The Chicago Boys: The Real-World Experiment of Milton Friedman’s Ideas
By: The Zeitgeist Editorial Team
Imagine a country turned into a laboratory for economic theory—a place where every free-market, laissez-faire, neoliberal policy was implemented to see what would happen. That country was Chile, and the experimenters were the "Chicago Boys," a group of Chilean economists trained under Milton Friedman at the University of Chicago. They took Friedman's theories and put them into practice, with catastrophic consequences for the people of Chile.
The Experiment Begins
The economic reforms that the Chicago Boys implemented were laid out in a document called "El Ladrillo," which they drafted in 1973. This comprehensive policy guide focused on liberalizing prices, ending subsidies, reducing tariffs, and developing the export sector while downplaying the importance of the domestic economy. These ideas would become the foundation of Chile's sweeping neoliberal economic changes.
It all started after the 1973 military coup in Chile. Democratically elected President Salvador Allende was ousted in a violent coup backed by the CIA, and General Augusto Pinochet took power. The new regime needed an economic overhaul, and that’s where the Chicago Boys came in—they were eager to transform Chile into a shining beacon of neoliberal economics. This was their chance to prove that the free market—completely liberated from government control—could bring prosperity.
Under the watchful eye of Pinochet, the Chicago Boys enacted sweeping reforms—forced changes under an authoritarian regime, implemented without public consent. They deregulated industries, privatized state-owned enterprises, slashed public spending, and opened up Chile to foreign investors. Taxes on the wealthy were cut, and social services were decimated. Government spending was reduced by 27%, and the fiscal deficit was cut from 8.9% of GDP to 2.9%, but these cuts came at a significant social cost, with healthcare and education services heavily impacted. Public investment was halved, and tariffs were reduced from 70% to 33%, leading to significant economic instability, including rising unemployment and falling real wages. The result was a massive reshaping of Chile’s economy—one that put profit over people at every turn.
The influence of the Chicago Boys was so significant that Orlando Letelier, a Chilean diplomat who was later assassinated for his outspoken criticism, aptly described the situation: “Repression for the majorities and ‘economic freedom’ for small privileged groups are two sides of the same coin.” Letelier argued that the economic policies being implemented under Pinochet could not be separated from the systemic repression and brutality that accompanied them. The economic freedom championed by Friedman and his followers was only possible through the suppression of political freedom.
The Human Cost
For a while, it looked like these reforms were "working." Economic growth spiked, and foreign investors poured in. But beneath the surface, the story was far grimmer. The Chicago Boys' experiment came at an immense cost to ordinary Chileans. Unemployment skyrocketed as government industries were dismantled and labor protections were gutted. By the end of the initial phase of reforms in 1976, unemployment remained high, and the economy faced a deflationary recession. Poverty surged, wages stagnated, and inequality deepened to staggering levels. Despite an average real per capita GDP growth rate of 5.6% between 1990 and 1998, much of this growth failed to reach the working class, and inequality persisted. The richest 1% of Chileans controlled more than a quarter of the country's wealth, while many were still struggling to access basic services like healthcare and education.
Public services like healthcare, education, and pensions were privatized, putting them out of reach for much of the population. People who once relied on state support were suddenly left to fend for themselves in a new cutthroat market-driven world. Approximately 40% of healthcare spending went to administrative costs, highlighting inefficiencies that made these privatized services even less accessible to those in need. Healthcare became a privilege, not a right. Education was something you bought, not something you received. And for those who fell through the cracks—there was nothing.
One poignant example of the human toll is the plight of climate refugees in today's world. As natural disasters worsen due to climate change, many people from Honduras, Guatemala, and other parts of Central America are forced to migrate, seeking safety and stability. These refugees are often met with hostility and political weaponization, much like how vulnerable Chileans were treated under the neoliberal experiment. It's a cycle of displacement and suffering that echoes the deep inequalities embedded by policies that prioritize profit over human well-being.
Freedom for Whom?
The irony here is that Milton Friedman spoke endlessly about "freedom" and how markets would bring about liberty. But in Chile, the very policies he championed were enforced under a brutal dictatorship—a regime that jailed, tortured, and murdered anyone who dared to dissent. The so-called "freedom" of the market came at the expense of actual human freedom.
This is the core contradiction of Friedman’s vision. The Chicago Boys claimed to be bringing economic freedom, but they did so while stripping away political freedoms. What good is the freedom to participate in a market when you’re living in fear of government repression? What good is a thriving economy if the wealth is hoarded by the elite while the majority struggle to survive?
The Legacy of the Chicago Boys
The Chicago Boys’ policies left deep scars on Chilean society—scars that persist to this day. The inequality entrenched by their economic experiment remains one of the defining features of Chile’s economy. Although poverty levels were reduced from 38.6% in 1990 to 21.7% by 1998, the benefits of economic growth were unevenly distributed, with the wealthiest continuing to accumulate wealth while much of the population faced limited opportunities for upward mobility. The richest 1% of Chileans control more than a quarter of the country’s wealth, while many are still struggling to access basic services like healthcare and education.
