Pedro Ibáñez Ojeda: Businessman, Politician and Institution Builder

Pedro Ibáñez Ojeda was born in Concepción on October 27, 1913, son of businessman Adolfo Ibáñez Boggiano and Graciela Ojeda Rivera. In his youth, he left his hometown to attend the Liceo Eduardo de la Barra in the coastal city of Valparaíso. After school, he entered the business world, working in the industrial and agricultural sectors from 1930 onwards. That year he joined his parents’ company, Adolfo Ibáñez y Cía, as a junior employee, where he rose to president by 1951. The Ibáñez group was comprised of the Industrial Tres Montes (a food processing company), Ibáñez y Cía, and the supermarket chains Almac and Ekono.

Ibáñez was a prominent business leader, actively involved in both local and international associations, being a member of the Consejo Interamericano de Comercio y Producción (InterAmerican Counsel of Commerce and Production, CICyP), a business association founded in 1941 that brought together the leading industrial figures from across the Americas. The organisation was notable for its anti-developmentalist stance, rejecting the increasing economic role of the State in the region and advocating for a market-oriented economy.Footnote ¹⁴ Ibáñez’s election as president of the CICyP (1961–64) highlights the extent of his influence within the Latin American business community.Footnote ¹⁵

Ibáñez also played an active role in the educational field. He was dean of the Facultad de Comercio y Ciencias Económicas (Faculty of Business Studies and Economic Sciences) at the PUCV between 1952 and 1967. He was also president and director of the Adolfo Ibáñez Foundation from 1951. In 1954, Ibáñez and other family members set up the Escuela de Negocios Adolfo Ibáñez (Adolfo Ibáñez Business School) in the province of Valparaíso. Like his father, Pedro Ibáñez believed that the study of economics was crucial for the country’s development.Footnote ¹⁶ However, he disagreed with the prevalent economic theories of the 1950s that emphasised the state’s economic role. Thus, the ENV was created to educate new generations on the advantages of a market-based economy. Initially, the institution was affiliated to the PUCV and, later, to the Universidad Federico Santa María (UFSM). This association ended in 1988 when Ibáñez founded the UAI in Viña del Mar. From the beginning, Ibáñez was interested in educating the country’s future entrepreneurs following the institutional model of US universities.

A political vocation helped define Pedro Ibáñez’s life. He became a member of the Partido Liberal (Liberal Party, PL) in 1960, becoming a senator for Aconcagua and Valparaíso from 1961 to 1969. Between 1961 and 1965, the right-wing parties in Chile experienced a significant decline in support, losing ground to the Partido Demócrata Cristiano (Christian Democrat Party, PDC). The right-wing representation in parliament decreased from 45 seats in 1961 (31.14%) to just nine seats (12.4%) in the 1965 parliamentary election. This dramatic loss in support led to the dissolution of the Partido Conservador (Conservative Party, PC) and the Partido Liberal.Footnote ¹⁷ Still, Ibáñez was a leading figure in this time of crisis, being one of the founding members of the Partido Nacional (National Party, PN) in 1966.Footnote ¹⁸

Among that group, he stood out for his criticism of the agrarian reform of both the Christian Democrat Eduardo Frei Montalva and the Socialist Salvador Allende. He was a fierce opponent of the left-wing coalition Unidad Popular that governed Chile from 1970 until its removal from power by a military coup in 1973. Three years later, the regime appointed Ibáñez member of the State Council, whose function was to outline a new constitutional project for the dictatorship. In discussions, he criticised the right to universal suffrage due to the unwise decisions that the least educated people might make.Footnote ¹⁹ Although Ibáñez was an active participant in State Council debates, his direct impact was diluted by the composition of the council and the influence of other figures such as the former president Jorge Alessandri or Pinochet’s main political advisor, Jaime Gúzman.

In the beginning, Ibáñez’s major intellectual influence was German ordoliberalism.Footnote ²⁰ Ordoliberalism was a German variant of liberalism associated with the Freiburg school of economic thought since the inter-war period and implemented in Germany in 1949 as a social market economy. The economists Wilhelm Röpke, Walter Eucken, Franz Böhm and Alfred Müller-Armack are some notable thinkers.Footnote ²¹ They conceived the market economy as a fragile artificial order that must be protected. Thus, they envisioned a strong State to cultivate and safeguard a market-oriented order from illiberal forces, including capitalists and excessive state regulation.Footnote ²² Although Ibáñez’s discourses during the late 1950s and 1960s did find inspiration in Röpke and Ludwig Erhard, Minister for Economic Affairs (1949–63) and former Chancellor (1963–6) of West Germany, this inspiration seemed based on the practical success of the German miracle. In the 1970s, Ibáñez invited and spread ideas from the MPS, which was more influenced by US economists and the Austrian school. Nonetheless, in the 1980s Ibáñez would resume the diffusion of ordoliberal ideas through the magazine Renovación, linked to the party Renovación Nacional (National Renewal, RN).Footnote ²³

When comparing the coastal route of neoliberalism to the Chicago Boys, Ibáñez embodies an alternative, autonomous yet complementary route. There are some common points, for instance: the focus on training new generations, the creation of liberal institutions and the link with the business world. There were some differences. First, although both routes coexisted, their influence had a different temporality. The Chicago Boys had a slow public start until the mid-1960s when they advised on important economic groups, and then ramped up their influence until 1975 when they took charge of the economic administration of the military regime.Footnote ²⁴ By contrast, Ibañez and his coastal route were the foremost exponents of liberalism during the 1960s and early 1970s, from his political tribune as senator, the ENV and his business associations. Second, the Chicago Boys’ approach to liberalism was based on a thorough technical education within a specific tradition that was transferred to new generations. Ibáñez was a self-taught liberal with a preference for ordoliberalism, but prone to include other variants. His ideas were shared by Carlos Caceres, his main associate, but were not transferred to new generations since the ENV was management-oriented. He did not found an economic school, as the Chicago Boys did. Finally, the Chicago Boys’ international connections were mostly through the professors or former students at the University of Chicago, reaching international economic organisations. Ibáñez had diversified networks that included economists, businesspeople and politicians from Latin America, Europe and the United States.

