key figures in economics at UC was Joseph Grunwald, an American economist who was the director of the Institute of Economic Research. The institute was highly valued by the Rockefeller Foundation for its “academic and practical” research in areas such as “the productivity of the Chilean economy,” the greater Santiago area’s labor force’s characteristics, the historic influence of foreign corporations on Chilean economic development, and the impact of Chile’s expensive and complex social-security system on its economic progress.73 Such data were of considerable use to Chilean government planners and in “contributing realism to the training of Latin American economists.”74 Three allocations were made to economics at UC by Rockefeller, totaling over $250,000 between 1957 and 1961.
Grunwald emphasized the technocratic and “objective” character of the institute’s work by citing specific examples of the effects on public policy and opinion of its study of the government’s anti-inflation program of 1956, an issue that raised the political temperature, given its possible effects on the employment levels in the country. In conditions in which no one had any empirical data, politicians and the press were opining on the threat of mass unemployment. The institute’s labor-force survey produced the first statistics on the level of actual unemployment, and its findings were viewed favorably and reported across the press. Echoing the dilemma pointed up by Ted Schultz, economic research, Grunwald argued, necessarily has “political implications” but must be done for the good of society and public debate,75 a position in line with foundations’ thinking—so long as such implications did not question the fundamental power structures of market societies. Grunwald’s institute also produced popular economics publications and broadcasts to “enlighten public opinion.”76
Grunwald introduced neoclassical economics to students at UC, covering the ideas of Paul Samuelson and George Stigler, for example, along with other quantitative economists, such as Wassily Leontief and Leon Walras. He also covered the thought of Keynes, John Hicks, and Roy Harrod. Marx was not among the theorists considered in Grunwald’s teaching. Grunwald’s assistant director, Carlos Massad, trained at Chicago, underlining further the overlaps between UC and Catholic University economists.77 Interestingly, Ford’s William Carmichael noted that although “all of the [Ford] Foundation’s programs have a very conservative political orientation… those associated with them feel that education in the fields of economics and administration in the University of Chile is under the control of leftist elements.” This, despite that, by 1965, Carlos Massad, a Christian Democrat, was director of the institute.78
To some extent, of course, there were political differences between UC and Catholic University—the latter was more conservative, the former more centrist. And given the politicized character of the Chilean academy, such differences were accentuated by academics themselves, particularly as they sought party patronage as routes to greater income and government posts. However, Ford reports, particularly those by the U.S. economist John Strasma, who later became a Santiago-based program officer with the Ford Foundation, suggest that UC’s economists willingly served administrations of the center (Frei), center-right (Ibanez), and left (Allende) and that their leftist image was much exaggerated, as was the “reactionary” image of Catholic University economists. Ford granted to UC economics $450,000 in 1961, while Rockefeller chipped in with another $150,000 in the same year, to establish the Graduate School in Economics (ESCOLATINA) to serve the needs of Latin America as a whole. Strasma stressed that UC’s Institute of Economics was “clearly the most pluralistic” group of economists in Santiago, a mixture of socialists, liberals, and conservatives as well as several “‘apolitical’ technicians.”79 Of course, there were ECLA economists like Osvaldo Sunkel and Pedro Vuskovic who taught at UC, but their economics were not necessarily exclusively “Marxist.”80
Grunwald helped create at UC a close-knit network of economists in a position to “absorb” Ford’s new grants from 1962 when the Institute of Economic Research and the Graduate School in Economics were merged. This was done “to develop a scientifically oriented teaching program in economics; to evolve, refine and promote sound and objective analysis and solution techniques for the problems” of economic development.81 According to Strasma, the program was successful because of the “Foundation’s decisive assistance,” creating 162 highly trained economists from across the region who, upon graduation, had taken up roles as teachers or policy makers in their respective countries. But Strasma remained dissatisfied: he wanted to deepen and expand the program by attracting even more students and making ESCOLATINA “an action center” for high-level research and, even more, the center of a network that would “exercise a guiding influence in both organizational aspects and the design of teaching and research programs in the other Latin American faculties of economics via its members’ direct participation in seminary and advisory activities in other faculties.” Strasma’s mission, fully shared by Ford, included plans to bring to Chile economists from “advanced countries” to work with the emerging cadres of UC graduates to “provide a scientific and authentic picture of the Continent’s real problems and, with this nucleus… to create a scientific atmosphere that will be adequate for analyzing Latin American realities.”82
