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  1. The Weekend Essay
9 September 2023

The lessons of Chile’s struggle against Big Tech

Salvador Allende’s greatest legacy is his attempt to democratise technology.

By Evgeny Morozov

On 1 August 1973, a seemingly mundane diplomatic summit took place in Lima, Peru. But there was nothing remotely mundane about the summit’s revolutionary agenda. The attendees – mostly high-ranking diplomats from Bolivia, Chile, Colombia, Ecuador and Peru – aspired to create a more just technological world order. A world order that may have prevented the rise of Silicon Valley – and of Big Tech along with it.

A good first step, they thought, was to join forces and explore ways to curb the growing influence of multinational corporations. This was particularly pressing in the realm of advanced technologies, the majority of which originated from the US and western Europe.

These technologies often had to be imported to Latin America at exceedingly high costs. One study found that between 1962 and 1968 Chile alone saw its payments for tech services doubled, with the country’s companies paying for many expired or non-existent patents.

It was in order to avoid such absurd external obstacles that the five nations gathering in Peru had signed the Andean Pact four years earlier. A regional free-trade agreement of a radical, almost extinct kind, it aimed to facilitate the collective pursuit of industrialisation and economic development. Through it, the five countries would pool their political power and try to avoid the steep costs associated with importing foreign technology. The pact also fostered the establishment of joint research and development projects to create domestic alternatives.

Orlando Letelier, then serving as foreign minister under the socialist president Salvador Allende, led the Chilean delegation. His speech in Lima echoed the radical aspects of Allende’s technology agenda, noting that “we live in a world where the Roman concept of property, when applied to technology, fosters exploitation”. Letelier highlighted the increasing technological dependence of the region. “Today,” he lamented, “approximately 500 multinational corporations control 90 per cent of the world’s productive technology.”

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To mitigate such disparities, Letelier called for the creation of a new international institution. It would facilitate developing countries’ access to the benefits of advanced technology and research, including patents, in a manner akin to how the International Monetary Fund (IMF) grants them access to financial capital.

Admittedly, this proposed International Technology Fund would need to adopt a less prescriptive approach than the IMF and be less subordinate to the US. Here was a blueprint for an alternative technological world order, informed by an insight lost on most of today’s technology analysts: a country’s technological backwardness is often the result of long-running geopolitical and geoeconomic factors – it almost never stems simply from rigid bureaucracy or the lack of an innovation culture. In other words, success in the global technology game was a factor of a country’s power and sovereignty, not of its inventiveness and openness to new ideas. 

In the new global system envisioned by Letelier and Allende, each nation, including those currently referred to as the Global South, would eventually be capable of developing their own unique industrial – and technological – stack. This strategy would prevent them from having to rent various technologies – think of cloud computing or artificial intelligence today – from the multinationals, thereby halting the cycle of their own technological and economic dependency.

But this vision was never realised. Merely six weeks after the summit in Lima, on 11 September 1973, Allende’s government was toppled in a military coup that ushered in General Augusto Pinochet’s cruel dictatorship. Orlando Letelier spent the next 12 months in brutal concentration camps, alongside many other prominent members of Allende’s administration.

Upon his eventual release and exile to the US, Letelier fervently pursued the anti-Pinochet cause. He became a vehement critic of the neoliberal economists advising the Chilean government at the time, known as the Chicago Boys. A month after the Nation published his major exposé on Milton Friedman and his followers – an essay that showed the bankruptcy of their solutions to Chile’s economies woes – Letelier met a tragic end. His car was blown up in Washington, DC, on direct orders from Pinochet’s regime. One month later, Chile dropped out of the Andean Pact. This was the end of Chile’s ambitious – and completely forgotten – struggle to reclaim technologies from Big Tech and Big Capital. 

As we commemorate the 50th anniversary of the Chilean coup, it’s tempting to see Allende as a tragic but hapless figure, who spent most of his short-lived presidency fending off efforts to unseat him. It’s true that the ambitious agenda outlined in “40 Measures” the famous electoral programme of Allende’s six-party Popular Unity coalition, was secondary to the government’s efforts to survive the onslaught of the CIA, multinational companies, Chilean oligarchs and various far-right terrorist movements. 

And yet, for all the problems and crises, there were plenty of radical, utopian and even otherworldly initiatives that still have the power to inspire us today. Surprisingly, many of them had to do with technology; Letelier’s push for the tech equivalent of the IMF was just one of many examples.  

Common to all of them was an understanding of technology through the lens of geopolitics and heterodox economics – a lens that got destroyed by the global neoliberal transformation that followed the coup. While Pinochet embraced the Chicago School of economics, Allende’s government was the beneficiary of what might be called the Santiago School of technology. And as we contemplate a post-neoliberal future, free of the Chicago Boys’ influence, we have much to learn from these humbler but wiser Santiago Boys.