Nevertheless, Ibáñez and the Chicago Boys formed an alliance during the 1960s that preceded the 1973 coup d’état.Footnote ²⁵ While Ibáñez was an institutional builder, the Chicago Boys served as technocrats, advising and participating in his organisations. The collaboration began towards the end of Jorge Alessandri’s centre-right administration in 1964. Ibáñez was a member of the Business Commission of the Instituto Privado de Investigaciones Económicas y Sociales (Private Institute for Economic and Social Research, IPIES), a think tank that included Sergio de Castro, the leader of the Chicago group and future Minister of Finance under Pinochet, and the Chicago-trained economists Sergio de la Cuadra and Sergio Undurraga.Footnote ²⁶ Another point of collaboration was the advisory work provided by the Centro de Estudios Socioeconómicos (Centre of Socioeconomic Studies, CESEC), a think tank founded by Agustín Edwards Eastman in 1963 and led by Sergio Undurraga and Pablo Baraona, to the CICyP under Ibáñez’s leadership.Footnote ²⁷ CESEC produced El Ladrillo, a document outlining the economic transformation that would be implemented during the military regime in Chile. The Chilean section of the CICyP was advised by Chicago-trained economists such as Javier Fuenzalida, Rolf Lüders, Pedro Jeftanovic, Sergio Undurraga and Javier Vial.Footnote ²⁸ In the 1960s, the Chicago Boy Pablo Baraona, who would become Pinochet’s Minister of Economic Affairs, travelled weekly to Viña del Mar to teach at the ENV at Ibáñez’s invitation. Additionally, the senator persuaded Baraona to join the new Partido Nacional in 1966. By the late 1960s, Ibáñez had founded the Instituto de Economia Social de Mercado (Institute of Social Market Economy, IESM) to promote market-oriented ideas, with prominent members including Pablo Baraona, Sergio de Castro and Javier Fuenzalida. While the Chicago Boys provided technocratic economic advice, Ibáñez articulated a political discourse and coordinated a wide range of market-oriented institutions, including business associations, think tanks and universities.

Ibáñez and the Mont Pelerin Society

Friedrich Hayek founded the Mont Pelerin Society in 1947 along with the most prominent market-oriented minds of his time. This was the culmination of several attempts since the early twenties to resuscitate liberalism from its recent laissez-faire form and counter totalitarianism and collectivism in Western Europe and the United States.Footnote ²⁹ In its inception, the MPS gathered a variety of liberal traditions such as the Austrian, Chicago and Freiburg schools, plus scattered market advocates from Europe.Footnote ³⁰ Key ideas among the MPS members and neoliberal schools have been (1) the belief in a free civilization based on individual freedom, (2) concern over economic planning and government coercion, (3) the belief in the efficiency of the market mechanism as an allocation tool and (4) the idea that competitive order should be protected by institutional frameworks.

The balance between the diverse groups within the society was difficult to maintain. The economic support of US foundations (primarily the William Volker Fund, the Realm Foundation and the Earhart Foundation), the boom of memberships in the United States and the resignation of the ordoliberal leader Wilhelm Röpke in 1962, due to the ‘Hunold affair’,Footnote ³¹ probably contributed to the consolidation of US-based economic doctrines and to the detriment of European-based contributions in the long term.Footnote ³² By the end of the 1950s and early 1960s, the MPS was discussing the importance of including members from Latin American and Asia.Footnote ³³ Thus, the society gradually expanded its ranks beyond traditional Western countries: the Mexicans Luis Montes de Oca, banker and former Comptroller General (1924–7) and Secretary of the Treasury and Public Credit (1927–32), and Gustavo Velasco, founder of the Instituto de Investigaciones Sociales y Económicas A.C. (Institute of Social and Economic Research) in 1953; the Argentine Alberto Benegas Lynch Sr., Minister Counsellor at the Argentine Embassy in Washington (1955–8) and founder of the Centro de Difusión de la Economía Libre (CDEL);Footnote ³⁴ the Brazilians Eugenio Gudin, Brazilian Minister of Finance (1955–6), and Paulo Ayres, founder of the Brazilian think tank Instituto de Pesquisas e Estudos Sociais (Institute of Research and Social Studies, IPES); the Guatemalan Manuel Ayau, founder of the Universidad Francisco Marroquin in 1971; the Peruvians Romulo Ferrero, Minister of Finance (1945 and 1948), and Pedro Gerardo Beltrán, Prime Minister and Minister of Finance (1959–61);Footnote ³⁵ and the Venezuelan cousins Nicomedes Zuloaga, founder of the magazine Panorama Económico, and Ricardo Zuloaga, electrical industry engineer and businessman, joined the society between the 1950s and 1960s.Footnote ³⁶ The first Chilean MPS member was Pedro Ibáñez in 1968, sponsored by Manuel Ayau. While Northern members were mostly scholars and exceptionally entrepreneurs, the new members from Latin America were primarily businesspeople.

