After the military takeover led by General Augusto Pinochet in 1973, free market economists labelled Chile as “the miracle economy”. The same thinktanks then praised Chile for continuing the so-called miracle following the establishment of civilian rule in 1990. To this day, the International Monetary Fund and global financiers often refer to Chile as a model for the rest of the world.

But what has a decade of civilian rule meant for ordinary people? I had occasion to judge for myself recently, on a return trip to Chile for the first time in 13 years.

I arrived in the middle of the recent presidential elections, the third since 1990. Ricardo Lagos won the poll by a small majority. Much has been made in the media of Lagos becoming the first Socialist Party (PS) President since Salvador Allende. Yet the PS has been in a coalition government (known as the Concertacion) with Christian Democrats for the past decade.

Throughout these years the Concertacion's social and economic policies created an investment haven for foreign capital. A sweeping privatisation process begun under Pinochet was extended to the ports, electricity, oil refineries and banks. According to the World Bank, Chile became the most “liberalised” economy in Latin America—”a market-based economic system in which the private sector is the engine of growth”.

This “engine of growth,” however, is synonymous with stark social inequality. Alongside fabulous wealth for a few, a quarter of Chileans still live in poverty, with tens of thousands forced into unemployment or casual low-paid jobs.

On one level, things are different to my last visit in 1987-88. Then Chile was in transition from military dictatorship to civilian rule. Pinochet had called a state of emergency, to deal with the general unrest and mounting opposition to his regime. I remember on several occasions in downtown Santiago, people attempting to congregate for a rally, only to be dispersed by police with water canon trucks. Curfews at night were particularly unnerving, as the only sounds outside were military vans patrolling the streets.

International business demanded a shift in the political structure to channel such continuing confrontations into the safer waters of parliamentary democracy. As part of the political settlement, the Concertacion sought to ensure that the mass murders and other crimes committed by the military would be buried. Under the constitution agreed with the junta, the PS voted in favor of providing Pinochet with senatorial immunity, supporting his position as “senator for life” and protecting him from future prosecution.

During Pinochet's detention in Britain, the PS leaders worked even harder to keep a lid on the demands for justice. During the elections, Lagos continually stated that Chile had to reconcile its differences and “look to the future, not the past” .

Despite such proclamations the issues have refused to die. In fact, this time, on my very first trip into the city centre of Santiago, I was confronted by an anti-junta demonstration outside the Institute of Bernardo O'Higgins, where thousands of tortures and disappearances took place during and after the coup. Many of those present were holding up photos of loved ones who had disappeared more than 20 years before. They held up banners demanding action against Pinochet and the junta as a whole.

As my visit continued, it became clearer to me that these sentiments are rooted in deeper social contradictions.

A wider social gap

Since my last visit I was struck by the fact that living conditions for ordinary people have either not improved or significantly worsened. As many people said to me, the miracle economy only benefited a small layer. The huge gap between rich and poor had strongly affected me even 13 years earlier. This time, when I travelled from Santiago's airport to the city, the landscape seemed much worse. The housing conditions were appalling, including many shantytowns, as well as old and ill-maintained buildings and shops.

More than an hour out of Santiago's centre, miles and miles of housing estates line the side of the road. They are uniform in appearance, most with dirt roads and children playing outside. They resemble workers' housing estates I saw when I travelled to Eastern Europe. On Chilean television one of the advertisements run daily by a housing developer depicts a poor family whose luck has changed. They are moving out of their wooden shanty to one of the new estates. The commercial shows the family with all their worldly belongings on the back of a tip truck travelling down the road to a better life. On arrival their faces beam with delight as they survey their new home. This fantasy bears little resemblance to the truth in these suburbs—no privacy, no parks or playgrounds for the children, and no access to modern facilities, just bare, ugly streets.

But living squashed up in a tiny estate home at least offers some security. Others are not so fortunate. They have to live in makeshift houses on the side of the road, along railway lines or anywhere there is a spare piece of land, with no water or electricity. For others the streets are their only refuge. Near where we were staying, every night around 9pm, a group of people would get ready to sleep on shopfronts with all their worldly possessions—their blankets and their dog. By the morning they were gone, probably to beg for food. On another occasion, I saw an entire entourage of street ice-cream sellers, about nine or ten people, clustering together to settle down for the night under some shelter in a rich suburb.

