What Happened in Chile: An Analysis of the Health Sector Before, During, and After Allende’s Administration September 7, 2009Posted by rogerhollander in Chile, Health, History, Latin America.
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Tue, Sep 1, 2009
To all those in Chile and in the rest of Latin America who are persecuted because they believe that the way to break with the underdevelopment of health is to break with the sickness of underdevelopment.
On September 11, 1973, at nine o’clock in the morning, two battalions of infantry surrounded the Chilean presidential palace in Santiago. From ten o’clock until two o’clock, troops bombarded the building, killing most of the staff, including the President of Chile, Salvador Allende.²
Just a few yards from the palace can be found the most luxurious hotel in Santiago, the Careras Hotel, which is owned by the U.S. Sheraton chain.
The New York Times correspondent in the city reported that the maids, cleaners, and blue-collar workers in that hotel gathered in the basement in fear and anger over the fall of what they considered their government. Up on the top floor, meanwhile, the hotel manager invited his patrons to drink champagne with him, to celebrate the military coup and the fall of the Unidad Popular government (Kandell, 1973a).
Not far away, in the Medical College building, the Chilean Medical Association sent a telegram of support for the coup (El Mercurio, 1973a).
Meanwhile, in most health centers and hospitals, and in most working-class and rural communities, the health workers, the blue-collar workers, the low-income peasantry, the unemployed, and the poor, that sector of the Chilean population that Neruda had defined as the “disenfranchised majorities,” were resisting the military takeover.
The strength of the resistance is evidenced by the fact that today, ten months after that morning in September, the country is still in a state of siege (Gott, 1974). And the military has had to establish a repression defined by the correspondent of Le Monde in Santiago as “the carnage of the working class and of the poor” (Le Monde, 1973:12).
Thousands of miles away, according to the Washington correspondent of Le Monde Diplomatique, the atmosphere in the “corporate corridors of power in Washington was one of cautious delight, with some embarrassment” (Le Monde Diplomatique, 1973:7).
Why these events? How were they linked? And more important, what is the meaning of those events in Chile for Latin America as a whole?
In this presentation I will try to give you my perception of what happened to Chile’s health sector and why it happened. And I will attempt some tentative conclusions. Also, and since it is my assumption that the health sector in any society mirrors the rest of that society, I will try to describe the evolution of Chile’s health services within the over-all parameters that define the general underdevelopment of Chile.
In order to explain the events in Chile, both within and outside the health sector, we should first look at the causes of underdevelopment in Chile, which, as I have postulated elsewhere (Navarro, 1974), are the same determinants that shape the structure, function, and distribution of resources in the health sector.
The causes of underdevelopment, not only in Chile, but also in most of Latin America, are not due (as is believed in most of the leading circles of government and academia of developed countries and in the international agencies) to:
(1) the scarcity of the proper “values” and technology in the poor countries
(2) the scarcity of capital and resources
(3) the insufficient diffusion of capital, values, and technology from the developed societies to the cities of the underdeveloped countries and from there to the rural areas
Quite the opposite of that interpretation of underdevelopment, the causes of underdevelopment are the existence in Chile – as well as in the rest of Latin America – of the “conditions of development,” that is (1) too much cultural and technological dependency on the developed countries, and (2) the under-use and improper use of the existing capital by the national bourgeoisie and its foreign counterparts.
In fact, the highly skewed distribution of economic and political power in Chile is the root of Chile’s underdevelopment.
To some of you, accustomed to the classless approach of sociological research prevalent in American sociology, this may sound very sketchy and even like a slogan. If this is the case, I would suggest you read “The Underdevelopment of Health or the Health of Underdevelopment” (Navarro, 1974), where I present evidence to support this theory. This presentation is an extension of that article.
To understand the underdevelopment of health resources in Chile, we have to start with a description of the skewed distribution of economic and political power between the different classes in Chile. Although each class contains different groups with different interests, there is still a certain uniformity of political and economic behavior within each class that allows us to break Chilean society into basically three classes.3
At the top, we have 10 percent of the population, who control 60 percent of the wealth (income and property) of society and who determine the pattern of investment, production, and consumption in Chile. Because their economic, political, and social power is dependent on the power of the bourgeoisie of the developed countries, Frank (1973) adds the expression “lumpen” to the term bourgeoisie.
Dependent on the lumpenbourgeoisie are the middle classes, who, in Latin America, as a UN-ECLA report states, “improved their social status by coming to terms with the oligarchy” (United Nations Economic Council for Latin America, 1970:79; quoted in Frank 1973:134). Far from being a progressive force, as the middle classes were in the developed societies following the industrial revolution, the middle classes in Latin America were and are a mere economic appendage to the lumpenbourgeoisie.
Below these two classes is the majority of the population, the blue-collar workers, the peasantry, the unemployed, and the poor, representing 65 percent of the Chilean population and owning only 12 percent of the wealth of that society (Petras, 1970).4
The Structure of Health Services in Chile
Not unexpectedly, the class structure of Chile is replicated in her health services.
The governmental health service or National Health Service (NHS) covers the working class, the peasantry, the unemployed, the poor, and a small fraction of the lowest-paid white-collar workers – a group that represents approximately 70 percent of the Chilean population.
Voluntary health insurance (SERMENA) covers the middle class which represent approximately 22 percent of the Chilean people; and fee-for-service, out-of-pocket, “market” medicine covers the lumpenbourgeoisie, approximately 8 percent of Chileans.
Not unexpectedly, expenditures per capita are lowest in the government sector, higher in the insurance sector, and even higher in the private sector.
Between 1968 and 1969, the top two groups, the lumpenbourgeoisie and middle classes, representing 30 percent of the Chilean population, consumed 60 percent of Chile’s health expenditures, while the working class, the peasantry, the unemployed, and the poor, representing 70 percent of the population, consumed only 40 percent of national health expenditures (Chilean Ministry of Public Health, 1970:93, 183, and 186; quoted in Gaete and Castanon, 1973).
Moreover, reflecting the increasing income differential between the upper and lower classes, those differences of consumption have been increasing, not decreasing.
In 1958, private-sector consumption represented 41 percent of national health expenditures. By 1963 that percentage had grown to 57 percent, and by 1968 to 60 percent (Gaete and Castanon, 1973:10).
Between 1960 and 1968, private-sector consumption of health and medical services increased from 2.0 to 3.7 percent of the Gross National Product, while public sector consumption decreased from 3.2 percent to 2.5 percent over the same period. This expansion of private-sector consumption was due to increased consumption per capita in the private sector, since the percentage of the population in the upper classes did not change. (Petras, 1970).
In summary, then, the distribution and consumption of health resources in Chile reflects Chile’s class distribution, and this leads to a situation in which family expenditures for health services in the lower classes are a tenth of the amount spent by the upper classes (Diaz, 1966; quoted in Gaete and Castanon, 1973).
It is important to know how this distribution of resources, which reflects the class system, came about. It is worth noting that, while the evolution of the Chilean health services has some unique elements, there are also quite a few characteristics that are similar to those seen in other countries, including in the United States. For a succinct historical review of the main historical events in Chile during this century, see Scientists and Engineers for Social and Political Action (1973).
In 1925, it was written into the Chilean Constitution that health care is a human right and that the state has the responsibility of guaranteeing health care for its citizens.
The gap between theory and practice was a wide one, however, and it was not until 1952 that a National Health Service was established, initially to take care of blue collar workers, and then, in successive stages, other sectors of the population such as the peasantry, the unemployed and the poor.5
There are several reasons, as many as there are theories, for the creation of the National Health Service at that time. One reason is the situation of the Chilean economy in the 1930s and 1940s.
In the Depression that hit the world economy in the 1930s, international demand for raw materials and primary products fell off markedly, creating a major crisis in dependent economies such as Chile’s, where the main exports were those goods. However, during World War II, the demand for Chile’s products, and primarily for copper, Chile’s main export, began to revive.
It was at this time that the lumpenbourgeoisie and its foreign counterparts saw an opportunity to develop Chile’s sluggish economy according to their own schemes, with industrialization as the main stimulant. Because they wanted to build up the economy, it was advantageous to have a healthy work force, particularly in the industrial sector.
The primary aim of the National Health Service was to “produce a healthy and productive labor force” (Gaete and Castanon, 1973:12), and the statutory law establishing the National Health Service actually states that a prime objective of the Service is to “guide the development of the child and the young, and the maintenance of the adult for their full capacity as future and present producers” (Chilean Ministry of Public Health, 1950).
The industrialization of the country required great sacrifices and, as has occurred in most countries, the burden of these sacrifices fell not on upper- but on lower-class shoulders.
During the decade 1940-1950, a large regressive distribution of income took place at the expense of the lower-income groups. Wages during that period fell from 27 to 21 percent of the national income, and the economic gap between the classes increased dramatically. These developments were accompanied by great repression, with the intent to destroy working-class-based parties.
Not surprisingly, this period of Chilean history was marked by worker and peasant uprisings, and great social unrest.
This reaction was not unlike that of Bismarck during the previous century in Germany, with, besides repression, the creation of social security and the founding of a National Health Insurance scheme to care for blue-collar workers, and later the peasantry, the unemployed, and the poor.
The intent of these changes was to co-opt the unsettling forces. But the concession of one class was the gain of the other.