Chile’s late integration into the MPS stands in contrast to other Latin American countries. Despite similar economic context – such as an expanding state role, high inflation and inward-focused development strategies – Chile lacked a robust neoliberal community like those in Argentina, Mexico, or Venezuela.Footnote ³⁷ The Chilean right wing effectively negotiated and co-opted the economic policies of the Frente Popular (Popular Front) (1938–52) and Carlos Ibáñez (1952–9),Footnote ³⁸ which meant that the Chilean elite did not feel sufficiently threatened to systematically seek out alternative economic doctrines.

In fact, neoliberalism found only limited reception in Chile during the 1940s and 1950s, with the Conservative Senator Héctor Rodríguez de la Sotta being one of the few exceptions in promoting these ideas.Footnote ³⁹ The 1955 agreement between the University of Chicago and the PUC was an anomaly, and it took over a decade for these ideas to gain influence and another to reach positions of power. Although Pedro Ibáñez promoted the ordoliberal model in the 1960s, he was unable to galvanise a strong movement around these principles. It was only with the rise of the military regime and its market-oriented reforms that neoliberalism truly expanded in Chile, as both the state and right-wing civil society became eager to cultivate a strong intellectual community centred around market-oriented ideas.Footnote ⁴⁰

It is difficult to date the first encounter between Ibáñez and the Latin America MPS. While Ibáñez had previously met Peter T. Bauer, British economist and MPS associate, in 1961 and Albert Hunold, former MPS secretary, in the mid-1960s, neither facilitated his introduction to the Latin American MPS. Moreover, Hunold had scouted Ibáñez to be part of an alternative association that would be led by Röpke, the ‘Foro Atlanticum’.Footnote ⁴¹ However this did not materialise as the German intellectual died in 1966. One possible introduction could have occurred during the general meeting of the CICyP in 1964 in Santiago, which was attended by Romulo Ferrero and Ricardo Zuloaga.Footnote ⁴² The CICyP included some of the most prominent economic associations from Argentina, Brazil, Chile, Guatemala, Paraguay, Peru, the United States, Uruguay and Venezuela. This association actively promoted market-oriented ideas in the Americas and should be considered as one of the spearheads of early neoliberalism in Latin America.Footnote ⁴³

However, the most likely occasion for Ibáñez’s initial contact with the Latin American members of the MPS was in 1967. That year, the Friedrich Naumann Foundation, a think tank of the West German Liberal Party, organised the International Colloquium of Democratic Leaders in Colombia, 1967.Footnote ⁴⁴ The colloquium aimed to bring together the leading exponents of liberalism in Latin America and Europe to share experiences and debate ideas. Notable attendees included Pedro Ibáñez from Chile, Manuel Ayau from Guatemala, Paulo Ayres from Brazil and Álvaro Alsogaray, former Argentine Minister of Finance (1959–61), politician and former ambassador in the United States (1966–68). Manuel Ayau was a long-standing member of the organisation at the time while Alsogaray, Ibáñez and Ayres would join the MPS between 1968 and 1970. Prior to this event, there is no record of interaction between these individuals or any reference to the MPS. During the colloquium, Ayau shared his ideas and activities with the South American participants. Following this, Ibáñez and Ayau began exchanging correspondence.Footnote ⁴⁵ Ayau was instrumental for Ibáñez, as he sponsored his membership in the MPS in 1968 and introduced him to Hayek.

Ibáñez benefited from contacts within the MPS when inviting global North Atlantic figures to Chile, in efforts that included local coordination to raise funding and regional cooperation to organise the trip. Ibáñez’s first invitation of this kind was to Ludwig Erhard to visit Chile in 1969. This endeavour started in 1967, when he met Ayau. Ayau had organised the former German chancellor and MPS member’s visit to Guatemala and Venezuela a few years before, fostering the interest of Alsogaray, Ayres and Ibáñez. Alsogaray had connections with Wilhelm Ropke and Ludwig Erhard. He offered to mediate between the group and Erhard. Thus, Erhard visited Brazil, Argentina, Chile and Peru in 1969. The German-organised meeting paid off.

During the Chilean dictatorship, Ibañez also organised international visits to promote market-oriented ideas and improve the international image of the country. The most notable visits prior to the Mont Pelerin regional meeting were those of Milton Friedman in 1975 and Friedrich Hayek in 1977, both Nobel Prize laurates, awarded in 1976 and 1974, respectively.Footnote ⁴⁶ While Friedman’s visit was through the Chicago Boys’ network, Ibáñez personally organised Hayek’s visit. Friedman’s visit to Chile unleashed an economic debate about the role of Western economists in implementing economic reforms in authoritarian contexts with high social cost, a controversy that haunted him for years.Footnote ⁴⁷ These visits also fostered an intellectual climate supportive of the regime’s reforms at a time when local intellectuals were deeply critical of the model, and the economic and political right wing remained unconvinced of the transformation.

In 1975, the Chicago Boys implemented a ‘shock therapy’ approach by privatising state-owned companies, opening markets and deregulating the economy. Industrial production fell by 28%, GDP declined by 17% and unemployment reached 20% of the working-age population.Footnote ⁴⁸ These economic hardships added to the already high human cost of the military regime’s takeover, with 3,227 victims either dead or missing and around 40,000 tortured.Footnote ⁴⁹ In 1977 Chile was still in an economic transition, although the situation was stabilising. Internationally, Chile was isolated. Western democracies criticised the regime for systematic human rights violations.Footnote ⁵⁰ One year before Hayek’s visit, Pinochet’s secret police killed Orlando Letelier, Salvador Allende’s ambassador to the United States, in a car bombing in Washington, which piqued the United States’ hostility towards Pinochet.Footnote ⁵¹ Chile was the anti-utopia combining radical reforms and human rights violations,Footnote ⁵² which is why market advocates in Chile were so eager to invite notable figures.

