Social Policy in a Fast‐growing Economy: The Case of Chile

Chile has adopted a package of free‐market, neo‐liberal social policies. This follows a pattern established by the country’s largely successful economic policies. Neo‐liberal social policy consists of a series of two‐tier systems, which are not in contradiction with the economic model. On the contrary, a key function of the social policies is to supplement a dynamic style of capitalist economic development through a number of mechanisms. These include: improving the skills, education and health standards of the labour force; increasing savings in a privately‐run pension system; reducing labour costs to firms; and providing a safety net to those whom the “trickle down” does not reach. The paper examines social policy in three sectors: pensions, health and education. It explores historical roots, present characteristics, and the degree of success or othewise of policy in these sectors. The discussion refers to the role played by the legacy of the Pinochet military dictatorship (1973–90), the interface between public and private spheres, the whole question of social policy in the context of fast economic growth under free‐market conditions (and the possible presence of causality links), the changing balance of power between suppliers and users of social sector services in favour of the latter, the threat of market failure, and questions such as whether these policies have been successful and whether (or why) Chileans are prepared to accept this unequal two‐tier system.