The Chilean Road to Socialism


CHAPTER 25

Commerce and Consumption

The short-term effects of the Popular Unity government's economic policies with respect to wages, prices, interest rates, the tough attitude toward maintaining and increasing production levels in industry, and other fiscal and monetary measures were to redistribute income in favor of salaried and wage-earning classes and to create an upturn in the economy. Increased consumer demand, however, together with other factors which Pedro Vuskovic analyzes, quickly created supply shortages of a wide variety of consumer goods. The right-wing opposition used these shortages in an attempt to gain political advantage against the government. Women's organizations of the Popular Unity and the government then arranged a large public meeting to discuss openly the sources of the problem.


CONVERSATION WITH THE WOMEN OF CHILE
Pedro Vuskovic is Minister of Economy, Development, and Reconstruction. This is a somewhat abridged translation of Minister Vuskovic's talk to thousands of women garnered in a Santiago stadium on July 29, 1971. The translation attempts to retain the informality of the talk while leaving out some of the detail and repetitiveness (which the Minister used to drive home his point) of the original Spanish

PEDRO VUSKOVIC

Beloved compañeras:

My greetings go to the compañeras who have organized this meeting and demanded our presence.

My greetings also go to the compañeras of Santiago who have come to this stadium to have a sincere and open dialogue with the representatives of the government of the people and to do their bit with their generosity as women helping with the tasks of this, their own government. ..

A Right and a Responsibility

I believe, my compañeras, that at this meeting a right is attained and a responsibility must be complied with.

This right is being exercised: to demand that the government report directly to the people; a right to summon them to ask them for an explanation, to ask them what the government is doing. It is not the Minister who is calling you; it is the workers who are summoning and demanding the presence of government officials.

While the women of Santiago were mobilizing for this event and organizing with their government the defense of vital supplies for their homes, a Santiago newspaper took the liberty of writing the following paragraph:

"The Minister of Economy, Mr. Pedro Vuskovic, has deemed it convenient to call housewives to a stadium for the purpose of explaining the problem of lack of supplies and its origins."

I think various things must be clarified about this. In the first place, the housewives here are not meeting with any "Mister Minister": the housewives are meeting with the compañero Minister of the government of the people.

In the second place, it is not I who have summoned you to this event, but it is you who have summoned me to come here in representation of the government, and here I am, because the Ministers of the government of the people feel that it is their duty and their obligation to discuss problems with the people, because this government is not afraid of the people, because it is the government of the men and women of this country, and therefore, it is under such conditions that I attend.

Going Straight to the Point

We are going to speak, and it is good that we do so, of each of the problems in particular. But before we do: Why do we have to face these problems? Is it that we are producing less today, are we importing less than before? No; quite the contrary; we are producing and importing more than before. Well, then this has to be explained, because if we are producing and importing more than before, why is it that we do not have some things? Because it is a fact that we are lacking some things.

What are the factors that affect this problem? Here we have to consider the first important factor, which is behind all this: the economic policy of the government of the people has meant a substantial increase in the purchasing power of the great majority of the population.

In this there is a substantial difference with the past.

Before, the problem was one of income, of purchasing power. When there was a lack of supplies, and there was on many occasions, there was an even greater decrease in the living standard of the workers; and this meant hunger. At other times products were wasted instead of being scarce, because the families of the workers did not earn enough to buy what they needed.

That was really a crime: to waste products when there was a population that does not have enough to eat. That was the kind of problem we were accustomed to face before! Then it was easy not to have shortages of supplies. Because if the thing is to cut down on what people are earning, to increase prices again and again, until the people are not able to buy, except in very small quantities, then it is quite easy to say, "There was no lack of supplies." The problem is different now.

The problem today is that popular consumption has increased, there is greater purchasing power. And the problem is that sometimes there are difficulties in obtaining supplies of all that which this greater purchasing power permits the people to buy. Because of this larger purchasing power, which is present in each of the homes of the Chilean workers, we cannot always increase supplies as much as we would like. A higher salary alone does not necessarily make it possible to buy more meat, more rice, more oil, because, from time to time, there is one or the other thing which is not available. But the problem, compañeras, is that we have problems of lack of supplies to increase consumption, not to decrease consumption, and in that sense, and without denying that we must attack this problem, I could say that today we have a "good problem" on our hands. . . .