In 1977, Ibáñez had obtained funding from the Earhart Foundation in the United States to invite distinguished economists to the ENV. With this support, Ibáñez began to contact Hayek. Manuel Ayau wrote to Hayek as a board member of the MPS. Ayau said that Ibáñez had recently been in Guatemala and intended to invite Hayek to Chile to give lectures and to accept an honorary degree at the Universidad Santa María. Ayau described Ibáñez as an active promoter of liberal ideas throughout his political career. He also mentioned the Adolfo Ibáñez Foundation, designating it as a private organisation with over 25 years of experience that established a School of Economics and Business following the same philosophy as the Universidad Francisco Marroquín.Footnote ⁵³ Thanks to this introduction, Hayek replied favourably. He expressed his desire to visit the west coast of South America, a region he was unfamiliar with, and said he would be delighted to receive an invitation from the Universidad Santa María, adding that he could only travel in November.Footnote ⁵⁴

Pedro Ibáñez wrote to Hayek on 25 May 1975, extending his invitation again. He explained that the ENV was an independent school, both financially and academically, but was officially associated with the Universidad Santa María. He proposed a one-week visit to become acquainted with Chile’s political and economic situation.Footnote ⁵⁵ The visit did eventually take place between 17 and 23 November 1975. To make the most of Hayek’s visit to South America, Alberto Benegas Lynch invited Hayek to Buenos Aires, sharing the expenses with the Chilean group.Footnote ⁵⁶

Hayek’s activities included lectures and discussions with individuals from the world of business and politics,Footnote ⁵⁷ including a brief meeting with General Augusto Pinochet. These interactions have led some scholars to argue that Hayek directly influenced the 1980 Constitution and its authoritarian project in Chile.Footnote ⁵⁸ This is in much the same vein as economist Milton Friedman’s visit to Chile and its much-vaunted impact on economic policy-making.Footnote ⁵⁹ Such characterisations probably exaggerate Hayek’s actual influence on the Chilean discussion since his school of thought was not widely known in Chile in the 1970s.Footnote ⁶⁰ It also overshadows the developments among the intellectual Chilean right wing, which shared commonalities with Hayek’s proclamations, but were not wholly derived from them. Hayek had greater visibility in the 1980s thanks to the Centro de Estudios Públicos (CEP), a neoliberal Chilean think tank which named him honorary president (1980) and assiduously disseminated his thinking until the economic crisis of 1982.Footnote ⁶¹ Hayek’s visit seems to have had a more academic and general character than an air of consultancy. It nevertheless served to legitimise the economic reforms and the military regime in Chile while he refined his thoughts on transitional dictatorships on the path to liberalism.Footnote ⁶²

These visits, and the subsequent regional MPS in Viña del Mar in 1981, were possible because there was a growing Latin American contingent within the MPS. Ayau was president of the society between 1978 and 1980, having been on the board before that. In 1962 Gustavo Velasco was part of the MPS council, holding the same position that Nicomedes Zuloaga would have in 1967.Footnote ⁶³ As a result, the Venezuelan group had already organised a regional meeting in Caracas in 1969 and Ayau did the same in Guatemala City in 1973. As Ibáñez’s correspondence suggests, Latin Americans were part of a regional intellectual and business community. They helped each other in the diffusion of liberalism in the region by giving access to major actors, fostering economic debates and circulating ideas through different institutions, such as think tanks, universities and magazines.

Pedro Ibáñez Ojeda’s Contacts for a Regional MPS Meeting in Chile

As early as 1978 at a meeting of the MPS in Hong Kong, Pedro Ibáñez Ojeda aired the idea of hosting a general assembly in Chile. He presented the idea to fellow Latin Americans such as Nicomedes Zuloaga and Manuel Ayau and prominent figures of the organisation, including Milton Friedman; Chiaki Nishiyama, Japanese economist and president of the MPS (1980–2);Footnote ⁶⁴ George Stigler, American economist, 1982 Nobel Laurate in Economics and a key leader of the Chicago School; Lord Ralph Harris, British economist and head of the Institute of Economic Affairs; Edwin Feulner Jr., co-founder and president of the conservative US think tank The Heritage Foundation; Peter Bauer, Hungarian-British economist and pioneer in the field of development economics; British economist Martin Bendelow, from the Centre for Policy Studies; Gastón Leduc, French economist and MPS president between 1974 and 1976; Joaquín Reig, Spaniard, promotor of the Austrian school and founder of the publishing house Union Editorial; Max Thurn, banker and secretary of the MPS.

Ibáñez wrote that the ‘economic as well as political developments in my country may be worth reviewing and analyzing on the spot’.Footnote ⁶⁵ He added that if his application was approved, he guaranteed that ‘a group of top economists, business leaders, and government officials would be only too glad to co-operate and welcome the members of the Society’,Footnote ⁶⁶ a reference to the Chicago Boys and their allies in civil society and government. The Chilean argued that the magnitude of the radical change from a socialist to a capitalist model in such a brief time frame was reason enough to consider Chile a deserving host and a worthy object of analysis. Chile could offer answers in a world that thought the revolutions of socialism were irreversible in the Cold War context of the time.

