Chile

How Chile's Free Market Miracle Survived a Resurgent Left

Outgoing President Gabriel Boric predicted that Chile would go from being neoliberalism’s “cradle” to its “grave.” His movement got buried instead.

César Báez | 3.13.2026 10:49 AM

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(Jesús Martínez/Sipa USA/Newscom)

Gabriel Boric, the former student radical who rode a wave of left-wing unrest into Chile's presidency in 2021, left office Wednesday, replaced by José Antonio Kast, a right-wing populist who secured a landslide victory last December. Boric's election was supposed to be a watershed moment for a country long held up as Latin America's free market success story; it appeared Chile was repudiating the liberal economic model that had defined it for decades. Yet the leftist project collapsed under its own weight, and the Chilean pendulum has since swung violently in the opposite direction. But Kast arrives with a different set of dangers.

The story begins in the 1970s, when Chile transitioned from socialism to free market capitalism during the murderous dictatorship of Augusto Pinochet. Under Pinochet's predecessor, the socialist President Salvador Allende, the inflation rate had reached over 600 percent, and the nation's economy had been on the verge of collapse. That origin left an indelible stain on what became one of the greatest economic success stories of the past half-century. Chile's free market reformers struck a Faustian bargain with the Pinochet regime: In exchange for looking the other way as thousands were tortured and disappeared, they were granted enormous latitude to slash regulations, cut tariffs, and privatize state-owned companies.

But voters eventually opted to continue Chile's laissez faire economic agenda. For 30 years following Chile's 1990 transition back to democracy, left-of-center governments doubled down on free market policies, and the nation prospered. From 1990 to 1998, the poverty rate was cut nearly in half, while extreme poverty plummeted from around 13 percent in 1990 to about 6 percent. By the early 2000s, Chile had become one of the region's wealthiest countries.

In 2014, President Michelle Bachelet began to erode Chile's pro-market agenda, but policies such as private pensions, low tariffs, and light-touch regulation remained in place. The country had become "a case study in institutional resilience," Chilean economist Víctor Espinosa tells Reason. The free market order had become an institutional framework too deeply embedded and too economically valuable to dismantle easily.

By the 2010s, Chile was still outperforming every other Latin........

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