Naturally the working-class-based parties not only supported but fought for the creation of the National Health Service. And it was none other than the late President Allende, at that time a member of the Chilean Senate for the Socialist Party, who introduced and sponsored the law establishing the National Health Service.
In that respect the Chilean experience in the 1950s repeated the experience with social security in other countries.
Let me quote Sigerist, that great medical historian and professor of medical history at Johns Hopkins back in the 1940s. His presentation to the London School of Hygiene in the same year (1952) that the National Health Service was created in Chile, are relevant not only to the Chilean situation of the 1950s but also to our present debate on national health insurance here in the United States (Sigerist, 1956; quoted in Terris, 1973:317):
Social-security legislation came in waves and followed a certain pattern.
Increased industrialization created the need; strong political parties representing the interests of the workers seemed a potential threat to the existing order, or at least to the traditional system of production, and an acute scare such as that created by the French Commune stirred Conservatives into action and social-security legislation was enacted.
In England at the beginning of our century the second industrial revolution was very strongly felt. The Labour Party entered parliament and from a two-party country England developed into a three-party country.
The Russian revolution of 1905 was suppressed to be sure, but seemed a dress rehearsal for other revolutions to follow. Social legislation was enacted not by the Socialists but by Lloyd George and Churchill.
A third wave followed World War I when again the industries of every warfaring country were greatly expanded, when, as a result of the war, the Socialist parties grew stronger everywhere, and the Russian revolution of 1917 created a red scare from which many countries are still suffering. Again social-security legislation was enacted in a number of countries.
Every historical pattern we set up is to a certain extent artificial, and history never repeats itself unaltered. But patterns are useful because they help us to understand conditions.
When we look at the American scene we find the need for health insurance and a red scare that could not be stronger, but America has no Socialist party, no politically active labour movement that could bring pressure upon the Government. The existing order is not threatened from any side and conservative parties do not feel the need for action on these lines.
How applicable this quotation is to our present situation in the United States is for you to decide.
As for its applicability to the Chilean situation in the 1950s, it is clear that the creation of social security and the National Health Service was also a response by the right to claims and threats from the left. At the same time, the middle and upper classes retained their private sector options with fee-for-service, direct payment to physicians, following the market model in which health services are sold and bought like any other commodity.
The attitude of the medical profession toward the National Health Service has been ambivalent.
On the one side, they need it, since the consumer power for the majority of the population covered by the National Health Service was, and continues to be, very low indeed. The National Health Service has always been an important source of income for the 90 percent of Chile’s physicians who work for it either on a part- or full-time basis (Gaete and Castanon, 1973:9).
On the other hand, the medical profession maintained profound reservations about the National Health Service because they feared government intervention. This explains why, as their conditions of acceptance of the service, they demanded:
(1) that the Chilean Medical Association be appointed, by law, as the watchdog of the National Health Service, to defend the economic and other interests of the medical profession
(2) that their private practice, fee-for-service patients would be able to use National Health Service facilities.6
In the 1960s, when an economic depression hit Chile and the costs of health care increased, both the consuming middle classes and physicians began a movement that led to the creation in 1968 of a health insurance plan (SERMENA), similar to our Blues, to cover both hospitalization and ambulatory care, with maintenance of the fee-for-service payment to physicians.
As with our Blues, the creation of SERMENA was a response to provider concern that the increasing costs of medical care were forcing their private clientele out of the market. The Frei administration, whose main constituency was the middle classes, approved and stimulated the creation of this insurance, which covers the majority of professionals, small owners, petite bourgeoisie, and white-collar workers.
With the establishment of SERMENA, the Chilean class structure was formalized and replicated within the health sector, with the National Health Service taking care of 70 percent or the majority of the population, the blue-collar workers, the peasants, the unemployed, and the poor, and the health insurance scheme (SERMENA) taking care of the middle classes (20 percent) and increasing sectors of the lumpenbourgeoisie (2 percent). For a historical review of the health services in Chile, see Laval, 1944; Laval and Garcia, 1956. Both articles are in Spanish.
The Distribution of Resources by Regions
Related to this maldistribution of resources by social class, there is a maldistribution of resources by regions, depending on whether the areas are urban or rural.
Analyzing the distribution of resources, we find that the number of visits per annum per capita in Santiago is twice that of the rural areas, while the personal expenditures for health services in Santiago ($38) are over four times those in the rural areas ($9), for both ambulatory and hospital care. (For an excellent review of the distribution of health resources in the National Health Service in Chile, see Hall and Diaz, 1971.)
Although Santiago has only one-third of the Chilean population, it has 60 percent of all physicians and 50 percent of all dentists. In terms of environmental services, 80 percent of the water supply and 65 percent of the sewerage system is considered adequate in the urban areas, compared with only 20 percent and 9 percent, respectively, in the rural ones (Requena, 1971).
As I have explained elsewhere (Navarro, 1974), these rural areas are not marginal areas that the modern sector has not reached. Quite the contrary, their poverty is due to their link to the modern sector, with the wealth of the urban areas being partially based on the poverty of the rural ones.
However dramatic this statement may sound, the evidence shows that a significant part of the wealth of the urban-based lumpenbourgeoisie comes primarily from the extractive industries and agriculture, which are situated where most of the poverty in Chile is – in the rural areas. (For a detailed and excellent explanation of this argument, see Frank, 1969: 1- 120.)
Why Such Maldistribution?
In the paper referred to earlier (Navarro, 1974), I attempted to analyze some of the reasons for this maldistribution, which are typical of most Latin-American countries. As I indicated earlier, we cannot understand the maldistribution of resources in the health sector without analyzing the unequal distribution of economic and political power in these societies, i.e., who controls what, or what is usually referred to in political economy as who controls the means of production and reproduction.
In Chile, as in most Latin-American countries, the lumpenbourgeoisie controls most of the wealth, property, and income in society. They are the ones who do most of the saving, who direct the investments and influence the affairs of state and who primarily control the workings of the executive, legislative, judicial, and military arms of government. Above all, they control the distribution of resources in the primary, secondary, and tertiary sectors of the economy.
In the tertiary sector, they influence the distribution of resources in the health sector by:
(1) expounding the “market model” system of allocating resources, whereby resources are distributed according to consuming rather than producing power, i.e., upper-class, urban-based consumer power
(2) influencing the means of reproduction, i.e., urban-based medical education
(3) controlling the social content and nature of the medical profession, as a result of the unavailability and inaccessibility of university education to the majority of the population.
Medical students come primarily from the professional and lumpenbourgeoisie classes, which represent less than 12 percent of the Chilean population.
Let me illustrate this point with figures on the father’s occupations of the 264 first-year students in the School of Medicine of the University of Chile in 1971: managers and professionals (70.4 percent); white-collar workers (16.0 percent); blue-collar (4.1 percent); and others (9.5 percent). The category “others” does not include peasants. The peasantry, 30 percent of the labor force, had not a son or a daughter in the main medical school of Chile (Sepulveda, 1973:4).
Another mechanism of control used by the lumpenbourgeoisie in the health sector is their influence, tantamount to control, over the highly centralized, urban-based state organs, so that the public sector, controlled by the different branches of the state, is made to serve their needs.
Until 1970 the executive, legislative, and judicial branches were all controlled by those political parties that represent the lumpenbourgeoisie and the middle classes. In the election of 1970, however, the executive, though not the other branches of the state, changed hands and passed partially into the control of the working-class-based parties. For a detailed explanation of this point, see the series of articles edited by Cockcroft et al. (1972: Part II).
Consequences of Class Control: Priorities in the Health Sector
Control by the bourgeoisie of the means of production in the health sector leads to a pattern of production aimed primarily at satisfying the bourgeoisie’s pattern of consumption. And this pattern of consumption of the lumpenbourgeoisie, the setters of the tastes and values of these societies, mimics the patterns of consumption of the bourgeoisie of the developed countries.
Not surprisingly, the pattern of production in the health services of Chile was very similar to the pattern of production in most health services of developed countries, i.e., a system that is highly oriented toward:
(a) specialized, hospital-based medicine as opposed to community medicine
(b) urban, technologically intensive medicine in contrast to rural, labor-intensive medicine
(c) curative medicine as different from preventive medicine
(d) personal health services as opposed to environmental health services
Considering the type of health problems prevalent in Chile, where malnutrition and infectious diseases are the main causes of mortality and morbidity, the best strategy to combat the problems which affect the majority would be to emphasize precisely the opposite patterns of production to those currently prevalent in the health sector. This would imply emphasis on rural, labor-intensive, and community-oriented medicine, while giving far greater priority to the preventive and environmental health services than to personal health and curative services.
This mimic behavior of the lumpenbourgeoisie is explained by their interest in having the “latest” in medicine, with a concomitant growth of open-heart surgery units, coronary-care units, organ transplants and the like, representing “Cadillac” or “Rolls Royce” medicine.
This order of medical priorities is bad enough in developed countries, and even worse in developing ones, because it diverts much needed resources away from providing health services for the many, in order to provide them for the few.
Control by the few of the production of health resources also determines a pattern of reproduction in Chile’s medical education, where the distribution of specialties follows very closely, by types and percentages of specialties, the pattern in the developed countries.