Prior to his departure to Hong Kong, Ibáñez met with the head of the military junta General Augusto Pinochet to inform him of his initiative. He expressed so in a private letter to the Chilean foreign minister Hernán Cubillos. In the letter, Ibáñez wrote that ‘when I said goodbye to the president and explained that I would try to organise a meeting of the society in Chile, he welcomed the idea with great interest and “motu proprio” [of his own accord] offered to help’.Footnote ⁶⁷ Although no response or further meeting records were found, the fact that Pinochet and his foreign minister were informed of Ibáñez’s efforts shows the extent of the businessman’s connections and that his initiative aligned with the interests of the regime. The junta may have shown interest in winning support from a transnational society highly reputed among neoliberals, in the context of international isolation given Chile’s status as an ‘anti-model’ due to human rights violations, political repression and shock therapy.Footnote ⁶⁸ Ibáñez was in effect conducting cultural diplomacy for the military regime.

Of all the letters Ibáñez sent, he received replies from Bauer, Bendelow, Reig, Stigler, Thurn, Nishiyama and Friedman. Bauer excused himself for not knowing Chile and its situation but could only speak positively of Ibáñez. Reig, a Spanish follower of the Austrian school, totally agreed to support the Chilean’s proposal for a general meeting in 1980. Bendelow fully endorsed Ibáñez’s project and, to counter the ‘chicken-hearted opposition from some members on the grounds of “political gestures”’, proposed scheduling another meeting in Yugoslavia in 1982 alongside the Chilean proposal. Additionally, he arranged for Tim Congdon, a British economist, to visit Chile to deliver a lecture at the ENV and to author a report on the Chilean economic transformation for The Times and The Wall Street Journal. This was aimed at improving the international perception of the country. Footnote ⁶⁹

The other letters supported the initiative but suggested taking a different route. Edwin Feulner Jr. explained that he was not a member of the board, therefore, he did not believe that his voice would have much power in the deliberations on the issue. Nevertheless, he advised Ibáñez to organise a regional, rather than a general, meeting in 1979.Footnote ⁷⁰ Friedman also expressed his doubts about hosting a general meeting in Chile, favouring the possibility of a regional equivalent for South America. He wrote: ‘I may say that personally I am very dubious about its desirability or feasibility. It seems to me it would be far more feasible and suitable to arrange for a regional meeting in 1979 in Santiago, Chile.’Footnote ⁷¹ He elaborated his argument by explaining that this would be the first regional meeting in that part of the planet after previous unsuccessful attempts from similar groups in Brazil and Argentina.Footnote ⁷²

In a reply, Thurn stated his firm support for the Chilean cause, but believed staging a general meeting in Chile was ‘too far and too expensive’. Regarding the equivalence in distance of Chile and Hong Kong from the United States and Europe, Thurn explained that such a meeting was exceptional since it was held only thanks to Japanese support.Footnote ⁷³ He encouraged Ibáñez to plan instead a regional meeting, which US citizens and some Europeans would attend. Then president of the MPS Nishiyama gave further weight to these arguments, saying that he found it difficult for the group to hold two meetings in such distant locations. He favoured organising a regional meeting in Chile in 1979 or 1981.Footnote ⁷⁴

While Nicomedes Zuloaga offered his ‘unrestricted’ support to Ibáñez,Footnote ⁷⁵ Ayau followed a realistic approach of focusing on the region. In his letter, Ayau conceded that holding an international meeting in Chile was difficult due to the economic conditions of many European scholars. He recommended holding a regional meeting but extending invitations to illustrious professors from outside the continent, offering to pay expenses for them and their wives. For this endeavour, Ayau would enlist the support of the Uruguayan Ramón Díaz, who was to replace him on the MPS board. He concluded that if Chile were to host a regional meeting, it would be ‘a great occasion for us to gather the people of our philosophy in Latin America’.Footnote ⁷⁶

Whether these logistical issues were a polite way to discard a general meeting in an authoritarian country remains unclear. Ibáñez withdrew his offer at the 1978 meeting of the MPS in Hong Kong. Glenn Campbell’s proposal to host the next general meeting at the Hoover Institution at Stanford University, on the theme ‘Constraints on Government’, was chosen instead. At the same meeting, the MPS approved Henry Manne’s request to organise a regional meeting in Miami, Florida, in 1979, and Reig’s idea to hold a regional meeting in Madrid, Spain, in September of that year.Footnote ⁷⁷ In light of the reactions to his proposal, Ibáñez focused on gathering support to select Chile as the venue for a regional meeting of the MPS. This would be only the second such meeting on South American soil since the founding of the organisation, but the first meeting held under a military dictatorship.

This meeting in 1981 was seconded by MPS members, although with some reserve among a few members because it could be interpreted to mean that the MPS supported dictatorships. Arthur Seldon, founder president of the British Institute of Economic Affairs, commented to Hayek that ‘(t)wo or three members have expressed some anxiety that the Society would be appearing to be supporting the Chilean regime and what seems to be the continued postponing of political freedoms’. Then, he asked for more reflection on how democracies can implement market reforms, since the examples of Taiwan, Hong Kong, Singapore and now Chile were used to argue that ‘market economy does not ensure political democracy’.Footnote ⁷⁸ This letter shows concern for the emerging idea of authoritarian neoliberalism, and the importance of explaining that democracies also could implement market reforms. Still, judging by the correspondence, this concern regarding the Chilean case was marginal within the MPS.

