A historical materialist account of the Chilean capital control: prototype policy for whom?

Abstract

After the tumultuous 1990s, capital controls are making a comeback. Although about 14 emerging markets have implemented capital constraints, the Chilean variant (1991-8) has drawn the most attention. Many scholars and policymakers, especially of the Keynesian variant, are quick to support country-level capital controls as a useful device to quell further socio-economic devastation largely brought about by the speculative activities institutional investors. While this is an important concern, their analyses tend to treat capital controls as ready-made, technical policy instruments usually devoid of political and historical considerations. On the contrary, the Chilean case demonstrates that capital controls can form one moment of larger accumulation strategies from which a minority of the population benefits. By examining the Chilean control through the lens of historical materialism, this essay attempts not only to provide a more rigorous and critical scrutiny but also seeks to 'politicize' this seemingly neutral policy. In doing so, the essay suggests that the URR was not a means to an end, but rather an integral moment of a larger class-based strategy - paradoxically named 'growth with equity' - that was designed to stabilize and reproduce a development model, which serves the interests of powerful transnational financial capitals and industrial conglomerates.