Why is it that we have this greater purchasing power?

This has been attained for two reasons.

First, the government of the people defined a policy of wages and salaries different from the former one. Because it was not a question of bargaining for how much less than the cost of living wages should be readjusted, but more a question of how much above the cost of living of last year we should readjust the remunerations this year.

This year, in the public area, the minimum salaries were increased from Eº 12.- to Eº 20.-, without any discrimination with respect to age or sex, which represented an increase of 66.7 per cent.

The remunerations that were lower than a minimum wage were increased by 40 per cent.

The remunerations between one and two minimum wages were increased 38 per cent, and the remunerations that were above two minimum wages were increased 35 per cent.

Family allowances in the public sector were increased from Eº 68.- or Eº 48.- to a single amount of Eº 102.-, and they were increased 100 per cent in the case of workers affected by Social Security.

Pensions were increased between 35 per cent and 67 per cent.

With all this, and if we take into consideration the readjustment obtained by the workers in the private sector, the total readjustment of remunerations has amounted to 45 per cent, compared to a 35 per cent price increase of last year.

Second, the result of price policy, of the decision to put a stop to the inflation, is that these salary increases will not vanish due to the immediate increase of all the prices. We faced the task of holding back price increases so that the readjustment of wages and salaries would actually represent a greater purchasing power for the workers and would not return to the hands of capitalists and large enterprises in terms of prices that became higher each time.

Reduction of Inflation

The results of this are well known: between January and June of last year, inflation exceeded 22 per cent; this year it amounts to 11 per cent. We have been able to reduce inflation by one half. In the first semester of last year, the salaries had been readjusted too late, about March or April, and by that time had already lost 20 per cent of their actual purchasing power. This year we did not wait until April, we readjusted the salaries in January, and the price increases have been substantially less than last year.

As a result of policies, the purchasing power of the workers has increased 30 per cent and the consumption of the whole population has increased more than 20 per cent. And at those levels of greater consumption we do have, temporarily, problems of supplies. This is a part of the answer to the question: Why are things scarce?

Of course, the reactionary press wishes to show another picture. They are not interested in this; they are interested in scandal, in making noises; they are not interested in the solution of problems, they are interested in the political dividends.

They are very happy, because for the first time they have something concrete they can hold onto; they can start again with a campaign they initiated long ago. . . .

Now they appear once again, this time carrying the banner of the consumers. This time their cynicism has reached incredible levels. When was the reactionary press ever concerned about the fact that the people were going barefoot, that they were very badly dressed? Or have they forgotten that the rate of undernourishment in Chile is, even today, a reflection of a social crime? And don't they know that infant mortality also reflects the deficient living conditions and in Chile amounts to more than eighty-five per thousand? Or have they forgotten that even during their administration they had created one bread for poor people and another for rich people and also one kind of milk for the poor and another for the rich? Then this campaign is simply unacceptable. It is a cruel and savage mockery, which the workers and especially you will be able to answer back to.

How to Confront the Problem

We are confronted with a situation we are going to correct in the right way, but under no circumstances the way they did in the past. It would be easy for those of us in the government to let prices shoot up until the workers are not in a position to buy and obtain their needed supplies, and thus exchange the "scarcity" for "too many things." But we are not willing to follow that road!

We will follow the only road we believe is correct for solving this problem: we will defend the greater purchasing power of the population and we will therefore seek production increases and not price increases. Therefore it is more difficult for us to solve this problem.

And when we are trying, compañeras, to solve things this way ... it is not so easy to increase production by 20 or 30 per cent in the course of a few months. It is not so easy, because not the whole system of production is in the hands of the government of the people. Because a great part of the decisions on production are still being taken by those who are interested not in the success of the economic policy of the government of the people but in its failure, in order to be able to substitute this government for another, reactionary one.

In a nutshell, there are two ways of solving the problem of supplies.