Although Hayek’s reply was absent in the consulted archives, interviews in Chile show his support for an authoritarian transition to liberalism as a lesser evil than Marxist revolutions. MPS Members from the global North, many familiar with recent Chilean history, were deeply critical of the Allende years. At the same time, Hayek sought to differentiate between unlimited democracy and transient liberal authoritarianism. In his 1981 interview with Realidad, the Austrian explained that democracy was simultaneously ‘indispensable’, because it limited the state’s power and put an end to bad governments, but it also had the potential to become a ‘democracy of unlimited powers’.Footnote ⁷⁹ Thus, Hayek defended constrained democracy and criticised unlimited democracy, which he understood as a regime where a simple majority could change fundamental rights and liberties. When asked by El Mercurio for his opinion on dictatorships, Hayek explained that in the long run, he rejected them, ‘but [a dictatorship] may be a necessary system in a period of transition’, when this stage was understood as a means ‘to achieve a stable democracy and liberty, clean of impurities’.Footnote ⁸⁰ His comments about Chile thus followed his ideas that democratic regimes can be contrary to freedom while also tolerating authoritarian systems when those regimes were transitory and helped consolidate a liberal political and social order.Footnote ⁸¹ Previously, Hayek had explained that ‘the opposite of liberalism is totalitarianism, and the opposite of democracy is authoritarianism. In consequence, it is at least possible in principle that a democratic government may be totalitarian and that an authoritarian government may act on liberal principles.’Footnote ⁸² This transitional dictatorship idea had antecedents in the early 1960s, before the Chilean experience.Footnote ⁸³ Other MPS members probably followed Hayek’s position in the global North, a point requiring further research.

A Latin American Organisation

At the general meeting held at the Hoover Institution, the board agreed that a regional meeting of the MPS would be hosted in Viña del Mar in 1981. MPS president Nishiyama approved the nomination of a Latin American committee in charge of organising the event. The committee was composed of Paulo Ayres;Footnote ⁸⁴ Ramón Díaz, Uruguayan lawyer, founder of the magazine Búsqueda and future president of the MPS (2000); Alberto Benegas Lynch Jr. (Argentina), founder of ESEADE University Institute, a market-oriented university; and Carlos Cáceres (Chile), Ibáñez’s right-hand man, part of the dictatorship’s state council, and Pinochet’s future Minister of Finance and of the Interior in 1983 and 1988 respectively. Pedro Ibáñez would serve as president of the committee with fellow compatriot Hernán Cortés, then director of the CEP, appointed as secretary.Footnote ⁸⁵ Ayau was not part of the committee, although they constantly sought his advice. The regional meeting in Chile was the product of a Latin American collaboration.

Due to a shortage of homegrown talent, the organising committee needed the help of other Latin Americans. Ibáñez was the only Chilean member of the MPS since his admission in 1969. This contrasted with Argentina, which had nine members; Guatemala, seven; Venezuela, five; México, four; Brazil and Peru, three members; and Costa Rica, two. Chile had the same number of members as El Salvador, Puerto Rico and Uruguay. Despite the significance of events in Chile for the future course of neoliberalism, the country’s representation within the MPS was minimal.Footnote ⁸⁶ Carlos Cáceres would join in 1981, doubling the number of members with Chilean nationality. The Dean of the ENV came from the coastal route of neoliberalism in Chile.

The regional committee drew up a list of speakers to present diverse topics, often acting as a bridge for potential speakers or distinguished guests. The Brazilian Ayres and Argentine Benegas Lynch were notable in this regard. They also raised interest among businesspeople and scholars from their respective countries. Many eventual guests had previously accepted invitations from Ayres, Benegas Lynch, or the Uruguayan Ramón Díaz. Nicomedes Zuloaga from Venezuela was also active in contributing with suggestions.Footnote ⁸⁷ A second committee was established on the ground in Chile. Its members included Ibáñez, Cáceres and Cortés, alongside former ministers like Cauas, linked to Banco de Santiago, Pablo Baraona and Lüders, the latter being employed by Banco Hipotecario de Chile (BHC).Footnote ⁸⁸ The actual management of the meeting fell on the shoulders of the first three. The others suggested potential speakers, refined the programme and contributed to the fundraising effort.

Conversely, the so-called Chicago Boys, the archetypal torchbearers of neoliberalism in Chile, were part of the University of Chicago networks. While they participated in some meetings of the MPS as guests, they were not fully-fledged members. Even though Chicago Boys professed a similar ideology and were in contact with US members, their participation in Pinochet’s economic team was a cause for concern. Glenn Campbell, director of the Hoover Institution and part of the organisation of the general MPS meeting at Stanford in 1980, revoked the invitation of Sergio de Castro, Chilean finance minister from 1976 to 1982, to the 1980 meeting. In a letter to Ibáñez, Manuel Ayau said there were groups of ‘anti-Chilean’ activists, a reference to opponents of the dictatorship, who could cause trouble for the organisation if current and former high-ranking persons of the regime made the trip from Chile. Their presence could ultimately exaggerate matters and prevent discretion from being maintained.Footnote ⁸⁹ In agreement with Friedman, Ayau asked Ibáñez ‘not to invite people currently in the government’.Footnote ⁹⁰ This did not mean disengaging from the Chilean situation but rather avoiding protests and media hostility, as Friedman experienced after he visited Chile in 1975.Footnote ⁹¹ This explains why other Chilean economists trained at Chicago University such as Ernesto Fontaine, professor at the Universidad Católica, Hernán Cortés Douglas, or Rolf Lüders, BHC’s vice president of the Board, were considered as alternatives, with Lüders being selected on the recommendation of University of Chicago professor Arnold Harberger and Friedman.

Follow the Money: Economic Conglomerates and the MPS

MPS meetings required considerable amounts of money. According to Nishiyama, a general assembly had cost ‘only’ US$200,000; he considered that a regional meeting should be half of that. The Viña del Mar event created several headaches because it cost much more.Footnote ⁹² Nonetheless, tracing the financing reveals how active the local and transnational capital was to promote market-oriented ideas in Chile during the Pinochet regime. In the Chilean case, there was a joint effort from local economic corporations, transnational firms and MPS funds.