Conditions for the wealthy few have become ever more luxurious. On a scenic tour of the well-to-do zone, I was told that residents had moved into more extravagant housing further into the hills surrounding Santiago. Security in all these areas has been upgraded to incredible heights—many of the homes have massive concrete fences, patrolled regularly by both security and police. Driving back down from the hills, signs of exorbitance abound. Some of the shopping malls resemble mini-cities, with ample and well-maintained roads—a rarity in Chile.

Another thing that struck me was that apart from the Metro underground rail network, the entire infrastructure—roads, electricity, public transport and water—was in various states of disrepair. As we discovered, bus drivers face particularly difficult conditions. They have to fly along at top speed down busy city streets, horns honking and bouncing off holes in the road as passengers pay for their tickets while standing on the steps with the doors still open. The drivers work on commission and are forced to poach passengers from rival bus companies in order to maintain their income. Some of the drivers have their children on board selling tickets, instead of going to school. We travelled to the south on a bus, taking the most popular company to avoid potential problems. On the way back, however, the large bus, carrying about 50 people, broke down in the middle of the road. The male passengers were asked to get out and help push the bus to give it a jump-start. It seemed from the passengers' quick response that this was a common occurrence .

An unexpected eye-opener was our trip to see a soccer match at the national stadium. Within a few minutes of the game commencing, the fans of one of the teams, the working class-based “Colo Colo,” began their famous chants and sing-alongs, some aimed against the police. Immediately, as if it were all pre-arranged, the riot police marched in military formation towards the fans. Within 10 minutes they began the charge, wielding batons and using tear gas. They rounded up nearly all the fans and forced them from the stadium. After the match we walked to catch a bus home and saw armoured personnel carriers and water cannon trucks lined up in the side streets ready to be called into action.

In the city area there are police and private security guards everywhere—on the streets, in the parks, in the metro—all just waiting for something to happen. This is a city of massive contradictions, and you can see why the wealthy are fearful of social explosions. Thousands of people are at rock bottom.

To get by and earn at least some money, many are forced into degrading and menial work. Like most apartment blocks, the one where we were staying had its own self-appointed keeper. I got to know Roberto, our keeper, quite well. He was an old thin gentleman with a big smile. While he seemed happy to get the mail, sweep the steps and look after the cars, in return for 1,000 pesos—less than $3 from each resident—you could tell from the weathered look on his face that he had a hard life. I never found out where he lived, but every day at about 7am he would turn up and sit downstairs next to the gas meters where he hid a cask of cheap wine to share with his friends, also cleaners, in the street.

Another custom is that parking your car in the street involves a bit more than just locking the doors. A self-appointed “attendant” patrols each street. In return for a few pesos he ensures that parking inspectors do not give you a ticket and no one steals your car. If you promise a bit extra he will put a piece of cardboard over your windscreen to keep out the sun. The attendant, who probably has to feed his family on the day's takings, takes the job very seriously.

One disturbing experience occurred in a beachside town called Las Cruces. I saw an old man selling food from his cart, calling out to people in their houses. Meeting him face to face, I thought I would purchase some items to help him out. I had a quick look at the food and it was rotten, but he seemed adamant that I take the best pieces of fruit he had, telling me they were very tasty. He embodied the life of the countless poor in Chile, who have suffered hardship for their entire lives.

Dilapidated schools, museum, hospitals

I was able to visit a number of working class schools in the Santiago area. At one particular school for poor students with high academic standards, the average class size was 47. Students sat in tiny desks, while the teacher taught from a small platform at the front of the classroom. The school had not been upgraded for decades, and whilst it looked quite grandiose from the outside, at closer inspection it was in a state of disrepair. Teachers had to provide their own chalk, and other basic necessities such as paper for some of the poorest students. For physical education, the facilities were virtually nil. Three basketballs served a school of 1,500 students—each ball was held under lock-and-key in the teachers' staff room. A great deal of imagination went into teaching at a school such as this one, as many teachers explained to me. Most teachers worked from Monday to Saturday, putting in more than 45 hours per week.