Table 1 shows the percentage distribution of physicians in certain specialties. You can see that surgery, the typical technological, hospital-based specialty, represents the top specialty by percentage of physicians, with pediatrics and public health being the lowest categories.
It should be obvious that in a country with 38 percent of the population under 15 years of age, and with most morbidity caused by environmental and nutritional deficiencies, there is an oversupply of surgeons and an undersupply of pediatricians and specialists in public health.
Percentage Distribution of Physicians by Some Specialties
Country Year General Practice Public Health Surgery Pediatrics
Chile 1972 14.0 3.2 18.2 10.0
United States 1970 17.8 0.8 20.0 6.0
Source: Adapted from Department of Human Resources, Pan American Health Organization (1973)
Expenditures on environmental health services were a very small fraction of total health expenditures, with the majority of resources going to curative services and the largest percentage to hospitals. In 1969, 94 percent of total health expenditure was spent on medical care, while only 6 percent was spent on water and sewerage. Per capita expenditures on these items were $24 (US) and $1.5 (US) respectively (Sepulveda, 1972).
The well-known economist Ahumada (1968), Navarro (1974), and many others (see Navarro and Ruderman, 1971) have emphasized that the health services required for a developing country are services that are not technological, but labor-intensive, not hospital- but community-oriented, not curative but preventive, and aimed not at personal but environmental health. This suggested order of priorities is precisely opposite to the one followed in Chile and in the majority of Latin-American countries, which as I have explained, is a result of the pattern of economic and political control in those countries.
The Election of the Unidad Popular (UP) Government
Having detailed the situation before the coming of Allende’s government, let me now define what a government whose main constituencies were the disenfranchised blue-collar working classes and peasantry did, and intended to do, in the area of health services. A song, popular among the upper class during the Allende administration, said (quoted by Feinberg, 1972:169):
Under Alessandri [National Party], gentlemen governed,
under Frei, the noveaux riches [and not so rich],
and now, with Allende, govern the ragged ones.
The Unidad Popular government, which took office in 1970, was a coalition administration, a popular front government of different parties with no one in a clear position of leadership.7 Inter-party struggles were part of the daily political scene, with cabinet positions given according to the relative importance of each party within the coalition.
The Ministry of Public Health, not a basic post within the government (or, I would add, in most governments and in most countries), was given to a minority party, the Radical Party, whose constituency was a small sector of the middle class. The major health policies, however, were defined by the Cabinet, chaired by President Allende, with a Socialist and Communist majority.
President Allende, a physician by profession, had long been acquainted with the development of the health services, both as a member of the Senate for thirty years and as the youngest Minister of Public Health during the Popular Front government in 1938. It is thus not surprising that although the distribution of health resources was not the top issue within the administration, it was not at the bottom either.
The evolution of events in the health sector mirrored the over-all series of events that took place in Chilean society as a whole during the period 1970 to 1973.
The three main commitments that the Allende administration made in the health sector were the integration of the different branches of the health services (with the exception of the armed forces health service) into one health service, the democratization of the health services institutions, and the change of priorities in the health sector, placing greater emphasis on ambulatory care and preventive services.
Let me start by looking at the third of these commitments and examining ambulatory and preventive services.
The Change toward More Ambulatory and Preventive Services
The National Health Service in Chile was organized by region during the Alessandri administration (1958- 1964). This regionalization was developed further during the years of the Frei administration (1964 to 1970) and strengthened during Allende’s time.
There were three levels of care: a primary-care or health-center level, looking after a population of approximately 30,000 people; a secondary-care or community-hospital level, looking after a population of approximately a quarter to half a million; and a tertiary-care or regional-center level, in charge of the care provided to a population of one to one and a half million people.
This regionalized National Health Service during the Alessandri and Frei administrations has been characterized as being largely centralized, bureaucratic, and very hospital-oriented (Requena, 1971:7). Like the situation in the United Kingdom and the United States, a large percentage of all National Health Service expenditures, close to 50 percent, went to hospitals.
The Allende administration tried to reverse these priorities by shifting more resources to the health centers.
One example of this shift was that, out of the six hours a day physicians worked in the NHS, during the Allende administration at least two hours or the equivalent had to be spent in the health centers.
Another example is that the Compulsory Community Service, whereby all physicians had to work for a period of three years in an urban or rural health center (either when their degrees were granted, or at the end of their residencies), was expanded to five years.
Also, the number of hours that the health centers were open to the community was expanded into the late hours of the evening, and in some communities such as Santiago, they were even open twenty-four hours a day. During the night hours, the centers were staffed with final-year medical students, under the over-all supervision of available physicians (Chilean Ministry of Public Health, 1972).
Needless to say, none of these changes endeared the Allende administration to the majority of physicians. These policies were, however, very popular with the majority of the population, since they increased the accessibility of resources, providing services where people lived (i.e., in the communities).
Following the implementation of these policies immediately after Allende took power, there was a large increase in the consumption of ambulatory services, primarily among children. Indeed, the over-all number of ambulatory visits by children increased in the first six months of 1971 by 17 percent over the whole country and by 21 percent for the city of Santiago (Requena, 1971:11).
As part of this new orientation toward the community, preventive services such as immunizations, vaccinations and prenatal care were emphasized. These services were provided not as separate programs, but as part of the core services of the health centers.
Another change was to expand the distribution of half a liter of milk per day, previously provided to children under five, to include children up to 15 years of age.
While these activities were far from uniformly successful, they stimulated popular support and popular involvement in the delivery of health services. And this leads me to what may be considered one of the most important achievements in the health sector during the Allende administration: the democratization of health institutions.
The Democratization of Health Institutions
The National Health Service in Chile has been referred to as a mammoth bureaucracy that was not very responsive to the needs of the citizenry in general and to the local consumers and communities in particular.
However, the increase in working-class political consciousness as a result of the continuous economic crisis of the 1960s, besides making the working-class parties more powerful, also created, at the community level, a demand for popular participation in social and economic areas. This growing demand explains the creation by the Frei administration of the Community Health Councils, which were aimed at stimulating the participation of the communities in running the health institutions, either at the primary-, secondary-, or tertiary-care levels (Gaete and Castanon, 1973:14).
Like our health advisory councils here in the United States and the newly established district community councils in Britain, these early councils were supposed to be merely advisory to the director of the institution, who was appointed by the central government.8
The councils were not very successful as a mechanism for community participation in the health sector. They were perceived by the working class as a co-opting mechanism. Indeed, as indicated by the First Congress of the Trade Unions of Chilean Health Workers (1971; quoted by Gaete and Castanon, 1973:23-24):
with community participation [equivalent to our American consumer participation], our bourgeoisie gives our workers a feeling of participation, but without an actual and authentic power of decision . . . with this policy the decisions that are taken by the bourgeoisie are legitimized by the participation of the workers, who not only don’t have any power of decision, but do not have the right to complain afterwards about those decisions either, since, in theory, the workers did participate in those decisions.
It was felt that, as another writer pointed out, “community participation is an intent of co-option of the community dwellers and legitimization of the power of the bourgeoisie” (Germana, 1970:15).
Responsive to a demand not for community participation but for community control, the Allende administration committed itself to the democratization of the health institutions, stating in their political platform dealing with the health sector that “the communities – people – are the most important resources in the health sector, both as producers and as decision makers” (Unidad Popular Party, 1970).
Democratization took place in other areas besides the health sector, although in that sector it did go further. A likely reason for this may have been that most of the health institutions, health centers, hospitals, and the like, were already in the public sector and more amenable to government influence. The majority of economic institutions, on the other hand, remained in the private sector.
The democratization of the health institutions took place via the executive committees, which, as their name suggests, were the executive or top administrative authorities in each institution. They had a tripartite composition, with a third of the board elected by community organizations (trade unions, Federation of Chilean Women, farmers’ associations, etc.), another third elected by the workers and employees working in that institution, and one third appointed by the local and central government authorities.
Each level elected the level above itself, so that the executive committees of the health centers elected the executive committees of the community hospitals and these elected the executive committees of the regional hospitals. Their authority was limited to an over-all budget for each institution, and it had to be spent within the guidelines established by the planning authorities, which were in turn accountable to the central government.
How did this democratization work? Before replying to this question, I should point out that democratization was a result of popular and community pressure on the one side and the commitment of the ruling political parties to implement it on the other.
A key element for that implementation was the civil servants of the National Health Service, who mostly belonged to the opposition parties and whose outlook, like that of most civil servants in any country I know of, be it socialist or capitalist, tend to be conservative. By a large majority, 86 percent to be precise, they were in favor of community participation but against community control (Albala and Santander, 1972:68).
Let me explain what I mean by the conservative attitude of the civil service.
Civil servants, or, as Miliband (1969) defines them, the “servants of the state,” tend to defend the status quo and thus tend to be conservative. As Crossman (1972) has said for the Labour Party in Britain, and Myrdal (1960) has said for the Social Democrats in Sweden, both parties have always encountered the unspoken resistance of the civil service when trying to implement their policies. And even in China, after thirty years of Communist Party rule, as the need to have a cultural revolution showed, the civil service opposed the changes advocated by powerful sectors of the ruling party (Robinson, 1969). Chile, then, was no exception.
Needless to say, another group that did not welcome democratization of the health institutions was the medical profession, and this added to the long list of grievances that the medical profession had against the Allende administration.