In the search for financing, Ibáñez and Cáceres sought to involve local economic conglomerates and businesses to cover the trip’s expenses. In this sense, the regional committee meeting, plus the meeting held by Nishiyama and Hayek on 23 April 1980 in Santiago, provide information about the costs and speakers. According to the records of the session, it was thought that Banco Sud Americano, City Bank, Esso, the Matte group, the Angelini group, the Edwards group, the Ross group, the Yarur group, the Said group and the Ibáñez group could contribute US$10,000 each, a total of US$100,000. The committee believed the Vial and Cruzat conglomerates would contribute up to US$50,000 each. Total donations from Chilean groups could amount to US$200,000. The MPS was prepared to back the event with an extra US$40,000 making a budget of US$240,000.Footnote ⁹³

A registration fee of up to US$2,000 would be charged to 30 businesspeople interested in attending from Argentina, Chile and Brazil, raising potentially US$60,000. Fees for guests were set at US$250 per MPS member and US$500 for guests. Notwithstanding, they still had a deficit of 324,040 Chilean pesos, approximately US$10,000, although Nishiyama, according to the Chileans, had offered to raise up to US$40,000 from Japanese companies to cover the expenses of the meeting.Footnote ⁹⁴

The fact that Nishiyama offered funds raised in Japan for a Latin American regional meeting shows the importance of transnational networks in disseminating neoliberalism. Nishiyama’s leadership of the MPS between the late 1960s and early 1980s helped to bring Japanese capital into the MPS.Footnote ⁹⁵ It is precisely for this reason that Nishiyama asked Ibáñez for a list of Japanese companies operating in Chile. According to their correspondence, this was unusual, and Nishiyama questioned the motives.Footnote ⁹⁶ In a letter addressed to the members of the executive board of the MPS, Nishiyama explained that ‘it is true that I verbally suggested that I might provide the Chilean group with US$20,000 at maximum, with the provisos [sic] that I would succeed in raising the amount in Japan’, if the Chileans reduced the amount to US$100,000, lowering the projected budget for a regional meeting and as long as the Committee and Board of the MPS approved it, but that doing so could set ‘a bad precedence [sic] for the future’ and would violate the resolution taken by the council at the Stanford general meeting. These doubts would eventually be resolved, and Ibañez received a subsidy of US$30,000 from Japanese backers to organise the MPS meeting in Viña del Mar in 1981.Footnote ⁹⁷ The procedure remains obscure, and why Japanese companies would contribute to a regional meeting in Latin America is unclear. However, the local role of Nishiyama and the increasing globalisation of the Japanese economy may shed some light on the coordination of transnational neoliberalism.

The Chilean business world backed the meeting in Chile. While donations from local companies totalled US$96,154, the dues from Chilean guests were US$61,287. The US$157,441 collected in Chile was accompanied by the dues from foreign members and guests (US$57,606) and the US$30,000 contribution from the MPS. Thus, the total income of US$245,047 covered most of the meeting costs of US$253,202, resulting in US$8,155 of deficit.Footnote ⁹⁸

Many of the aforementioned conglomerates had experience in financing this type of event. For instance, the Vial Group (BHC Bank) invited Friedman, Harberger and Carlos Langoni, future president of the Brazilian central bank between 1980 and 1983, to give several lectures and seminars in 1975. The Ibáñez group played the same role in Hayek’s and Erhard’s visits in 1977 and 1969, respectively.Footnote ⁹⁹ Several conglomerates were active in creating an institutional infrastructure dedicated to disseminating market-oriented ideas. In 1980, the Cruzat, the Matte, the Yarur and the Ross groups committed to financing the CEP for US$125,000 per year for a total of four years.Footnote ¹⁰⁰ The Edwards group pioneered neoliberalism in Chile through the economics section of El Mercurio and the support of the Chicago Boys.Footnote ¹⁰¹

Economic conglomerates had become increasingly important in the Chilean economy. According to Fernando Dahse’s book Mapa de la extrema riqueza, the Cruzat-Larraín group controlled 24.72 per cent of the assets of the 250 largest companies in the country in 1978. The Vial group controlled 12.61 per cent; the Matte group, 8.59 per cent; the Yarur group 2.43 per cent and the Edwards group 2.53 per cent.Footnote ¹⁰² Although the data came from 1978, the economy would not experience significant changes until the 1982 peso crisis. Economic conglomerates in Chile were keenly interested in spreading and using neoliberal thought, by hiring Chicago-trained economists and financing Ibáñez’s project.

Connections and Differences Between Local and Executive Committees of the MPS

The regional meeting was organised principally by the Chilean committee headed by Ibáñez. Nevertheless, it was in permanent liaison with the society’s executive committee, composed of Nishiyama, James Buchanan, leader of the so-called Virginia school, which applies economic principles like self-interest to politics, treasurer Edwin Feulner Jr. and Secretary Max Thurn. Ibáñez functioned as a go-between, having to manage tensions with Nishiyama which threatened to jeopardise the president’s support and the delivery of funds from the society. These negotiations suggest that Nishiyama’s support was not granted, but that after some debate he made an exception to include the local government in the opening of the meeting.

On 30 October 1980, Pedro Ibáñez contacted the Chilean committee composed of Cauas, Baraona and Lüders to organise the following year’s meeting. He then expressed a need for an overarching theme.Footnote ¹⁰³ The Latin American group composed of Ayres, Ramón Díaz and Benegas Lynch checked the draft programmes. They then recommended the invitation to several of their fellow compatriots. This group also commented on Ibáñez’s proposal, suggesting changes and possible invitees. Finally, the local committee took advantage of Hayek and Nishiyama’s visit to the CEP in April 1981 to meet with these renowned members of the MPS. That day they discussed logistical and thematic issues, defining most of the programme.

