In the first part of this series of articles, I’ve briefly explored the withering away of large-scale centrally planned economies by means of liberal reform, which is essentially the reason as to why debate around this topic has died down - with no relevant modern examples, how is one to argue against the market system?
However, what we are discussing today is sure to challenge your preconceived notions in the field of economics, as there’s nothing quite like Chile in the seventies - from futuristic cybernetics to Cold War conflicts, we have it all.
Welcome to the capital city, Santiago! The year is 1970, and Salvador Allende had just barely won the presidential race against Jorge Alessandri and Radomiro Tomic, both being the usual center-right politicians. What made Allende different was very simple: he was a marxist, well-known for his vision for a “Chilean Way to Socialism”. Was he a soviet-style authoritarian? Probably not! Was that enough to stop both the USSR and the U.S from funneling money into the election? Definitely not! With about $900,000 being approved for anti-Allende propaganda by the CIA, and $400,000 being sent to the socialist alliance by the KGB, it is now most clear that Chile was to become a battleground of the Cold War.
Despite this, his administration was uncompromising in its reform, with industries such as copper-mining and banking being fully nationalized, with the former being heavily invested in, while also adopting policies of land redistribution. A minimum wage was introduced, with lowered taxation for the lower and middle class, coupled with an extensive system of price controls, all in an attempt to redistribute wealth and increased employment rates. Allende’s measures led to some improvements, with an 8.6% increase in GDP, a decrease in inflation, as well as a rise in employment.
The truth is, things were looking bright for Chile, and the positive response to the reforms had opened up the government to any and all proposals that could help the country pursue its socialist ambitions. As such, one of the men in charge of CORFO (a government organization which was tasked with managing the newly-nationalized industrial sectors), Fernando Flores, decided to investigate potential avenues of digitalizing decision-making processes within the economy. In the summer of 1971, he excitedly presented his vision to the English researcher Stafford Beer during their meeting in London, after being fascinated by his work in the fields of cybernetics and operations management.
As the two grew closer, a coherent plan started taking shape, and with Allende’s full support, Project Cybersyn was born, which we will be discussing in painstaking detail in the second half of this article, so make sure to tune in.
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