Democratization, however, proved to be quite popular among the citizens of the communities. A survey carried out for a doctoral thesis (Albala and Santander, 1972) found that the majority of community representatives interviewed expressed “satisfaction” to “active satisfaction” with the democratization of the health institutions.
Not surprisingly, community involvement with health institutions increased, side by side with the increased politicization of the population, which was the main characteristic of the period between 1970 and 1973.
Another example of community participation was the Councils for Distribution of Food and Price Controls (JAP), neighborhood committees created by communities to avoid speculation and oversee the distribution of popular items to consumers.9
The community-control movement was parallel and went hand in hand with the movement of workers’ control, another commitment of the Allende administration.
Indeed, all 320 enterprises that were in the public sector during Allende’s 34 months as President were managed by an administrative council composed of five worker representatives (three blue-collar workers, one technical person, and one professional person), five state representatives, and one state-appointed administrator.
Let me add something here that my business school colleagues will very likely not believe.
An American scholar in Chile found, in a multivariate analysis of productivity in a sample of factories, that productivity in the factories was related to participation by both workers and employees in the process of decision making.
The variable of the political consciousness of the factory workers was more important in explaining increased participation and production than were other variables such as capital-labor ratio, technological complexity, technological type, size of the vertical or horizontal integration, and other factors (Scientists and Engineers for Social and Political Action, 1973:26- 28; Zimbalist and Stallings, 1973).
All these related movements of community and worker control grew parallel to the politicization of the population and increased rapidly after the first abortive attempt at a military coup on June 29, 1973, when, spontaneously, twenty factories were taken over and directly managed by both the workers and the communities. And it was in response to the first owners’ strike in October 1972 that the workers themselves took over the management of the factories. As Steenland (1973:18) has indicated:
the October offensive of the bourgeoisie further polarized the Chilean political scene. Every organization and almost every individual was forced to take a position for or against the government.
It was at this time that the Industrial Strife Committees were established to coordinate the management of all factories located within a vicinity or community and to set up committees within each factory in charge of production, distribution, defense and mobilization.
These committees also stimulated the creation of the Neighborhood Commands, broadly based community committees in charge of the coordination of community social services, including health, and the mobilization of the population (North American Congress on Latin America, 1973b:5).
These movements of community and worker control, stimulated at first by the Allende government, grew and achieved a momentum of their own, until they expanded into the main sectors of the economy and forced a hesitant government into a defensive position.
As Sweezy (1973) has indicated, the government went from a leadership position to one of a follower, far behind, and hesitant to grant what was being requested and demanded in those movements. And, as both Sweezy (1973) and Petras (1973) point out, it was this hesitancy that seems to have partially stimulated the downfall of the Unidad Popular government.
And speaking of hesitancy, let me describe the third characteristic of the Allende government in the health sector, the one in which it showed the greatest hesitation and the one that brought about the greatest opposition: the policy of ending two-class medicine, with integration of both the National Health Service and SERMENA into just one system. In the health sector, this policy was Allende’s Achilles’ heel.
The Intent of Creating a Classless Health Service
Allende had made a commitment, as part of his political platform, to create one national health service that would integrate both the National Health Service and the voluntary health insurance of SERMENA (Requena, 1971). This integrated system was never intended to include health services for the armed forces. A characteristic of the Allende administration was his efforts not to antagonize the military, allowing and even encouraging the granting of special privileges to those in uniform (Rojas, 1973).10
How the integration of health services was to take place was not spelled out either in the Unidad Popular platform or in subsequent policy statements once Allende was in power. Fearful of further antagonizing the lumpenbourgeoisie, the middle classes and the medical profession, the UP government kept postponing the implementation of this commitment for a more propitious time.
Opposition to the integration measure was expected from the lumpenbourgeoisie and middle classes, because integration would have meant a leveling off of their consumption of health services and the prospect of having to share the resources they had always enjoyed with the rest of the population.
Among the former reasons was the fear of losing the much desired fee-for-service and “private practice” type of medicine typical of SERMENA. In addition, they feared that integration with the National Health Service would mean the loss of their independence and of their economic power.
Among the class reasons was the increasing curtailment of consumption that both the lumpenbourgeoisie and the middle classes experienced under the Allende administration as a result of an alleged scarcity of resources both outside and within the health sector.
Since much has been written on that scarcity of resources, allow me to dwell on this point for just a moment.
There is a widely held belief in some sectors of our academia and press that the cause for this scarcity of goods, commodities, and services, and even for the fall of the UP government, was the incompetence of the economic advisers to the Allende administration.
As one of the representatives of this belief, Paul N. Rosenstein-Rodan (1974:E12), recently wrote in the New York Times, “undergraduate economic students would have known better” than the economists advising the Chilean government.
According to this interpretation of the scarcities and of the fall of Allende, other possible explanatory factors, such as the U.S.-led economic blockade, the boycott of the production of goods and services by U.S. and Chilean economic and professional interests, and the manipulation of the international market by those interests to damage the Chilean balance of payments, are dismissed as mere “left wing demonologies.” Actually, in the widely publicized article by Rosenstein-Rodan quoted before, these factors are not mentioned once.
Since the acceptance of the idea of “economic incompetence” absolves the powerful economic and professional groups both internationally and in Chile of any major responsibility for the events in Chile, this interpretation of the scarcity of resources and of the fall of Allende is the most widely held, supported, and circulated view, not only among those economic groups, but also among those sectors of the U.S. press and academia sympathetic to those groups.
Because this view is so frequently expressed both outside and within the health sector, let me present other alternate explanations for the scarcity of goods, commodities, and services under Allende.
When the UP government took office, 47 percent of the population were undernourished (North American Congress on Latin America, 1972:17), 68 percent of the nation’s workers were earning less than what was officially defined as a subsistence wage, and there was an unemployment rate of 6 percent in Chile as a whole and a rate of 7.1 percent in Santiago (Scientists and Engineers for Social and Political Action, 1973:14 – 19).
The poorest 60 percent of Chilean families received only 28 percent of the national income, while the richest 6 percent received 46 percent (Steenland, 1973:9). Over one quarter of the population of Santiago lived in flimsy shacks without running water. Meanwhile, industrial production was running at only 75 percent capacity (Steenland, 1973).
Just one year after the UP took office, industrial production went up to 100 percent capacity, unemployment went down to 3.8 percent (5.5 percent in Santiago), workers received a 20 – 30 percent increase in real wages, and the percentage of the national income in wages went up from 51 percent in 1970 to 60.7 percent in 1971. Meanwhile, inflation was kept down to 22 percent in 1971, as compared to an average 26.5 percent in the years 1965 – 1970.
This dramatic increase of the purchasing power of the majority of the population and the larger availability of resources to all, not only to a few, created a great increase in the demand for goods and services, which as I indicated before was also reflected in the consumption of health services, primarily ambulatory health services.11
Because of the increase in demand for basic goods such as food, the UP government had to import more than the usual 60 percent of food that Chile had to bring in from abroad. Chile, like the United Kingdom, has to import most of the food that it eats.
This increase in imported commodities, plus the decline by 28 percent in the international price of copper, which represented 80 percent of Chile’s foreign-exchange earnings, created a rapid shortage of foreign exchange and a rapid worsening in Chile’s balance of payments.
Compounding this situation was the “invisible” economic blockade, which started immediately after the UP government took office.
As Steenland (1973:10) points out, to fully understand the meaning of this economic blockade, you have to realize that in Chile, a country with a gross national product of about $10 billion, a government budget of about $700 million and exports of about $1 billion, United States investments also amounted to a sizable $1 billion, controlling 20 percent of the Chilean industry, with participation in another 7 per cent cent. Steenland (1973:14) continues:
In the dominant industries, foreign interests controlled 30.4 percent and participated in another 13.2 percent . . . And aside from outright control through ownership, Chilean industry used largely U.S. machinery and was dependent on the U.S. for technology. This dependency was greatest where the industries were most modern, and in industries which were growing rapidly – rubber, electric machines, refinement of metals, and lumber. In addition to U.S. control through technology and ownership, the U.S. government also exercised great indirect economic power through international finance institutions.
Not surprisingly, then, when the Allende government nationalized the U.S.-dominated mining industry, the United States pressured the international lending institutions to deny new credits to the Chilean economy, with the result that the total loans and credits fell in just one year, 1971, from $525 million to just over $30 million.
For an excellent and detailed account of the economic blockade, see North American Congress on Latin America (1973a). The Santiago corespondent of the Washington Post (1973c:1,14), writing just after the coup described how the economic blockade helped to cripple Allende:
Since 1970, the Allende government has been the target of economic policies that have squeezed the fragile Chilean economy to the choking point.
These policies were conceived in an atmosphere of economic strife between the Allende government and a group of large U.S. corporations whose Chilean holdings were nationalized under the terms of Allende’s socialist platform.