A list of research projects underway at ESCOLATINA in 1965 provides evidence of technocratic work of direct use to the Chilean government and private corporations. Projects include studies of demand for products such as tractors, chemicals, newsprint, paper, and milk concentrates; the transportation system; population distribution patterns; productivity rates across economic regions; input-output analyses of manufacturing industries; quantification approaches to the demand for money; patterns of income, consumption, and savings’ rates in Chile; and so on. There is nothing there suggesting particularly radical economic analyses or methods nor a specific political agenda over and above that implied by a market system with a strong state sector.83 It reflects precisely what was promised at the time a Ford grant of $500,000 was awarded—a program of research focusing on “quantifying” Chile as an aid to economic development in “both the public and private sectors.”84
The teaching curriculum also betrays little that may be defined as politically radical per se, even if there are hints that UC economists were interested in the socioeconomic aspects of development. For example, in 1962, the curriculum consisted of a staple of economic principles, social accounting, agricultural economics, statistical inference, economic theory, fiscal policy, and mathematical economics. By 1962, of course, Carlos Massad had been promoted to director of ESCOLATINA. On the staff, for example, was the economist Alvaro Bardon, who, from 1976 to 1981, served as the president of the central bank during the Pinochet regime, while Carlos Clavel, Herta Castro, and James Locke were graduates of the Chicago program.85 Other economists, among the twenty-seven named in a report, were educated at Stanford (Hector Assael), Kiel (David Alaluf), Iowa State (Ivan Bello, Kurt Ullrich), Harvard (Juan Braun, Carlos Hurtado, Teresa Jeanneret, Roberto Maldonado), Yale (Mario Cortes, Luis Federici, Carlos Sepulveda), MIT (Eduardo Garcia), LSE (Arturo Israel, Ivan Yanez), and Duke (Ricardo Lagos).86 Another report indicates the funding sources for overseas study periods of faculty members: of the eighteen faculty for whom information was indicated, seven had received scholarships from the Rockefeller Foundation, five from USAID, and one from the Fulbright program.87 The predominantly U.S.-educated and U.S.-funded faculty members set up teaching programs that resembled U.S. graduate schools and invited their former professors to ESCOLATINA. Among visiting professors were faculty from Harvard, Vanderbilt, and Chicago (Arnold Harberger, 1966) as well as from the RAND Corporation (Delbert Fitchett, 1966).88
A survey of economics students at UC in 1967 confirms the argument. For example, 73 percent of students felt the curriculum was too “theoretically orientated, and all but one were unhappy about it.” Students felt that not only did the curriculum fail to reflect anything of the “reality in the outside world”
but also that the there was a “deficiency in the theoretical analysis presented.” While 73 percent felt that the programs were “ideological,” only 5 percent argued they were Marxist in orientation, and an overwhelming 95 percent who thought the programs were ideological thought that they were dominated by persuasions that were “Capitalists” or “Neo-Liberal.” Ninety-five percent of students felt that the program should be oriented to training students to become “‘agents of change’ rather than to ‘maintain the system.’” Challenging what sounds like a technocratic approach, 65 percent of students wanted an education that reflected “Knowledge of Latin American Reality” rather than “the training of a ‘Professional technically efficient [sic].’”89 Students seemed to want more radical economics teaching at ESCOLATINA than the faculty members were able or willing to provide.90