The final programme of the Viña del Mar meeting included nine round tables with the following titles: ‘Freedom of Expression and Misinformation of the Western World’, ‘Education, Government or Individual’s Responsibility’, ‘Should State Enterprises Exist?’, ‘Direct or Indirect Taxation, New Approach to Tax Policies’, ‘Social Security, a Road to Socialism?’, ‘Ethics and Capitalism’, ‘Origins of Market Economies, an Historical View’, ‘Monetary System for a Free Society’ and, finally, ‘Democracy, Limited or Unlimited?’.

Ibáñez’s good relations with the executive board did not prevent criticism from Nishiyama. On 9 July 1981, the latter wrote two letters, one addressed to Ibáñez and the other a response to Feulner Jr., with a copy for the board. In the missive to Ibáñez, Nishiyama wrote:

The letter to Feulner was in response to a funding request made by Ibáñez to the institution’s treasurer. Nishiyama was surprised to have not been included, despite copies reaching Buchanan and Thurn. Nishiyama admitted he had verbally offered a maximum of US$20,000, while Ibáñez contended that it was US$40,000, but now the president called into question its appropriateness. He considered it absurd that a regional meeting had such a high budget, given that the general meeting held in Stanford the previous year had cost US$200,000 and the Chilean regional one would cost around US$150,000.Footnote ¹⁰⁵ Poor communication had merely compounded matters.

The Chilean response was not long in coming. In a letter addressed to Nishiyama with a copy for the rest of the executive committee, Carlos Cáceres reminded Nishiyama of the agreements reached in Santiago about financing and the programme. He also mentioned Nishiyama’s leading role in the inaugural conference, the drafting of the programme and the search for funding. Cáceres tried to convey a sense of perplexity about Nishiyama’s criticism and unwillingness to attend the meeting in Viña del Mar.Footnote ¹⁰⁶ In light of this letter, the MPS president accepted the invitation and found resources for the Chilean meeting. The Chilean initiative won support, but it did not seem to be a strategic priority for the board, more like appeasement of a particularly active member.

Nonetheless, after this exchange Nishiyama made an exception for the Chilean group. Inviting government officials was forbidden by the society. However, Ibáñez and the regional committee wanted to invite government officials and ministers to an opening or closing dinner. Before doing so, they consulted with Nishiyama.Footnote ¹⁰⁷ The Japanese economist reminded Ibáñez that before he was elected president of the society, the board had made ‘a very explicit and stringent resolution at Stanford that absolutely no governmental official nor any governmental fund was allowed to be involved in the meeting’.Footnote ¹⁰⁸ Yet, at Ibáñez’s insistence, Nishiyama managed to arrange a solution in concert with other MPS members. In a cable dated 27 October 1981, Nishiyama told Ibáñez that if he wanted governmental officials to give a word of welcome to the participants, this could be done at the opening or closing banquet.Footnote ¹⁰⁹ Nishiyama remarked that he, as president, took full responsibility for this decision.Footnote ¹¹⁰ This exception was probably granted to the Chileans because the Andean country was believed to be on a path of transition to liberalism as promoted within the MPS – albeit led by an authoritarian regime. Rather than objecting to the military dictatorship, considerable flexibility was conceded to the Chileans.Footnote ¹¹¹

Limiting Democracy, and Indirect Support

The session titled ‘Democracy, Limited or Unlimited’ was arguably the most sensitive of the meeting, featuring James Buchanan, Gottfried Dietze, a professor at Johns Hopkins University and Christian Watrin, a professor at the University of Cologne. The speakers focused on the necessity of limiting the state and democratic processes to safeguard individual freedom.Footnote ¹¹² Dietze and Watrin traced a shift in the concept of democracy, from its roots in protecting individual liberty and delegating power, to a majoritarian system – unlimited democracy – that can threaten individual freedoms, particularly economic rights and property. Buchanan emphasised the comparative safeguards in republics over parliamentary systems and introduced the concept of the ‘electoral fallacy’, the notion that adherence to democratic procedures does not inherently guarantee democratic or liberal outcomes.Footnote ¹¹³ All three agreed that contemporary democracies lack sufficient defences against threats like communism or fascism, concluding that constitutional limitations are essential to protect individual freedoms.

While this discourse in Western Europe and the United States warned of totalitarian movements undermining liberal democracy – such as Nazism and real communism – its adaptation to the Chilean context indirectly backed the 1980 Constitution. It also aligned with Hayek’s view expressed previously in Chile on exceptional authoritarian transition to liberalism. Both proved useful for pro-junta advocates in justifying the role of the dictatorship, even as prominent MPS members such as Friedman or Buchanan remained sceptical about the compatibility between military regimes and democracy. Buchanan notably stood up for ‘the moral obligation that we have as freedom-loving men to seek ways to improve democracy without falling into the naïve belief that dictatorial governments are the only or the best method to establish a free economy.’Footnote ¹¹⁴

But neither Ibáñez nor the regime needed an explicit endorsement to strengthen their position. Ibáñez played a key role in fostering an intellectual climate that indirectly legitimised the neoliberal transformation. By aligning with principles shared by the MPS members, including critiques of centralised economies and unlimited democracy, Ibáñez facilitated a locally driven agenda of neoliberal promotion. Acting as a bridge between Chile, Latin America and the global North, he coordinated transnational support, mitigating Chile’s isolation due to its human rights violations and lack of a broader market-oriented intelligentsia beyond technocrats. His success depended on his integration into a wider Latin American neoliberal community within the MPS, which amplified his efforts and facilitated the dissemination of these ideas in Chile.