The instruments for carrying out the sustained program of economic pressure against Allende were the U.S. foreign aid program, the Inter American Development Bank, the U.S. Export Import Bank, the World Bank and also private U.S. banking institutions . . . [one example of this blockade is that] one of the first actions under the new policy was the denial by the Export Import Bank of a request for $21 million in credit to finance purchase of three Boeing passenger jets by the Chilean government airline, LAN-Chile. The credit position of the airline, according to a U.S. official familiar with the negotiations, was an excellent one.12
These credits were needed to buy not only foodstuffs, but also machinery, equipment, etc., and also to pay off the $3 billion foreign debt that the Frei government had left the nation, which made Chile the second most indebted country per capita in the world, after Israel (Steenland, 1973:14).
The lumpenbourgeoisie, dependent on foreign capital, joined the external boycott with an internal one together with explicitly political strikes aimed at causing the fall of the UP government or triggering a military coup. One part of this boycott was the truck owners’ strike that paralyzed the system of transport and hindered food distribution, thus compounding existing scarcities (Steenland, 1973:16).
It was the greatly increased demand for basic goods and services plus the politically motivated shortages, the result of both the international blockade and the lumpenbourgeoisie boycott, that determined the need to ration basic goods.
Not unlike rationing in other countries, the ones more opposed to that rationing were the upper rather than the lower classes. For the lower classes, the “free market” supported by the wealthy was in itself a form of rationing where the criteria for the distribution of food was based on the consumer power of the rich. Thus, the lower classes were far more sympathetic to formal rationing, where the criteria for the distribution of resources were defined by a government that was, at least in theory, sympathetic to their needs.
The weekly paper Ercilla (1973), which was not sympathetic to the UP, published an opinion poll showing that the success of the Allende government distribution policies lay in the fact that 75 percent of lower-class householders found that essential goods had become easier to obtain, while 77 percent of middle-class and 93 percent of high-income households were finding them less accessible. The medical profession, very much a part of these latter classes, were among those who were finding essential goods less accessible.
As a Chilean folk song says, sharing the riches, my son, is for some to have less and for others to have more.
The period 1970 – 1973 in Chile saw an attempt to redefine this idea of sharing. Not surprisingly, the medical profession and the classes they belonged to, the lumpenbourgeoisie and the middle classes, did not want to have their class and professional privileges redefined. Nor were they willing to tolerate the integration of health services into one system where they would have to share their resources with the majority of Chileans.
The Fall of the Allende Administration
As I have explained, the delay in integrating the two-class medical system into one system revealed the UP government’s hesitancy, which was greatest in the health sector, although it was a “trademark” of the Allende administration in other areas as well. As Sweezy (1973) has noted, the political strategy of the UP government seems to have been to increase its popular support while trying to avoid or postpone confrontation with the lumpenbourgeoisie and middle classes.
This strategy seemed a valid one in the first year of the administration, when the parties forming the UP coalition, which had polled 36.3 percent of the vote in the presidential election, just five months later, in April 1971, increased their share of the vote to 51.0 percent, in a municipal election that was based on the question of support or opposition to the UP government (Steenland, 1973:10).
The weakness of this strategy, however, was that it meant postponement not only of the integration of the health services, but also of promised policies in other sectors, and this gave the medical profession and other groups and classes the time to organize their opposition, which they did legally in 1972 and then illegally in 1973.
As Sweezy (1973) and Petras (1973) have indicated, the UP seems to have underestimated the power of the response of the national bourgeoisie and its international counterparts. A summary list of events shows this. (For a detailed list of events during the Allende administration, see Steenland, 1973; Zimbalist and Stallings, 1973; Scientists and Engineers for Social and Political Action, 1973; North American Congress on Latin America, 1973a and 1973b.)
In October 1972, the truck owners staged their first strike against the government, in theory to delay any attempt by the administration to nationalize transport, but in practice to force the resignation of the government.
The medical profession, following a call by the Chilean Medical Association, followed with a strike that was in theory to protest the lack of availability of equipment in the health sector, but, again, in practice, it was meant to force the Allende government to resign. In fact, organized medicine did call for the resignation of Allende at this time.
A passing but interesting note here is that the public health physicians, with a great number of faculty and students from the School of Public Health, as well as the majority of the trade unions of health workers, came to the support of the government. Their rallying call, which was to become a slogan later on, was the very nonsectarian one of “this government is shit, but it is our government.”
The 1972 strike did not succeed.
The second great moment of difficulty for Allende’s government was in July 1973, when the second strike of the truck owners took place with the explicit aim either of causing the fall of Allende or stimulating a military coup.
The medical profession joined in with renewed requests for Allende’s resignation. And, in an almost unanimous resolution, the Chilean Medical Association expelled President Allende from its membership. Dr. Allende, I might mention here, had been one of the first officers of the association when it was founded.
Meanwhile, from the end of 1972, the truck owners, the professionals (including the Chilean Medical Association), the Chilean Chamber of Commerce, and other groups representative of national and international economic interests, had been planning, together with the military leaders, the military coup of September 11, 1973, which achieved what they had sought, the fall of the Unidad Popular government. This fact was later admitted by the military leaders and reported by the New York Times (Kandell, 1973c), 13
The Chilean Medical Association was the first professional association to send a telegram of support to the junta, applauding their “patriotism.”
It seems, then, that the fear and hesitancy of the Allende government brought about its end. The leadership’s belief that time was on their side apparently proved to be a self-defeating strategy.14
The dramatic successes and the great popularity of the government during the first year were not used to advantage. The UP would have gained strength and weakened its opponents had it implemented its integration and democratization policies in the health sector and in other sectors of the economy.
The Response of the Reaction15
Not surprisingly, the military junta, the voice of those interests were curtailed during the Allende administration, including those of the medical profession, has undone most of the advances that the working class and peasantry achieved during the period 1970 – 1973. This has taken place both outside as well as inside the health sector.
Let me list some of the most important changes brought about by the junta.
First, the project of integrating the two-class medicine has been abandoned, with a declared commitment by the junta to leave the fee-for-service system of payment in SERMENA untouched. There has even been talk within military circles of changing the system of payment to physicians within the National Health Service from salary to fee-for-service (Chilean Ministry of Public Health, 1973b).
A colonel has been appointed Minister of Health, and the treasurer of the Chilean Medical Association has been appointed Director General of the National Health Service.
In other sectors of the economy, the junta has returned to the initial owners, to the private sector, most of the industries nationalized during the UP administration (Washington Post, 1973e) and said that it would pay for the remaining ones on generous terms (Kandell, 1973e).
According to an interview with General Pinochet, the head of the junta, published in La Prensa (1973b:14), the leadership wants to open negotiations with the U.S. former owners of the nationalized copper mines on terms favorable to the U.S. companies, since “it is not ethical that we Chileans take over what does not belong to us.”
An economic policy has been established aimed at encouraging foreign investments on very favorable and generous terms to foreign capital (La Prensa, 1973b). Furthermore, a policy has been instituted that encourages foreign investments, mimicking the “brotherly regime of Brazil” (Washington Post, 1973i:12).
Just one month after the coup, the World Bank (which had denied loans to Chile for three years), together with the Inter American Bank, loaned $260 million to the new government. The Allende administration had tried unsuccessfully for three years to get this loan (Rubin, 1973). As the president of the Chilean Bank, General Eduardo Cano, said, “the World Bank and international financial circles were well disposed to the new military government in Chile” (Washington Post, 1973h: A32).
Further proof of this good will is that the Latin American Development Bank, which turned down every request made by the Allende government, is about to award a development loan to the junta that is almost five times the size of all the loans received during the Allende administration (Birns, 1973).16
One month after the coup, the Nixon administration in the United States approved a $24 million credit to the junta, for the purchase of 120,000 tons of wheat. This credit, as Senator Kennedy indicated on the floor of the U.S. Senate (Washington Post, 1973g: All) “was eight times the total commodity offered to Chile in the past three years when a democratically elected government was in power.”
Second, the coup, which was a bonanza for the Chilean lumpenbourgeoisie and middle classes and their international counterparts, meant belt-tightening for the working class and peasantry in the health sector and other sectors of the nation.
In the health sector, institutional democracy was automatically discontinued a week after the coup. And the Minister of Public Health, a colonel, declared that in matters of policy the military would rely “very heavily on the good judgment and patriotic commitment of the Chilean Medical Association” (Chilean Ministry of Public Health, 1973c).
At the same time, the Chilean Medical Association sent a delegation abroad to several foreign countries, including Uruguay, Brazil, and the United States, to strengthen a scientific exchange with their professional colleagues and equivalent organizations in those countries. The Chilean Medical Association also reassured the military junta of its complete support (El Mercurio, 1973c).
Outside the health sector, the junta discontinued workers’ control of the factories, returning them to the previous managers (Kandell, 1973d), and, at the same time banned trade unions, incarcerating the national leaders of the trade unions, including those of the health worker unions (Kandell, 1973b).
In addition, all political party activities were forbidden, and all working-class-based parties were outlawed (Washington Post, 1973b). Only those the junta defines as “patriots” are entitled to any form of civil rights. The narrowness of their definition may be reflected by the declaration of General Pinochet, head of the military junta, accusing “the U.S. Senate of being under the influence of international communism” (La Prensa, 1973a:14).
Third, the junta changed the priorities in the health services. The amount of resources available to the health centers was reduced and the amount available to the hospitals increased. The number of hours that physicians have to spend in health centers was halved, and the hours the centers are open to the public were shortened to the 8:00 A.M. to 4:00 P.M. schedule of pre-Allende times. Moreover, the milk-distribution program was discontinued (Chilean Ministry of Public Health, 1973d, e, f).