A memo by Strasma in 1972 bemoaned the lack of books and journals on “socialist economic studies.” By 1972, of course, ESCOLATINA’s program was operating under differing conditions, notably the leftist Allende government of popular unity and, therefore, paying a lot more attention to “socialist” economics and, especially, postrevolutionary Cuba. More attention was also being paid to dependency theory in the context of greater interest in “autonomous development” and development for “the essential interests of the workers.”91 At this point, Chilean academics’ political polarization was becoming ever sharper, as UC faculty left for government posts or for Catholic University. Even then, however, according to Strasma, who doubled as a Ford program officer and faculty member at ESCOLATINA, when the curriculum “came under the control of economists with a solid grounding in Marx and a commitment to an economic policy program along the lines of the campaign program of President Allende,” teaching was “predominantly socialistic but not overly dogmatic.” Most significantly, the curriculum, under the direction of Ricardo Lagos, sought to instill “rationality in economic policy as well as a new global explanation of Latin American economic problems.”92
Ford officials stressed to ESCOLATINA staff an “outward-looking orientation, i.e., of searching for ways to strengthen relationships between the Faculty and other institutions engaged in or concerned with teaching and research in economics and administration.” The aim was to use Ford’s “bargaining power to insist that future support be contingent on progress being made toward the objective of a more rational and cohesive integration of efforts in the social sciences in the University of Chile and in the greater community of which it is a part.” Not only is this a clear indication of Ford’s desire to engineer specific changes in the institutional complex of economics research and teaching; it also shows a conscious plan to deploy Ford’s financial power to that end. The memorandum cited above also shows that Ford was conscious that Rockefeller and the U.S. government were also considering supporting UC’s work in public administration “in an effort to build a strong ‘international center’ of teaching and research in the social sciences.” Rockefeller awarded $200,000 for 1965–1966 to aid economic research at Catholic and UC and, in general, to strengthen Santiago’s claims to be an “international center.”93
Such an ambition—an outward-looking “constellation of social science institutes”—continued into the 1970s, despite deep political splits within the academy.94 It was Strasma’s view that teaching at ESCOLATINA was not “rigidly sectarian nor wedded to any one variety of contemporary socialist doctrines” and would contribute to the intellectual mix in Santiago’s menu of programs. ESCOLATINA was producing graduates of high quality across Latin America and for regional organizations.95 Still, Chilean academic polarization caused headaches for Ford staff members. Peter Bell, the head of the Santiago office, was doubtful over the general leftward drift of economists and others at UC and posed some difficult questions, which affected Ford’s work in Chile. For example, he asked to what extent Ford was “willing and able to recognize pluralism within a generally Marxist orientation” and what degree of strain Ford could bear in choosing between grant proposals of that kind. A debate ensued among Ford staff about the ideological and, therefore, nonrational character of the teaching curriculum.96 One report, based on conversations with ESCOLATINA’s leadership—Donald Castillo (director), Carlos Romeo, and Alberto Tassara—noted that the Santiago office of Ford had granted no funds to ESCOLATINA since Allende’s election victory. In part, this was attributable to the departure of several senior figures for high government posts. Pedro Vuskovic, for example, as minister for the economy, “was the architect of the regime’s offensive against banking and industrial monopolies in Chile.” Remaining faculty, largely “openly Marxist… evidently does not struggle hard against the tendency for political criteria to overshadow scientific standards, but does attempt to compensate by structuring the courses so that the individual student gains as wide an exposure as possible to various currents of economic thought.” In contrast, economics at Catholic University was seen by Ford’s Santiago’s office as “stronger overall” than ESCOLATINA’s, given the former’s greater competence in “econometrics and neo-classical economic theory.”97 Yet other reports suggested that ESCOLATINA, by 1973, had weathered the storm of defections of staff, recruited more experienced faculty, and offered the most pluralistic of economics faculties anywhere in Latin America, teaching everything, including classical, neoclassical, Marxist, and dependency theories. ESCOLATINA comprised equal numbers of pro- and anti-Allende economists, epitomizing the crisis in Chile as the military coup approached.98 The crisis in Chile—in politics, economy, and the academy—was reflected by increasing anxieties within the Ford Foundation. The military closed ESCOLATINA in 1973, leaving Latin America dominated by “economists and planners with technocratic and conservative outlooks,”99 groups that would continue to receive Ford support for several years after the military coup.