During the late 1990s and early 2000s, Chilean economists Sergio de Castro and Ernesto Fontaine traveled the world explaining how their neoliberal economic policies helped write what’s often described as one of the biggest success stories in South American politics, ignoring the widespread suffering and inequality that persisted beneath the surface. They boasted of Chile’s economic growth, pointing to GDP per capita, life expectancy, and education metrics as proof of their model's success. Former U.S. Secretary of State George Shultz once said, “Our Chicago Boys produced the only really good economy in Latin America in the 1980s; it was sensational.”
But beneath the shiny facade was a different story. The economic "success" that the Chicago Boys proclaimed was built on the backs of ordinary Chileans who were living under an oppressive regime. Augusto Pinochet's dictatorship was responsible for the disappearance and execution of thousands of political opponents. The economic miracle was not possible without the brutal repression of dissent. Pinochet's government jailed, tortured, and murdered to maintain control while the Chicago Boys reshaped the economy. Their neoliberal policies could not have been implemented in a free society—only under the boot of a repressive military dictatorship could these reforms be forced upon an unwilling population.
The impacts of such neoliberal policies have parallels in other countries, too. In the United States, deregulation and privatization—key components of Friedman's ideology—have led to an erosion of workers' rights, increased healthcare costs, and higher education becoming a financial burden rather than a public good. Moreover, deregulation has accelerated climate change by encouraging unchecked corporate pollution and the extraction of natural resources without environmental safeguards. The recent example of Hurricane Helene, which was supercharged by ultra-warm water made more likely by climate change, reminds us that the effects of these policies are not isolated. Natural disasters have become more intense and destructive, with vulnerable communities bearing the brunt of the damage, while wealthy corporations are often bailed out or avoid accountability altogether.
In 2019, Chile faced a massive wave of protests sparked by a 30-peso increase in Santiago’s subway fare. What began as a protest against rising transit costs quickly morphed into a nationwide movement against inequality, for-profit education, and low pensions—all symptoms of the Chicago Boys’ legacy. Demonstrators demanded an end to corporate abuse and the neoliberal system that had left so many behind. The protests caught the political elite off guard—how could such unrest arise in a country that supposedly had the best economy in the region? The answer was simple: the so-called prosperity of Chile was built on a fragile foundation of inequality, and the people had had enough.
Economist Sebastián Edwards, who studied at the Universidad de Chile and later wrote The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism, argues that Chile’s supposed prosperity was always built on a “social powder keg.” The Chicago Boys' emphasis on export-oriented growth while dismissing the domestic economy created a fragile system that was vulnerable to external shocks and deeply unequal. The benefits of economic growth never reached the working class, and the promises of upward mobility proved hollow. The disillusionment of young Chileans, many of whom were burdened by student debt and faced limited job opportunities, was a direct consequence of the Chicago Boys' policies.
The late Orlando Letelier—a Chilean diplomat and outspoken critic of the Chicago Boys—captured the essence of this disparity when he said, “Repression for the majorities and ‘economic freedom’ for small privileged groups are two sides of the same coin.” Letelier was assassinated in Washington, D.C., in 1976, likely by agents of Pinochet’s regime, for daring to speak out against the human cost of neoliberalism in Chile.
The legacy of the Chicago Boys isn’t just a Chilean story; it’s a warning to the world. Their experiment became a model for neoliberal reforms across the globe—policies that have widened inequality, weakened social safety nets, and concentrated power in the hands of the few. The Chilean experiment showed what happens when you let profit rule over people, and the lesson couldn’t be clearer: unchecked capitalism isn’t freedom—it’s a new kind of tyranny.
A Future Beyond Friedman
Chileans have been fighting back. In recent years, massive protests have erupted against the economic inequality and lack of social protections that stemmed from the Chicago Boys' policies. The people of Chile demanded a new constitution—one that would undo the neoliberal experiment and put people over profit. In 2020, they won a referendum to draft a new constitution, signaling a break from the past and a hope for a future built on fairness, dignity, and real freedom.
The story of the Chicago Boys is a stark reminder that economic theories are not just abstract ideas—they have real consequences for real people. It’s time to move beyond the failed promises of Milton Friedman and create a system that puts people first. We need to advocate for policies that ensure fair distribution of wealth, strong social safety nets, and accountability for those who exploit our planet's resources. The legacy of the Chicago Boys shows us that unchecked market freedom leads to inequality, repression, and environmental degradation. But it also teaches us the power of resistance—the possibility that, when people come together, they can demand and achieve a fairer, more equitable society.
—The Zeitgeist