Santiago's natural history museum lies in a working class area called Quinta Normal. On arrival, I wondered if I had come to the right place. The building resembled an abandoned building, with boarded windows, extensive graffiti and pieces of concrete crumbling from the walls. I paid the token fee, but once inside it was quite apparent that the museum had not been updated since the early 1970s. One section on the refining of copper, the biggest primary export in Chile, had not been updated at all, with most photos damaged or missing. A smell of mildew permeated the air. Many of the animal exhibits had either completely degenerated or had been replaced by colour photographs, probably from a magazine. Despite the museum's obvious lack of funding, carers kept it clean and tidy, as it is the only place where children from poor schools can go for scientific excursions. Once outside, I was swamped by a group of children asking me if I could give them a bite of my ice cream, or give them some money to buy one.

Many of the public hospitals are in an advanced stage of disrepair. One I happened to go past had people waiting in stretchers at the entrance. There was no space inside to provide patients and family members with a waiting room. I was given a tour of “El hospital del trabajador”—a non-profit workers' hospital. While it appeared better than most hospitals, it provided an insight into the number of industrial accidents. One of the attendants mentioned that many of the staff were on stress leave as they could not cope with the constant flow of mutilated bodies, particularly of young men in the building industry. As we walked through, a young patient all bandaged around the head approached us. The attendant flinched, saying: “I cannot even bear to look at the poor young people any more.”

Rural poverty

People in rural regions have been particularly impoverished in recent years. Casual or itinerant workers can be seen travelling in droves on the sides of the roads late at night. On one particular train trip to the country, we passed shanty-type homes on the side of the track. People were living in boxes with dirt floors.

The contrast between rich and poor is very sharp in rural areas as well. An elderly couple we met had lived in the country their entire life, surviving on the bare minimum. Their tiny wooden shack had a small subsistence vegetable garden. Surrounding their dwelling were maize plantations and vineyards, owned by a wealthy landowner. The couple lived on a monthly pension cheque of a bit under $200 per month. They had no access to a telephone, running water or many other basic necessities. Inside the house their only possessions were a kitchen table, some old pictures on the wall and a small cabinet, which contained a few glasses and ornaments.

Many people spoke to me about some initial improvements made by the new government in the early 1990s. These gains were either minor or have since been overturned. Even to these people, the reality of daily hardship was ever present. One person was typical. Throughout the 1980s he had worked at Chile's largest copper mine, La Escondida. He had to travel long distances from his family and worked in difficult conditions, including heavy shift work. In 1990 he was laid off and forced into unemployment for six years. The hardship he suffered was hard to describe, he told me, living in abject poverty with two young children. He was then able to get a job driving trucks. Whilst conditions have somewhat picked up, he still spends a lot of time away from his family, and relies on his impoverished parents to help with his children's education. One child has a very high average at high school, and teachers have encouraged him to go to university. This would mean monthly payments of US$600. The worker has not given up hope of his child attending university, but that would depend on support from his parents.

The situation for many young people has significantly deteriorated, due to the continual destruction of jobs in the traditional employment sectors such as the public service and primary industries. I spoke to a number of young people who had just finished high school. They explained that whilst free elections existed, most of them considered the parliament to be alien to their lives and needs.

Asked what they thought ought to be done, they simply felt that people should refuse to participate in the elections, so that the politicians could get a sense of their complete hostility to politics. They were also quite confused and misinformed about the coup. Many had little or no understanding of the attacks on democratic rights under Pinochet. For instance, some believed that 3,000 people were killed—the official figure given by the Concertacion government—and had no knowledge that disappearances continued until 1987. The real number of killings was closer to 50,000.

The youth reflect the general lack of a clear political perspective within the working class. The PS leaders bear particular responsibility for this. They promoted major illusions that under a new democratic regime, social conditions would improve, as would democratic rights. At the same time, they sought to distance themselves from any past “socialist” pretensions, in line with the needs of international business.

Yet after 10 years of coalition rule, many workers have developed a deep hostility to the government and its program of job destruction and privatisation. The hopes held by millions of ordinary Chileans in Lagos are sure to be short-lived. The “miracle economy” can only thrive if the government continues to impose further hardships on working people.