Institutional Design and Neoliberalism: The Chilean Model as a Result of the Unilateral Break of the Social Contract

Abstract

This article aims to define the meaning of institutional redesign processes in Chilean society over the last 30 years, which were based on the so-called de-collectivisation operating over the constitution, public property and the private economy. We argue that the de-collectivisation problem in Chile was a consequence of the unilateral break-up between social classes of the mid-1970s. In methodological terms, we present the social contract as an institutional mechanism to correct tensions between individual interests, its social results and the so-called forced rider, a forced consumer of public goods. This explanation of social contract allows us to illustrate the restrictions and benefit containment that the development-based, socio-political matrix imposed on capital from the 1940s to the 1970s, which led to the unilateral break-up of the democratic contract and opened the doors for a more restrictive and even new, anti-democratic institutional design. As a result, we briefly present the observable consequences that neoliberal institutional design has brought into the political, economic and cultural arenas. All of these consequences confirm the theoretical hypothesis that neoliberal institutional redesign was a class project that destroyed the achievements of the developmental political project based on the alliance between the middle and lower classes.