Chile’s privatized pensions enriched two conglomerates while excluding the armed forces

Evidence

The whole pension system was turned over to private enterprises, although members of the armed forces continued to receive comprehensive state guarantees. Legally mandated security for the investment of individuals provided for a minimal pension only. The government thereby opened up a vast new market. Capital collected on the basis of individual insurance contracts with workers and employees eventually amounted to approximately 20 percent of Chile’s gross domestic product (GDP) after ten years. While the private schemes were presented to the public as a liberating device for the individual, two of the Chilean conglomerates (BHC and Cruzat-Larrain) quickly gobbled up no less than two-thirds of the market (O’Brian and Roddick 1983; Mönckeberg 2001, 209–230). — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1587

Categorization

• XREF: The pattern of ‘individualized liberation’ enabling two private conglomerates to capture a market matches the general critique that market reform under authoritarianism consolidates oligopoly — parallels descriptions of Russian privatization. — connects to: Chilean privatization concentrated wealth in conglomerates while state kept strategic sectors — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 1633
• QUESTION: How did BHC and Cruzat-Larrain gain such dominance so quickly — through regulatory favoritism, informational advantages from the CEP seminars, or sheer scale?

Broader Connections

• Chilean privatization concentrated wealth in conglomerates while state kept strategic sectors #expands (0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1633