Outside the health sector, price controls were discontinued and the goods desired by the upper and middle classes are now plentiful in the stores. The working class and peasantry, meanwhile, as reported by the New York Times (Kandell, 1974:10), are going through very tough times of tight budgeting.
Fourth, all opposition was outlawed and persecuted, and in the health sector a campaign of repression was begun against those physicians and health workers who did not join the physicians’ strike against Allende’s government, who were considered sympathetic to Allende, and whose names were provided to the police authorities by the Chilean Medical Association (Argus, 1974).
A campaign of repression was started against the public health movement, which largely supported the Allende administration.
The budget of Chile’s only school of public health, which is situated in Santiago and is the most prestigious school of its kind in Latin America, was slashed by three-quarters, and 82 faculty members out of a total of 110 were fired and some imprisoned (American Public Health Association, 1973). As the Chilean Ministry of Public Health (1973a) stated, “Very many public health workers were misguided and their activities were subversive of the traditional medical values.”
Medical schools and all other university centers have been placed under military control. All presidents and deans of academic institutions are now military men. As Dr. E. Boeninger, the last president of the University of Chile, said, “The Chilean University is in the hands of the military” (El Mercurio, 1973b:12).
The known results of this repression in the health field are that 21 physicians have been shot, 85 imprisoned, and countless others dismissed (Chilean Medical Doctors in Exile, 1974).
Outside the health sector, the junta has instituted a campaign of repression that has been defined by Amnesty International as the most brutal that that association has ever surveyed, more brutal even than the repression in Brazil in 1965, Greece in 1968 and Uruguay in 1972 (New York Review of Books, 1974). Today, ten months after the coup, the state of siege continues (Gott, 1974).
It may be too soon to make a post-mortem of performance of the Allende administration in the health sector. But still, enough knowledge of those years has been accumulated to entitle us to draw some conclusions.
One important interpretation of these events may be that Chile seems to show, once again, what Brazil, the Dominican Republic, Uruguay, Paraguay, Bolivia and many other Latin American countries have shown before – that there is a rigidity in the economic, political, and social structures of most Latin American countries that makes evolutionary change almost an impossibility, however slow or gradual that change may be.
The lumpenbourgeoisie and their foreign counterparts offer extremely strong opposition to any movement that might curtail their benefits in any way. They perceive that any concession creates a momentum that might escalate, according to the sadly famous “domino theory,” to the final destruction of their privileges. The reaction of these groups to the UP government in Chile is an example of this.
As the pro-UP economist Alberto Martinez indicated, even if all the programs for nationalization that the UP government called for had been implemented, it would have meant state control of only 25 percent of industrial production outside of the mining sector, which is less than the control of that production by U.S. interests, estimated to be close to 30 percent (quoted by Steenland, 1973:12).
Allende himself argued:
I want to insist that Chile is not a socialist country. This is a capitalist country and my government is not a socialist government. This is a popular, democratic, national revolutionary government – anti-imperialist (Washington Post, 1973f:C1) .
Indeed, he emphasized that the UP was an “anti-imperialist and anti-monopolistic government, more than a socialist one” (Debray, 1971:85). And he held that it was “not a socialist government, rather, there is a government that is going to open the path, to blaze the path for socialism” (Allende, 1971).
The major economic decisions taken by Allende were the nationalization of the copper industry and the takeover of the control of banking and most foreign commerce, measures that were more anti-oligarchy and nationalist than socialist.
Concerning his interior policies, a UP economist (Monthly Review, 1971:17) has explained that Allende’s economic policy was of the nature that we in the United States
would call the New Deal type . . . [since] it combines a policy of large-scale public works (especially housing and related services) with fiscal and monetary measures designed to stimulate popular purchasing power . . . [and with] strict price controls [which ] would keep these gains from being dissipated as has regularly been the case in the past, through inflation.
Not surprisingly, Allende has been called the Léon Blum of Chile. Actually, his reforms could hardly be accused of being an intrinsic threat to the capitalist system. In spite of this, national and international interests perceived his programs as being the beginning of the end for them.
Opposition to UP economic policies was formidable, showing how, inside the parameters of underdevelopment and within present structures, the possibilities for change, however limited, are very small indeed. Allende underestimated this opposition.
The gradualism and the faith of the UP leadership in the “uniqueness” of the Chilean phenomenon (considered by some to be unhistorical), together with their postponement of policies that would have weakened their opponents, allowed time for national and international interests to organize their opposition.17 The postponement of the integration of health services is a fitting case in point.
In that respect, Allende’s delays may have caused his downfall. Contrary to prevalent belief in some sectors of the U.S. press, the cause of Allende’s downfall may not have been because he moved too quickly but because he moved too slowly. Indeed, as Oskar Lange (1938; quoted in Monthly Review, 1971:40) said almost forty years ago, if
a socialist government . . . declares that the textile industry is going to be socialized after five years, we can be quite certain that the textile industry will be ruined before it will be socialized . . . [during those five years] no government supervision or administrative measures can cope effectively with the passive resistance and sabotage of the owners and managers.
It is my belief that this observation applies to the health sector as well as to other areas. Many proposals for national health insurance schemes and/or national health services have been frustrated because of delays in their implementation and because of final compromises with the medical profession and with other interest groups in the health sector.
Actually, the Chilean experience reflects the experience of other countries, be they socialist or capitalist: when a political party or group is committed to a national health program intended to benefit the citizenry and to curtail the privileges of the providers, its chances of implementation are inversely related to the length of time required for implementation.
We can see that, in Chile, the longer the delay, the more time there was for the interest groups to organize and achieve compromises that diluted and subtracted from the program. And these compromises, I might add, can only benefit the providers, not the consumers, the majority of the citizenry.
There are certain conclusions, then, that we can derive from the events in Chile.
One is that the present political structures in most of Latin America (and in most of the underdeveloped world) hinder, rather than foster, any opportunity to bring about a change that would benefit not just the few, but the many. The national and international economic elites control those political structures to maintain outdated and grossly unjust political, social, and economic privileges in opposition to the popular demands of the majority of the population.
A second conclusion would be that gradualism by those parties and groups in underdeveloped countries that are committed to change weakens the possibilities for change in the health sector and in other areas. The Chilean workers and peasants, the real heroes of the tragedy that was played out in Chile, clearly understood this when they kept urging the Allende government to proceed with reform at a faster pace.
And when, after the first, unsuccessful, military coup, Chilean society began increasingly to polarize, it was the working class and the peasantry, in their work places, their factories, their hospitals and health centers, and in their communities, who began to mobilize and to prepare themselves for the coming second coup.
They have lost, for the time being, and the privileged classes and their military brute force have won. As the poet Pablo Neruda (1963:111) wrote almost forty years ago, on the day that another military coup took place, in Spain, hope lived in the hearts of the people,
Till one morning everything blazed:
one morning bonfires
sprang out of earth
and devoured all the living;
since then, only fire,
since then, the blood and the gunpowder, ever since then.
Bandits in airplanes
and marauders with seal rings and duchesses
black friars and brigands signed with the cross, coming out of the clouds to a slaughter of innocents.
1. First published in the spring of 1974 as “What Does Chile Mean: An Analysis of Events in the Health Sector Before, During, and After Allende’s Administration,” Milbank Memorial Fund Quarterly, 52:2, pp. 93-130. Based on a presentation to the International Health Seminar at Harvard University, Boston, February, 1974. Republished here by permission of the author, Vicente Navarro, M.D., Johns Hopkins University, 615 North Wolfe Street, Baltimore, Md 21205, USA.
2. For an accurate report of the events that took place during and after the coup, see the dispatches from Santiago by the correspondents of the Washington Post and Le Monde, and by J. Kandell (1973a-e) of the New York Times. The Santiago correspondents of the Wall Street Journal are notoriously inaccurate. For an excellent detailed critique of the misinformation provided by the Wall Street Journal, see Birns (1973).
3. The upper class includes the monopolistic bourgeoisie, the large agrarian bourgeoisie, the large landowners, the large urban non-monopolistic bourgeoisie, and the small and medium urban bourgeoisie. The middle class includes the petite bourgeoisie, the professionals, the white collars, state civil servants, and large sectors of the middle echelons of the armed forces. The working class includes the workers in monopolistic and large industries (the best-organized and most politicized workers in Chile), the workers in small and medium-sized industries, and the subproletariat. The peasantry includes the farm workers and sharecroppers. For an excellent description of each class, see the Popular Action Unity Movement (MAPU) pamphlet, “The Character of the Chilean Revolution,” published as Chapter 10 in Johnson (1973).
4. In terms of income distribution, in the 1960s this was as follows: “five percent of the population, composed mainly of urban owners of capital, receives 40 percent of national income; twenty percent of the population, mainly urban employees, receives 40 percent of national income; fifty percent of the population, mainly urban workers in industry and trade, receives 15 percent of national income; and twenty-five percent of the population, mainly rural agricultural workers, receives 5 percent of national income” Frank (1969:106).
6. Full-time physicians working for the National Health Service are supposed to work, in theory, six hours a day, being paid on a salary basis. The arrangements for part-time physicians are similar to those in the National Health Service in Britain, with privileges for “amenity beds” for the physicians’ private clientele within the National Health service hospitals.