AFTER THE SEPTEMBER 11, 1973, MILITARY COUP
“Schizophrenic” was the word used by some Ford officials to characterize what happened to its social scientists after the coup: right-wing economists at Catholic joined or otherwise supported the military junta; other elements suffered heavily at the hands of the military authorities.
Numerous Chicago boys joined the military junta, including their leader, Sergio de Castro, as well as Jorge Cauas, Miguel Kast, Sergio de la Cuadra, Alvaro Bardon, and Pablo Baraona. They served Pinochet as ministers of finance (Cauas, Castro, Hernan Buchi, de la Cuadra), ministers of economy (Baraona, Bardon), and budget directors (Juan Carlos Mendes, Martin Costabal). Other neoliberal economists from Catholic University took positions in ODEPLAN, the national planning office, including Rodrigo Mujica and Ernesto Silva, as did Miguel Kast, before he was appointed minister of planning in 1978. Jorge Cauas, for example, promulgated “shock treatment” to build an economy centered on freer trade and export promotion, a new “Chilean economic model.”100 Government spending was drastically reduced, unemployment rose, and living standards fell. The relationship between the Chicago boys and the military, of course, was strong even before the coup: recall that Sergio de Castro had been the principal author of the secret economic plan of 1972, known as “the Brick,” because of its size and weight. He was ably assisted in that enterprise by Juan Carlos Mendez. None of this was unknown to Ford officers in Santiago and New York. It did cause them some concern, although they chose to continue disbursing funds to Catholic University economists until 1977, when Ford adjudged that conditions in Chile no longer were conducive to independent university research under conditions of pluralism. Interestingly, their assessment followed that of Catholic University “centrist” economists at CEPLAN, the Ford-funded center for planning research, led by Alejandro Foxley. CEPLAN—composed almost entirely of Christian Democrats who had supported President Eduardo Frei (1964–1970)—decided in 1976 that their position at Catholic was increasingly precarious and, after consultations with Ford, set up an independent research center, CIEPLAN, to continue their work. In many ways, CEPLAN/CIEPLAN personified the “objective” technocratic style Fo
rd favored: critical of Allende and Pinochet and firmly attached to a center ground that had all but disappeared in Chile by 1970. Continued Ford funding throughout the Pinochet years led Foxley (a Wisconsin Ph.D. in economics) to serve the first postmilitary government of President Patricio Aylwin, as minister of finance (1990–1994).
Ford was aware before the coup that Catholic University economics had lost key staff from 1970 onward and thus looked increasingly like their “Chicago” image. The only full-time economist who supported the Allende administration, Eduardo Garcia, left Catholic to join the government’s economic advisory commission, while a part-time economist of the left, Osvaldo Sunkel, left to join FLACSO, because of his increasing ideological marginalization. This, according to Ford, seriously eroded the “pluralism” of economics at Catholic, leaving the department uniformly opposed to the Allende administration.101 Despite Ford’s expressed concerns, there was no thought given to cutting the institute’s funding (it had been awarded $252,000 in 1972). After the coup and in conjunction with the increasingly difficult atmosphere within Catholic University and further departures from the institute to positions in government, Ford reconsidered that position. According to Jeffrey Puryear, there were strong doubts as to whether the institute “will continue to assume a critical role vis-à-vis government policy,”102 yet, as late as August 1975, over a year later, Ford was granting additional funding ($6,000) to the institute, although with a specific instruction that the grants “may be expended only for charitable, scientific, literary, or educational purposes.”103 Valdes was not entirely wrong, then, to consider Ford officials naïve. Indeed, it was not until 1978 that the grant of $252,000 was finally “closed,” when all funds had been expended and an additional ten graduate fellowships funded “to compensate for our decision not to continue large-scale assistance to the program.”104
Foundations of the American Century Page 28
