Estrategia, June 1989
“Business results of companies must be shown to the country at large with truthful and reliable background information. Their success and basic tenets should be explained, so that adequate business management becomes a veritable school of management”
A few months ago, an international economics and business magazine published an article under the above title; an awkward mixture of bilingual admiration, perhaps also harboring a certain degree of disbelief.
The article referred to Chile’s noteworthy situation, both in terms of its political as well as economic development, thus enshrining it as a model for the rest of Latin American countries. The Chilean economy is said to be making business inroads abroad. The article refers to several investments made by private Chilean companies in other countries of the region. Workers and executives travel and are transferred abroad. Along with significant capital remittances, the article emphasizes the application of a distinct Chilean business method and philosophy. Hence, the title of the article, making Chilean entrepreneurs akin to modern international business conquerors.
One cannot fail to ask: What happened? What reasons or which important modifications explain such significant differences between the country’s current and historical realities? Naturally, answers vary depending on different analytic orientations and emphases.
From an economic and legal perspective, however, certain aspects remain constant. Here is my take on this issue:
- A broad and growing consensus emerged in the country following many years of ideological clashes that culminated in the violence unleashed in the 1970s, that legitimized the peaceful coexistence of different opinions and interests. The conflicts arising from such diversity must now necessarily be resolved by institutional mechanisms provided in our current legal system. On the other hand, those wishing to practice or promote theories based on violently destroying the system, with the inadmissible excuse of replacing it with another, nowadays deserve civic repudiation and public contempt.
- Political freedoms prepared the ground for the adoption of free market economic structures in Chile. Entrepreneurs cannot now claim pseudo-nationalistic criteria for securing preferred market shares, special protection against foreign competition, or discriminatory treatment to their benefit. Private enrichment schemes by either domestic or foreign stakeholders at the expense of consumers are clearly barred.
Conversely, the expectation is now for Chilean entrepreneurs to find similarly fair, transparent, and non-discriminatory competition guarantees in international markets.
Thus, the complete opening of the Chilean economy to the rest of the world is expected to bring about greater levels of welfare, lower economic costs to families and competitive efficiency to companies.
- Business results of companies must be shown to the country at large with truthful and reliable background information. Their success and basic tenets should also be explained, so that best business management practices heretofore become a veritable school of management.
At the same time, the drama of failures, mismanagement, bankruptcies, and unemployment must be duly acknowledged and shown. Concealing inefficient business practices is self-deceiving since it removes important road warnings aimed at avoiding such inefficient and erroneous business practices in the future.
- Consequently, the production of goods and services lies essentially in the private sector. It is no longer incumbent upon the State to continue to engage in industrial production that not only does not belong to it, but which also confuses the power and independence of its public regulatory and guiding role. Governments should stay out of commercial or economic management affairs since such practice may result in unfair competition with private sector companies and individual or collective windfall profits.
- Economic affairs must be carried out -and it is so explicitly stated in our 1980 Political Constitution- honoring all legal norms while remaining consistent with principles of morality, public order, and national security. Therefore, there is also a legal and ethical valuation of economic affairs, i.e. immoral conduct going astray from current legal norms must be duly and severely sanctioned.
- To make all this possible, it is of the utmost importance to have and honor an independent judiciary. Additionally, citizens must have access to different types of judicial remedies allowing prompt compensation for violations against their rights; the foregoing, even if such violations arise from state agencies or faulty legal provisions.
As changes are continually introduced into Chile’s political life, it paramount to seek innovative economic and legal formulas based on a free market system that would enable the country to continue to conquer new horizons of freedom and prosperity for all.
