The leader of the Chicago boys

Initially published in 2007, this work was the subject of a second edition in May 2025 following the death, a year earlier, of Sergio de Castro, one of the main civilian hierarchs of the Chilean dictatorship (1973-1990). Through this controversial character, the book offers us an unprecedented entry into the workings of the Pinochetist junta and describes, in detail, the process by which Chile converted to authoritarian neoliberalism. It therefore offers a complementary reading to the masterful investigation carried out by Manuel Gárate Château as part of his doctoral thesis defended at Ehess in 2010, translated into Spanish two years later and republished several times.

Built essentially on interviews with the person concerned and citing other works of a testimonial nature (memoirs, interviews and essays by political actors), this story is not strictly speaking a biography. In substance on the one hand and in form on the other, it suffers from at least two weaknesses, but which do not detract from its interest.

A partial analysis, unfinished, but enlightening

Published by the presses of Finis Terrae University – which is administered by the very conservative Congregation of the Legionaries of Christ, the work turns out to be relatively ideologically oriented, without lacking scientific objectivity. The two authors, Patricia Arancibia and Francisco Balart, respectively doctor in history from the Complutense University of Madrid and professor of public law at the University of Chile, show great rigor in the restitution of the facts, while maintaining a certain complacency towards the figure and the role played by Sergio de Castro (1930-2024) in the first years of the dictatorship. They therefore chose to entrust the preface to the first edition to Pablo Baraona, who was his economist colleague, also trained in monetarism at the University of Chicago, and who succeeded him at the Ministry of the Economy in December 1976.

Concerning the architecture of the work, it turns out to be surprisingly shaky, because it turns out to be, in a way, truncated. And for good reason, the academic and institutional trajectory recounted was interrupted in the mid-1980s. In short, only the first half of the life of the man who was notably Minister of the Economy (1975-1976) then Pinochet’s Finance (1976-1982) is retraced here. The work ends with his departure from the government, following the economic crisis which hit Chile in 1982 and during which he refused to support counter-cyclical measures, implying a return to a hated interventionism. In the light of this intellectual portrait, Sergio de Castro appears as an obtuse supporter of laissez-faire, who until the end swore only by market mechanisms.

Each for himself and God for all

A future follower of a frenzied economic and social Darwinism, Sergio de Castro forged from birth the awareness that life is an everyday competition. Born in Santiago on January 30, 1930, in the heart of the southern summer, two months early, this very premature baby is the youngest of three boys. Raised as a Catholic, Sergio grew up between the mining town of Oruro and La Paz in Bolivia, where his father was the director of an import-export company for British products. Schooled at the San Calixto Jesuit college, he recounts a happy and rowdy childhood, one of the most amusing games of which consisted, with his comrades, of pushing the cholitas (indigenous women) to make them slide down the steep slopes of the Bolivian capital – which says a lot about the great consideration he has, from a very young age, for those weaker than himself…

Gifted for studies but lazy, he completed his schooling in an English school in Santiago, where he went to confession on Fridays, returned blows on the rugby fields on Saturdays and attended mass on Sundays. After a year at the University of British Columbia in Vancouver, he was forced to return to Chile in September 1950, following the death of his father. He then tried to take over the family business, but due to lack of training and contacts, the business collapsed. Returning to his studies, Sergio enrolled in the commercial engineering course at the University of Chile in March 1951. But quickly, the impetuous young man becomes disillusioned. The strong politicization of his comrades exasperates him.

The following year, he gave up the public university to join the Catholic University (CPU), yet much less prestigious at the time. What’s more, in addition to Law, Medicine or Architecture, the Faculty of Commerce and Economic Sciences of theCPU is one of the least popular sectors. In addition to the social doctrine of the Church, at the time they taught “ domestic economics » which consists – he reports with irony – “ to check if the price of tomatoes at the market was more or less expensive than that at the grocery store » (p. 51). Scientific reasoning conspicuous by his absence » (p. 51).

Thanks to the agreement signed between theCPU and the University of Chicago in the mid-1950s – and whose ins and outs have already been the subject of numerous academic works, de Castro left to train in Illinois, under the tutelage of the Spanish-speaking economist Arnold Harberger (now aged 101), who became the mentor of this first cohort of young, long-toothed economists whom he nicknamed “ the tigers “. Their appetite is voracious. Alongside Pablo Baranoa and Arturo Fontaine, de Castro sealed a pact: inspired by the teachings of Milton Friedman, Friedrich Hayek, Theodore Schultz, Georg Stigler and Gregg Lewis, they promised to transform Chile on the basis of a paradigmatic break with the then triumphant Keynesianism.