One, which has always been used and which the reactionary sectors favor is to let the prices go, take away the purchasing power from the workers, so that no scarcity of products will be noticed (but there would be hunger and malnutrition). With the price increases, capitalists recover their incomes, and we would go back to situations like the one we encountered in 1968, when of each one hundred Chileans, the ten richest received an income sixty-nine times greater than that of the ten poorest Chileans, and this situation became worse in the following years. That is the "recipe" for avoiding problems, and naturally favors the owners of large enterprises.

The other is the way the government of the people will do it. The essential thing is to improve the living standard of the workers. If this creates temporary problems of supplies, we must solve those problems directly. The only correct solution is to increase production.

This answer to our problems involves a great many things. It involves basic change in an economy that was not at the service of the workers but at the service of the great national and international capitalist interests. Therefore the government of the people is fulfilling this program backed by the people, with their active participation. We cannot consider these problems as completely apart from all that the government has done and will continue to do to change this economic and social system from its very roots.

Profound Transformations

There is no solution to the supply requirements, which have sprung up from an increasing purchasing power of the working class, but to attack at its very foundations all that is characteristic of the old economic system. Therefore the problem we are discussing today is not independent of the severe problems the government of the people is facing. It is not independent of the agrarian reform, because without it we would be able to solve the problem only temporarily and would have to face it again tomorrow. Agriculture has been dominated by the interests of the large landowners, who are responsible for the lack of sufficient food for the Chilean people, and it is their fault that our country has had to spend ever more dollars for importing food while the big landowners were not working the fields properly.

We then have the agrarian reform. Chile has enormous wealth in its agriculture, it has sufficient capacity to produce the food that all the Chileans need; yet each year we must spend our foreign currency to import food, just because the big landowners do not produce enough. Between 1965 and 1970, in five years, only fourteen hundred properties were expropriated. During the first year of this government more than a thousand agricultural properties have been expropriated by decisively applying the same law that already existed. Only when the process of agricultural reform has been completed, when the peasants take into their own hands, as they are already doing, the responsibility of producing necessary food for Chile, will we be able to end the miserable living conditions of our workers while also ending the expenses in foreign exchange represented by importing food.

We also have the nationalization of banks and the decrease of the interest rate, so that the small and medium producers may use our credits, as well as the small businessmen—and not just a few gentlemen, as was the case before.

We have the nationalization of our basic sources of wealth, such as coal, nitrates, and iron, and the important step for ending our dependency, for conquering our economic independence, the nationalization of copper. This is something the people and the Left have been demanding for many years, and it has recently been approved by Congress at the initiative of this government.

We have the formation of the area of social property, the fundamental basis to end the monopolies of the capitalist system and start the construction of a socialist economy: the expropriation or requisition of cement monopolies in order to permit the development of construction and the housing program, and the textile monopolies to produce the necessary cloth for clothing the people.

Together with these and other measures taken to transform the structure of the economy, to definitely resolve the problems of Chile and permit our development, this year we are starting to redistribute income to benefit the workers and the great majority of people.

To begin, we have the battle of production, involving the full participation of the workers in production committees and in the administration councils of the state-owned enterprises, as well as the vigilance committees in private enterprises.

All these things are linked and clearly influence, in various ways, the problem of supplies. . . .

Reasons for This Lack of Supplies

The first reason this occurred is precisely that the economic policy of the government of the people has permitted a substantial increase in the purchasing power of a large majority of the worker population. . . .

The second factor is that we have the deliberate maneuvers for the purpose of making this scarcity even worse. And we must consider this quite carefully. I must admit that a majority of the owners of large enterprises have responded, and production has in fact increased. As SOFOFA (Sociedad de Fomento Fabril—Society for Industrial Development) has recognized, industrial production for this year is already on a far higher level than last year. However, some large monopolies continue to interfere with it.

Several large enterprises had programmed their production to increase the expensive products and decrease those of popular use. At the state-owned enterprises we are changing this, but we still need more time to complete the process. . . .

The country learned about the indiscriminate butchering of breeding cows, which endangered reproduction levels. Also there were attempts to butcher underweight animals, which has forced us to adopt severe control measures. In addition, animals were held out of the market in order to force higher prices.

