Inflation and socio-political conflict in Chile, 1955-1970
The fundamental objective of this thesis is to identify the factors responsible for the persistence of the Chilean inflation and, particularly, for the failure of the three main stabilization efforts which took place under democratic conditions in Chile, i.e. those implemented in 1956-57, 1959-61 and 1965-67. In this thesis, the Chilean inflation of 1955-1970 is considered to have been, to a large extent, the result of the failure of the political system to accommodate conflicting demands within the limits of available resources. The analysis of the literature about the Chilean inflation shows that the economic approaches fail to take socio-political factors into account, and that the literature which focuses on the non-economic aspects of the phenomenon is varied, less formalized and, in general, more concerned with the sociological aspects of the conflicts which existed in Chilean society than with the political and particularly the institutional aspects involved. This thesis attempts to overcome these shortcomings by placing the Chilean inflationary process in its specific institutional and political context. This approach shows how important the contribution of socio-political analysis can be to the understanding of inflation, particularly in historically and geographically bound case studies. The thesis concentrates considerable effort on the analysis of the connection between the cyclical pattern of the Chilean inflation, the cyclical socio-political forces at work in the Chilean society and their institutional framework. The thesis argues that under democratic conditions the inflationary propensity which existed in Chilean society had both an upper and lower limit. The analysis of the record for 1955-1970 shows that there were forces working in favour of price stabilization that became more powerful as inflation accelerated, but there were also countervailing forces favouring the continuation of inflation and these came to prevail as inflation decelerated. The cyclical character of the Chilean inflation was partly related to the cyclical pattern of the six year presidential terms which involved alternating periods of strong and centralized presidential authority and of power dispersal. The Chilean inflation was the result of a society still searching for effective forms of social regulation, alternative to the traditional ones which started to collapse in the 1920s.