From university lecture halls to military mysteries

For more than ten years, those who soon called themselves the “ Chicago Boys » preach in the desert. The disruptive nature of their anti-state diagnosis and their pro-market solution are all the more repulsive in Chile as its capital has hosted, since 1948, the famous Economic Commission for Latin America and the Caribbean (CEPAL), a UN structure which defends developmentalism driven by public authorities. Beyond a few think tanks international who gravitate in the orbit of the famous Mont Pèlerin Society, few specialists claim to be a new macroeconomic model. Besides, we are not yet talking about neoliberalism. This academic isolation manifests itself within theCPUwhere the economics department, headed by de Castro from 1965, physically left the historic headquarters located in the heart of Santiago to settle two years later in an outlying convent, now known as the “ San Joaquin campus “.

During the 1970 electoral campaign, economists from theCPU approached the conservative candidate Jorge Alessandri, whom they nevertheless failed to convince of the merits of their heterodox proposals. Leader of Popular Unity, Salvador Allende wins over a radical left project. Covertly financed by the CIAthe employers’ organizations then began undermining the socialist-communist government. The economic situation is deteriorating, the budget deficit is exploding and inflation is reaching three-digit percentages. At the end of 1972, de Castro and his acolytes began drafting a drastic liberalization program known as “ The Brick » (El Ladrillo), which they finalized a few weeks before the military coup, perpetrated on September 11, 1973.

From September 14, the professor was asked to become an advisor to the officer designated Minister of the Economy. This is the beginning of his meteoric rise within the junta. Its first measure consists of tackling price controls, which were then exercised on some 3,500 goods and services. While his colleagues take the reins of theODEPLANthe planning department from where they tackle economic liberalization, the students he trained join numerous ministries and public companies, with the mission of carrying out a general audit on the basis of which to massively cut spending and reduce an abysmal public deficit. Like Elon Musk and his DOGE before his time, de Castro set up what we nicknamed “ the juvenile patrol » in charge of dismantling the bureaucratic colossus.

In April 1975, faced with a continuing economic crisis, dictator Pinochet abandoned the developmentalist views in vogue in the general staff and ceded his trust to the impetuous leader of the Chicago Boys. De Castro was appointed Minister of the Economy (April 1975) then of Finance (December 1976). Under his rule, Chile is transformed into a laboratory of neoliberalism: opening to foreign capital, strict budgetary discipline, reduction of corporate taxes, massive privatization (in transport, heavy industry and the banking sector in particular), end of the pay-as-you-go pension system, and above all the commodification of fundamental goods, such as health, education and water.

In the early 1980s, the “ Chilean economic miracle » soon takes on the appearance of a mirage. While the increase in the key interest rate in the United States increased the price of the dollar and caused a shock wave on international markets, the liberalization of banking activity led to an explosion in private debt in the country. This artificial growth results in a series of bankruptcies. If de Castro defends reinforced regulation of financial entities and accepts the principle of recapitalization (November 1981), like the good monetarist economist that he is, he categorically refuses to devalue and campaigns to eliminate the minimum wage. His mentor, Milton Friedman, received for a second visit to Santiago at the same time, reinforced his position. But his intransigence annoys within the junta, which fears a reversal of public opinion in the face of the economic slump which is taking hold. After standing up to Pinochet for several weeks, de Castro resigned in April 1982. Bringing in its wake a surge in inflation, the much-maligned devaluation deepened the crisis, as the authors deplore (p. 363 et seq.).

Posthumous influence

The work concludes with the return to favor of neoliberal solutions, thanks to the appointment, three years later, of Hernán Büchi, a “ true-false » Chicago Boys (trained at Columbia, but Friedmanite by conviction, and architect, among other things, of the reform of funded pensions).

As for de Castro, a brief internet search tells us that after his departure from the government, the economist returned to business, notably taking the helm of a pension fund and then of the Edwards bank, one of Chile’s main financial entities.

Since the democratic transition, its academic, economic and institutional heritage, like that of the Chicago Boys as a whole, has never been so valued. A certain Miguel Kast was his student at the CPU then trained, like him, in Chicago, from 1971. The torch of authoritarian neoliberalism which they both claimed has today been taken up by the youngest of the Kast siblings, José Antonio by his first name, the current far-right president elected in November 2025. Beyond the figure of Pinochet, the specter of military-civil dictatorship still hovers over Chile, like a condor with its claws. macroeconomics feasting on the carcass of the State.