Recently, other elements have been added: a campaign to stimulate excess consumption and to hoard supplies by those who have the necessary amount of money to do it.

What are they trying to attain by all this? Why so much fuss from the reactionary press? Because what they are trying to do is to find ways of making this problem much worse. How? Among other ways, by making their people hoard products by purchasing much more than they really need. For this purpose the "telephone chains of the nice neighborhoods" go to work. All these ladies call each other asking how much Nescafe, how much condensed milk, how much oil they have been putting away. And that is one way of making the problem unnecessarily larger. For example, last week two hundred tons more meat were distributed than normally, and in many working-class neighborhoods there was not enough meat. But I can tell you that in the homes of the so-called "nice" neighborhoods there was enough meat for a much longer time than was really needed.

Then, compañeras, we must know that these problems do not depend only on good will, nor on managing things well. Here we are faced with political forces who are willing to confront this government with any weapons and who are not at all concerned by the damage they may cause to the people of Chile, as long as they can create situations of lack of supplies. It is through these situations that they are dreaming of regaining power and the government, which was legitimately won by the people in September of last year.

To the greater purchasing power, and the reactionary maneuvers, there must also be added some real facts of things that have happened during the past weeks.

There have been storms and also an earthquake. And without looking for excuses, they have had effects that cannot be overlooked. The Nescafe factory suffered losses. Two of its departments collapsed, one of which was the packing section, and it will take two months until it can again work normally. The result was that a production capacity of 250 tons was reduced to 203 tons per month.

The poultry farms also suffered great damage. . . .

Other activities were also affected: Rayon Said was damaged seriously, and the installations of the textile company Sedamar collapsed.

We must also admit failures, errors, and insufficient administrative capacity or lack of instruments of control and ability to foresee needs and act in due time. We must point out, with respect to the management of the instruments of decision, that sometimes these remain in the hands of those who, as it has been stated quite adequately, "do things the wrong way."

We Are Not Trying to Escape Our Own Responsibilities

I accept our part of the responsibilities. What is more, I tell you in an open and completely honest manner that a part of these problems can be attributed to us as officials; we have not been as efficient as we should be; but it must also be understood that we are just starting to manage instruments that for years were managed by a few capitalists for their own benefit. And we will have to learn to manage these instruments not for the benefit of this small group of capitalists, but so that they may work for the benefit of the Chilean people. And we have to pay some price for learning these things!

We have also inherited problems such as the very low level of stocks of important food products, which we encountered when we took over this government. At the beginning of this year we faced very dark days at the Ministry, because sometimes whether Santiago would have bread or not depended on a ship subject to delay. . . . I Stocks of grain, of wheat, were reduced to levels that were completely and practically worthless. That is why we must produce more now, for a growing consumption, and also for constituting a reserve, which in a most irresponsible manner had gone down to levels that were a serious threat to the supplies of the people. These things must also be known. . . [1]

Distribution

I wish to tell you, compañeras, that now a problem has become evident, a problem that nobody dared to face openly, and that problem is the distribution mechanism, in this country and especially in this city.

This system has been organized, designed, and directed to serve that part of the city where the rich people live and to give bad service to the people who work.

Then, besides solving the immediate problem, compañeras, let us also put our hands in and solve this problem at its roots once and for all!

Aside from the circumstantial problem of scarcity, the government of the people, as an important part of its program, has proposed basic changes in the manner in which the distribution of goods has traditionally been carried out among the people.

Studies of groups of essential products show the backward and class-biased character of the traditional system. . . [2]

That is the absurd thing, compañeras, that things are cheaper where the people have more money and much more expensive where people have smaller incomes.

This is the distribution system you have been suffering for some time, and we must change it. This is a task we are facing. And we are willing to do everything possible and necessary to change this situation from its very roots. . . .