7. The parties of the coalition included the Socialist and Communist Parties, the most powerful within the coalition, the Radical Party (a lower-middle-class party), MAPU (United Popular Action Movement), and the IC (Christian Left). These two last parties were split-offs from the Christian Democratic Party (PDC), the main bourgeoisie party. To the left of the UP coalition parties, there were the MIR (Revolutionary Left Movement) and the PCR (Revolutionary Communist Party), two very small radical left parties which did not participate in, but supported, the UP government.
8. There is voluminous literature in both the United States and the United Kingdom on consumer participation. For a representative view in the United States, see Sheps (1972) and in the United Kingdom, see Weaver (1971). For a description of the roles of the district community councils, see Great Britain, Ministry of Health (1972).
9. The JAPs originated in 1971 to assist in the distribution process, making sure that local shopkeepers did not charge above the official prices and that they did not divert items to the black market (Zimbalist and Stallings, 1973).
10. This policy was part of a deliberate intent by Allende to co-opt the military, which traditionally has had very strong ties with the U.S. military. It is interesting to note that in 1973 , at the height of the economic blockade against Chile, Chile’s armed forces remained, along with Venezuela’s, the main recipients in Latin America of U.S. aid for training officers. And when no other public agency or department within the UP government could get international loans and credit, the Chilean military received credit to buy F5E supersonic jets (North American Congress on Latin America, 1973b:8). Actually, the U.S. granted to the military in Chile a total of $45.5 million in aid during fiscal years 1971 to 1974, double the total granted in the previous four years. As Admiral Raymond Peet testified before the Senate Appropriations Committee, “One of the big advantages that accrues to the United States from such a foreign sales program is the considerable influence we derive from providing the support for these aircraft” (North American Congress on Latin America, 1973b:9; Monthly Review, 1971).
11. One of the goods whose consumption increased most as a result of the growth in purchasing power of the working class and peasantry was beef. Under the Alessandri administration (1958- 1964) a worker had to labor five hours, 35 minutes to buy a kilo of stewing beef; under Frei, four hours, 53 minutes; but under the UP, a worker had to labor only two hours to buy the same amount (North American Congress on Latin America, 1972).
13. It has been said, particularly by conservative voices, that the military coup was a necessary response to the “lawlessness of the masses,” which seems to be their code name for the mass mobilization of the lower classes. This argument deliberately ignores the documented fact, recognized even by the junta itself, that the military started planning the coup as early as six months after Allende’s administration took office and one year before the spontaneous mobilization the working class took place. Moreover, the first mass mobilization occurred, as indicated in the text, after, not before, the first (unsuccessful) coup took place. In that respect, the historical sequence shows that the mobilization was a response by the working class to the military and strike threats from the lumpenbourgeoisie and the armed forces, not vice versa.
15. Information published in this section relies very heavily on the dispatches from the correspondents in Chile of the New York Times, Washington Post, and Le Monde, as well as information from Chilean and other witnesses who were part of these events. Additional information is from Sweezy (1973); Petras (1973); Scientists and Engineers for Social and Political Action (1973); North American Congress on Latin America (1973a; 1973b).
17. As an ITT memorandum indicated, “a realistic hope among those who want to block Allende is that a swiftly deteriorating economy . . . will touch off a wave of violence, resulting in a military coup” (Washington Post, 1973a:A2).
Ahumada, J. de
1968 Health Planning for Latin America. Washington, D.C.: Pan American Health Organization.
Albala, C., and P. Santander
1972 Preliminary Study of the Process of Democratization in the National Health Service, Ph.D. thesis. Santiago: University of Chile. In Spanish.
1971 Interview, Meet the Press 15 (October 13). American Public Health Association
1973 Letter, Ad Hoc Committee to Save Chilean Health Workers (December), New York.
1974 ”Medicine and politics in Chile.” World Medicine (April 10):15 – 29.
Birns, L. R.
1973 ”Chile in the Wall Street Journal.” The Nation 217 (December): 581 -587. Chilean Medical Doctors in Exile
1974 Letter, “An appeal from Chilean medical doctors in exile.” (March) Lima, Peru.
Chilean Ministry of Public Health
1950 The National Health Service. Santiago: Subdepartment of Health Education. In Spanish.
1970 Human Resources in the Health Sector in Chile. Santiago: National Health Service Press. In Spanish.
1972 Levels of Medical Care. Santiago: Fifth Zone of the National Health Service. In Spanish.
1973a, b, c, d, e, f. Bulletins of the Ministry of Public Health. Issue numbers 16, 35, 38, 39, 40, and 42. Santiago: Government Printing Office. In Spanish.
Chilean Trade Unions of Health Workers
1971 Political Organization of the Community, Popular Power and Democratization of Health. Santiago: First Congress of the Trade Unions of Health Workers. Mimeographed. In Spanish.
Cockroft, J. D., A. G. Frank, and D. L. Johnston
1972 Dependence and Underdevelopment: Latin America’s Political Economy. Garden City, New York: Doubleday.
1972 Inside View: Three Lectures on Prime Ministerial Government. London: Jonathan Cape.
1971 The Chilean Revolution: Conversations with Allende. New York: Vintage Books.
Department of Human Resources, Pan American Health Organization
1973 Health Manpower in the Americas. Washington, D.C.
1966 ”Family health expenditures.” Cuademos Medico-Sociales VII(4):21- 26. In Spanish.
1973 Ercilla (September 13 – 19):10. In Spanish.
Feinberg, R. E.
1972 The Triumph of Allende: Chile’s Legal Revolution. New York: Mentor Books.
Frank, A. G.
1969 Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil. New York and London: Monthly Review Press.
1973 Lumpenbourgeoisie: Lumpendevelopment- Dependence, Class, and Politics in Latin America. New York and London: Monthly Review Press.
Gaete, J., and R. Castanon
1973 The Development of the Medical Care Institutions in Chile During This Century. Santiago: University of Chile. Mimeographed. In Spanish.
1970 ”The state and the marginal masses in Chile.” Bolletin ELAS 4(6). In Spanish.
1974 ”Chile keeps state of siege.” Manchester Guardian Weekly 110 (June 29):7.
Great Britain, Ministry of Health
1972 National Health Service Reorganization: England. London: Her Majesty’s Stationery Office. Command 5055.
Hall, T. L., and S. Diaz
1971 “Social security and health care patterns in Chile.” International Journal of Health Services 1 (November):362- 377.
Johnson, D. L. (ed.)
1973 The Chilean Road to Socialism. Garden City, New York: Anchor Press.
1973a New York Times (September 20):14.
1973b “Military junta in Chile prohibits Marxist parties.” New York Times (September 22):1 and 3.
1973c “Chilean officers tell how they began to plan the takeover last November.” New York Times (September 27):3.
1973d “Ousted bosses back at Chile’s plants.” New York Times (September 25):3.
1973e “Chile offers to reopen talks on copper.” New York Times (September 29):3.
1974 ”Chile four months later.” New York Times (January 28): 10.
1938 “On the economic theory of socialism.” In Lange, O., and F. M. Taylor, On the Economic Theory of Socialism. Minneapolis: The University of Minnesota Press. Reprinted in Monthly Review 22 (January): 38-44.
1944 ”The biography of Don Alejandro del Rio.” Journal of Social Welfare XIII (July and December). In Spanish.
Laval, E., and R. Garcia
1956 ”Synthesis of the historical development of public health in Chile.” Journal of the National Health Service I (October). In Spanish.
El Mercurio (Santiago)
1973a ”Support of the professional organizations for the revolutionary government.” El Mercurio (September 18). In Spanish.
1973b ”Military delegates in universities.” El Mercurio (September 29):12. In Spanish.
1973c ”Starting anew in curative medicine.” El Mercurio (November 9):12. In Spanish.
1969 The State in Capitalist Society. London: Weidenfeld and Nicolson.
1973 ”The repression in Chile” Le Monde (October 10). In French.
Le Monde Diplomatique
1973 ”The Chilean coup” Le Monde Diplomatique (October 13 – 17). In French.
1971 ”Peaceful transition to socialism?” Editorial. Monthly Review 22(January):1 – 18.
1960 Beyond the Welfare State. New Haven: Yale University Press.
1974 “The underdevelopment of health or the health of underdevelopment: an analysis of the distribution of human health resources in Latin America.” Politics and Society Vol. 4, pp. 267 – 293.
Navarro, V., and A. P. Ruderman (eds.)
1971 ”Health and socioeconomic development.” International Journal of Health Services, special issue 1 (August).
1963 “A Few Things Explained.” The Selected Poems of Pablo Neruda, translated by B. Belitt. New York: Grove Press. Originally published 1947, in Tercera Residencia, 1935-1945. Buenos Aires: Losada.
New York Review of Books
1974 Terror in Chile. New York Review of Books XXI (May 30):38- 44.
North American Congress on Latin America
1972 New Chile. Berkeley and New York: North American Congress on Latin America.
1973a ”Chile facing the blockade.” Issue of Latin America and Empire Report VII(January).
1973b ”Chile: the story behind the coup.” Issue of Latin America and Empire Report VII(October).
