Salvador Allende
Economic policy

Chilean presidents were allowed a maximum term of six years, which may explain Allende's haste to restructure the economy. Not only was a major restructuring program organized (the Vuskovic plan), he also had to make it a success if a left-wing successor to Allende was going to be elected. In the first year of Allende's term, the short-term economic results of the economy minister Pedro Vuskovic 's expansive monetary policy were highly favorable: 12% industrial growth and an 8.6% increase in GDP, accompanied by major declines in inflation (down from 34.9% to 22.1%) and unemployment (down to 3.8%). By 1972, the Chilean escudo had an inflation rate of 140%. The average real GDP contracted between 1971 and 1973 at an annual rate of a 5.6% negative growth, and the government's fiscal deficit soared while foreign reserves declined. Unemployment rates had dropped from 6.3% in 1970 to 3.5% in 1972 before dropping again in 1973 to the lowest ever recorded.

The combination of inflation and price controls, together with the disappearance of basic commodities from supermarket shelves, led to the rise of black markets in rice, beans, sugar, and flour. The Chilean economic situation was also somewhat exacerbated due to a US-backed campaign to fund worker strikes in certain sectors of the economy. The Allende government announced it would default on debts owed to international creditors and foreign governments. Allende also froze all prices while raising salaries. His implementation of the policies was strongly opposed by landowners, employers, businessmen and transporters associations, and some civil servants and professional unions. The rightist opposition was led by the National Party, the Roman Catholic Church (which in 1973 was displeased with the direction of educational policy), and eventually the Christian Democrats. There were growing tensions with foreign multinational corporations and the government of the United States.

Allende undertook the pioneeristic Project Cybersyn, a distributed decision support system for decentralized economic planning, developed by British cybernetics expert Stafford Beer. Based on the experimental viable system model and the neural network approach to organizational design, the Project consisted of four modules: a network of telex machines (Cybernet) in all state-run enterprises that would transmit and receive information with the government in Santiago. Information from the field would be fed into statistical modeling software (Cyberstride) that would monitor production indicators, such as raw material supplies or high rates of worker absenteeism, in "almost" real time, alerting the workers in the first case and, in abnormal situations, if those parameters fell outside acceptable ranges by a very large degree, also the central government. The information would also be input into an economic simulation software (CHECO, for CHilean ECOnomic simulator) which featured a Bayesian filtering and control setting that the government could use to forecast the possible outcome of economic decisions. Finally, a sophisticated operations room (Opsroom) would provide a space where managers could see relevant economic data, formulate feasible responses to emergencies, and transmit advice and directives to enterprises and factories in alarm situations by using the telex network. In conjunction with the system, the Cybersyn development team also planned the Cyberfolk device system, a closed television circuit connected to an interactive apparatus that would enable the citizenry to actively participate in economic and political decision-making.

Allende raised wages on a number of occasions throughout 1970 and 1971, but the wage hikes were negated by ongoing inflation of Chile's fiat currency. Although price rises had been high even under Frei (27% a year between 1967 and 1970), a basic basket of consumer goods rose by 120% from 190 to 421 escudos in one month alone, August 1972. From 1970 to 1972, while Allende was in government, exports fell 24% and imports rose 26%, with imports of food rising an estimated 149%. Export income fell due to a hard-hit copper industry; the price of copper on international markets fell by almost a third, and post-nationalization copper production fell as well. Copper is Chile's single most important export, as more than half of Chile's export receipts were from that sole commodity. The price of copper fell from a peak of $66 per ton in 1970 to only $48–49 in 1971 and 1972. Chile was already dependent on food imports, and the decline in export earnings coincided with declines in domestic food production following Allende's agrarian reforms.
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