Speculation

It is quite certain that this scarcity will produce and increase speculation in many products, because the more scarce a product is, the more enthusiastically some dishonest people will take advantage of this situation. I realize, as the comrades said at the beginning of this meeting, that the official prices are not being respected and that meat is being sold at much higher prices than it should be. I can tell you that this is not due to the fact that the distributors are necessarily paying more. In fact, compañeras, this is the first time in I do not know how many years, if it ever happened before, that the price of meat during the month of July is practically the same as during the month of December.

However, we must admit that we have counted upon the honest co-operation of organizations of shopkeepers, and we know that the small merchants are also victims of exploitation. We are willing to work with them, to back them up. We wish to improve their business conditions and their profits. But, again quite clearly, we must tell them that this does not mean that we are giving them a blank check either, because some small merchants may damage the prestige of the rest and do whatever they wish, and just as we are willing to help them, we are also willing to use our full force to punish those who want to take advantage of the situation, speculating with the scarcity. . . .

Let Us Share the Responsibilities

But I believe that here we must say one thing quite clearly: if we emerge triumphant from this, if we can really solve all these problems, we will ensure an ever-increasing improvement in the living conditions of the population.

We—I refer to those of us who have administrative responsibilities: Subsecretary Garretón, the head of "Dirinco," the Minister who is speaking with you now—have assumed our share of the responsibility. But I must also tell you that we are not capable of handling this situation as if it were only an administrative, or bureaucratic, problem. It is impossible to overcome this purely by administrative means; we need others to help us out of these problems. What I want to say is this: we feel we have a right to ask that this responsibility be shared by you, by all of you.

It is the people of Chile themselves who must help to attain the success of the economic policy of the government of the people, in the fields, at the factories, in homes, and in each center of activity.

It is a problem of the entire population, of the women themselves, and they must take it into their own hands, just as we promise to fulfill our obligations.

There are practical experiences that show us how the organization and mobilization of the people resolve these problems.

We have developed several important initiatives in order to incorporate the organized people in the solution of the problem of supplies. . . .

The question is not one of a recipe. . . . But I ask you, can we develop in our neighborhoods a committee —let us call it by any name—a local source of supplies, that operates on the level of districts and neighborhoods? You can organize these! There we can get together unions, mothers' centers, neighborhood committees, sport clubs, and other organizations. Can we organize these? Are you capable of taking this thing into your hands?

Neighborhood Control

Starting from this point, if you organize this, wouldn't it be good to also organize a control of supplies? What is it that is lacking? Wouldn't it be adequate to check there the types and qualities of the products that are being sold or about to be sold? Why not control prices from there? The control should not necessarily be by quarreling with the small merchants, punishing the ones who speculate, but by patiently explaining to them that it is they who must participate also in these supply committees, to find out what is needed, how to work better; however, the one and only condition should be that they work honestly. . . .

These are tasks you can do; it is you who can take this matter into your own hands. And if you do this, if you assume this responsibility and give it shape, we will be able to adjust our own bureaucratic organizations in such a way that they really serve their purpose. In some measure, we are already trying to do this.

Within the Ministry, we put together a group of compañeras who have the specific task of taking care of supply problems. And we are giving this such a great deal of importance that we are practically considering it a rank within the hierarchy of the Subsecretariat of Internal Commerce.

I assure you that we are willing to take the control mechanisms from the few offices in which they are all together now and to turn them over to the community. We understand that it is very frustrating when people become desperate, because they wish to complain about something and they find out that there are only two phones they can call, and finally, compañeras, no attention is paid to them. Then people say, who will help us? Where can we go for help? How can we solve this if we have all the people in just one office?

It Depends on You

If you take charge of this responsibility, if you start to organize things, we will distribute this control equipment in neighborhoods, and to each one we will assign an official who will work with you, so that you do not have to come uptown to pose your problems.

And I further say to you, compañeras, if you start running this organization, if you put your shoulders to it in this way, it is you who will force us to leave the enclosures of our offices. . .

I believe, compañeras, that this is the only answer that is in accord with the interests of workers and the great majority of the people in the community. . . .


Notes:

1. The Minister continues here to analyze shortages of meat, poultry, fish, coffee, textiles, liquid gas, and other products.

2. The Minister then details shortcomings of the retail system.


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