1970 Politics and Social Structure in Latin America. New York and London: Monthly Review Press.
1973 ”Chile after Allende: a tale of two coups.” Monthly Review 25 (December):12 – 20.
La Prensa (Santiago)
1973a ”General Pinochet said that the U.S. Senate is under the influence of Communism.” La Prensa (October 22).
1973b ”Interview with General Pinochet.” La Prensa (October 22).
1971 “Program of ambulatory medical care in the National Health Service.” Report of the Director-General of Health, No. 1 (November). Santiago: Ministry of Public Health.
1969 The Cultural Revolution in China. Baltimore: Penguin Books.
1973 “The Chilean armed forces: the role of the military in the Popular Unity Government.” In Johnson, D. L. (ed.), The Chilean Road to Socialism. Garden City, New York: Anchor Press.
Rosenstein-Rodan, P. N.
1974 ”Allende’s big failing: incompetence.” New York Times (June 16).
1973 ”How the U.S. intervened in Chile.” The Guardian 26 (December 26):16.
Scientists and Engineers for Social and Political Action
1973 ”Chile.” Issue of the Bulletin of the Scientists and Engineers for Social and Political Action 5(6).
Sepulveda, P. S.
1972 ”Analysis of health expenditures in Chile.” Santiago: University of Chile. Mimeographed.
1973 ”Perspectives for a revolutionary change in Chilean medical care.” Santiago: University of Chile. Mimeographed. In Spanish.
1972 ”The influence of consumer sponsorship on medical services.” Milbank Memorial Fund Quarterly 50, No. 4 (October- Part 2):41 – 69.
Sigerist, H. E.
1956 Landmarks in the History of Hygiene. London. Oxford University Press.
1973 ”Two years of ‘Popular Unity’ in Chile: a balance sheet.” New Left Review 78 (March- April):3- 25.
Sweezy, P. M.
1973 ”Chile: the question of power.” Monthly Review 25 (December):1 – 11.
1973 ”Crisis and change in America’s health system.” American Journal of Public Health 63 (April):313 – 318.
Unidad Popular Party
1970 Political Platform of the Unidad Popular Party. Santiago: Unidad Popular Press. In Spanish.
United Nations Economic Council for Latin America
1970 Social Change and Social Development in Latin America. E/CN.12/826. New York: United Nations.
U.S. News and World Report
1973 ”Links with Chile revive.” U.S. News and World Report 75(23, December 3):85.
1973a Washington Post (September 16).
19736 ”Chilean junta dissolves labor group.” Washington Post (September 16):A26.
1973c ”U.S. puts credit squeeze on Allende government.” Washington Post (September 24).
1973d Washington Post (September 20).
1973e ”Chileans draft recovery plan.” Washington Post (September 24).
I973f ”Chile’s Allende: a prophetic interview.” Washington Post (September 28).
1973g ”Chile gets U.S. loan for wheat.” Washington Post (October 6).
1973h ”Chile claims favor of West’s bankers.” Washington Post (October 8).
1973i Washington Post (November 19).
Weaver, N. D. W.
1971 ”Community participation in the welfare state and hospitals.” The Hospital 67 (October):347- 351.
Zimbalist, A., and B. Stallings
1973 ”Showdown in Chile.” Monthly Review 25 (October):1- 24.
I would like to acknowledge the important assistance of many Chilean friends and colleagues in collecting the information presented in this paper. I want to thank Christopher George and Kathy Kelly for their invaluable assistance in editing and preparing the original manuscript.
- Vicente Navarro
Bailout Plan Hits the Poor June 25, 2009Posted by rogerhollander in Economic Crisis, Poverty.
Tags: bailout, bank loans, consumer credit, consumer debt, consumer law, consumer protection, consumer rights, H&R Block, hsbc, jackson hewitt, jp morgan chase, loans, low-income, poverty, predatory lending, rals, refund anticipation, roger hollander, Santa Barbara Bank & Trust, tarp, tax preparers, tax refund, victor corral
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When Congress hastily created and passed the Troubled Asset Relief Program (TARP) last fall to bail out the financial sector, the program didn’t offer any consumer protection against the type of predatory lending practices that led to the financial crisis. It came as no surprise, then, when Santa Barbara Bank & Trust, a self-described “community bank” in California, announced in January that it was intending to use its $180 million in bailout money to make high-priced refund anticipation loans, known as RALs.
RALs are short-term loans borrowed against a consumer’s tax refund. They’re often advertised as “quick cash,” because they allow people to get their tax refund in days instead of waiting for the IRS, which can take at least 10 days. Historically, poor communities have been targeted for these loans. According to the IRS, 85 percent of the people who took RALs in 2006 had incomes of $37,300 or less, and nearly two-thirds were recipients of the Earned Income Tax Credit. On average, a person pays between $200 and $500 in fees for a RAL.
This tax season, it’s expected that low-income taxpayers will pay more than $1 billion in fees and triple-digit interest rates associated with RALs.
Refund anticipation loans are made by a handful of banks, including HSBC, JP Morgan Chase and Santa Barbara Bank & Trust. The banks give tax preparers—including H&R Block and Jackson Hewitt, as well as preparers found at places like used car lots—a share of
the hundreds of dollars in “application,” “processing” and “e-file” fees that can be made from a single loan.
“These multimillion dollar corporations are basically skimming off another layer of taxpayer money with these loans,” said Chi Chi Wu, a staff attorney with the National Consumer Law Center, an organization that specializes in consumer law issues on behalf of low-income people.
While refund anticipation loans can be classified as abusive, predatory loans, they escape government regulation because they are bank loans, Wu said. National banks are immune to state consumer protection laws. Other than requiring full disclosure about RALs, all most states can do is sue for the fraud frequently associated with these loans.
Recently, the IRS began to implement the initial phase of a new system to process tax returns and issue refunds within 48 to 72 hours. “While this is significant, the refund anticipation loan business is anticipating this,” said Kimberly S. Jones of the California Reinvestment Coalition, a group that advocates for fair access to banking and financial services. “Now, some preparers provide RALs where you can walk out of there with a check or a check card. But it’s still a good thing, because it shortens the amount of time that they can accrue interest.”
Staff from the California Reinvestment Coalition and other groups recently met with Congress members to alert them to how bailout money was being used. “There was a lack of awareness on how TARP funds were being used” said Jones, who added that the groups are going to keep pressing Congress and the media about this “because there is a genuine, and appropriate, disgust with how TARP has been spent.” © 2009 ColorLines
Citigroup as the “Grim Reaper” December 10, 2008Posted by rogerhollander in Economic Crisis.
Tags: bank of america, banks, citigroup, Economic Crisis, fdic, Federal Reserve, financial crisis, general growth properties, ggp, grim reaper, jobs, Learsy, loans, malls, morgan chase, mortgages, roger hollander, tarp, taxpayers, toxic loans, treasury, Wall Street
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Raymond J. Learsy
www.huffingtonpost.com , December 10, 208
Brava Citigroup! From a broken institution you talked your compliant Wall Street buddies operating out of Washington to save your behind. Getting the Federal Deposit Insurance Corporation to provide protection against potentially debilitating losses from over $300 billion in toxic loans and securities which will now remain on Citigroup balance sheets as prime assets. Further the Federal Reserve stands ready to backup other residual risks in Citigroup’s asset pool of non recourse loans. And in addition the Treasury will be investing $20 billion in Citigroup from the TARP. Understand all of this? Just in case you don’t, the bottom line is that our government (read: taxpayers) put $300 to $400 billion on the line without which Citigroup would have in all probability been “bye-bye”.
Chastened and thankful? Give us a break. Charlie Gasparino in a “Citi’s Gossip Game” segment on CNBC yesterday reported that their Chief Finanacial Officer Gary Crittenden has been buttonholing anyone who would listen, bad mouthing Citigroups competitors such as Bank of America and JP Morgan Chase in order to boost Citigroup shares by putting down Citigroup’s competitors. Is that why we needed to save Citigroup?
And putting down JP Morgan Chase? An institution that has responded to the TARP assistance by announcing a policy that it will work with 400,000 homeowners to modify $70 billion in mortgages and loans, loans that have many homeowners scrambling to make payments they can no longer afford. Further it will stop foreclosures even in the most extreme cases for 90 days and has hired 300 mortgage counselors to help distressed homeowners. Speak of an example of civic responsibility.
What has Citigroup done in contrast? The Wall Street Journal reported on Friday that Citigroup is the lone holdout in a bank consortium comprised of Bank of America, Deutsche Bank, Eurohypo, Goldman Sachs and Wachovia who have all agreed to a nine month extension for debt laden General Growth Properties. GGP is the country’s second largest mall operator with over 200 malls in communities around the nation and with tens of thousands of jobs both directly and indirectly that could be impacted. Citigroup’s position would trigger a default in turn triggering cross defaults on other General Growth debt forcing the company to file for bankruptcy. A step that would not only effect General Growth, its employees and the communities wherein it operates, but would exacerbate, in a dramatically negative way, the commercial real estate market throughout the country. A Reuters article warns “Results of the negotiations [with General Growth Properties] are being closely watched in the $750 billion commercial mortgage backed securities market.”
In an earlier post, I ended by paraphrasing Lenin, “Wall Street will sell us the rope to hang American Capitalism.”
And in Citigroup we have created the perfect “Grim Reaper”.