The Santiago School owes its existence to the fact that the UN Economic Commission for Latin America and the Caribbean (Cepal) is headquartered in the Chilean capital. For the first few decades after its launch in 1948, this institution challenged the mainstream account of free trade – and technology’s role in it – which has been espoused by economists in Chicago and the Massachusetts Institute of Technology (MIT).

Imagine a richer country selling cars to a poorer one, which, in turn, reciprocates with bananas. As the two specialise and introduce technological innovations, prices of both commodities fall. Everyone is happy; progress marches ahead. 

The Cepal economists disagreed with this rosy prediction, arguing that, over time, the developed countries tend to come out stronger from such trades. First, technological innovation benefits the car manufacturers more than it helps the banana growers; you can’t 3D-print tropical fruit. Second, rich countries that typically produce more advanced goods also have powerful trade unions, who, in defending the interests of their workers, also prevent the prices of cars from adjusting as swiftly as those of bananas.

The Cepal economists argued that, in a world of ever-sophisticated technology, free trade favours the rich and the powerful: over time, it takes more and more Latin American bananas to pay for one European car. To quote one important participant in this debate – the former Brazilian president Fernando Henrique Cardoso, then a mere academic – the invisible hand of the market resembles that of the wicked stepmother: instead of correcting inequalities, it aggravates them.  

Hence the Santiago/Cepal dissent to the free-trade vision of Chicago: instead of accepting free trade and eliminating tariffs, developing countries should use trade and industrial policy to manufacture more of their current imports domestically. Maybe not the whole car yet but, say, the steering wheels and the tyres.   

This policy, known as import-substitution, quickly earned the support of reformist governments all over Latin America. It was easily the hottest policy idea of the 1950s. But a decade in, some dissenting Santiago-based economists and sociologists – many of them, such as Cardoso, were Brazilians fleeing the country’s own military coup of 1964 – began to grasp its limits. 

For one thing, you can’t simply make steering wheels the way one grows bananas: it requires expensive machines and the kind of know-how protected by intellectual property laws. If a country simply imports them from the US and western Europe – all in the hopes of “industrialising” and building advanced industries – it risks developing an even greater dependence on the advanced economies and multinational corporations.

This radicalisation of the initial Cepal agenda became known as dependency theory, taking Santiago by storm. It couldn’t be otherwise. Between 1960 and 1970, Santiago emerged as a haven many radical European and Latin American intellectuals – the “capital of the left”, as some christened it. Alain Touraine, Manuel Castells, Armand Mattelart, Franz Hinkelammert, Ruy Mauro Marini, Maria da Conceição Tavares: international leftist intellectuals of all kinds made Santiago their home (and that’s not even counting impressive domestic talent, from Pablo Neruda to Marta Harnecker).

For all its flaws and inconsistencies, dependency theory got one thing right: it correctly identified technology as the latest frontier of power and accumulation – and doing so a good decade before Apple was even founded. As Andre Gunder Frank, a Chicago-trained German economist who defected from the neoliberal camp to teach in Brazil and later Chile, wrote in the mid-1960s, “American technology is becoming the new source of monopoly power and the new basis of economic colonialism and political neo-colonialism.” He may as well have been talking about quantum computing, 5G or artificial intelligence. 

The Santiago School saw the fight for technological sovereignty as fundamental to any meaningful economic sovereignty – and, with it, national development. Without its own technological and scientific base, a country that assembled cars was as dependent as a country growing tropical fruit. As the Brazilian anthropologist Darcy Ribeiro – a friend of Allende’s and a distinguished member of the Santiago School – put it at the time, there’s not much difference between being a banana republic and a Volkswagen republic. 

The reason why the Santiago stance on technology seemed so radical was, in part, because it undermined the rosier orthodox account furnished by modernisation theory, which shaped so much of Washington’s stance in the Cold War. From their perches at MIT, Stanford and the Rand Corporation, modernisation theorists argued that technological and economic progress went hand in hand. Thus, as long as countries could arrive at a “take-off” point – mostly by borrowing the solutions that had worked in North America or western Europe – their upward developmental trajectory was assured. 

The Santiago School disagreed, seeing foreign control over technology as a key bottleneck on the road to development. Instead, they advocated building up a nation’s own technological capacity, for, as Allende once colourfully put it, “We have a right to our own solutions.” But it wasn’t just a matter of trade and industrial policy, as Cepal had been preaching for decades. It also involved confrontations with multinational companies that stood in the way of technological progress; the radicalisation of engineers and scientists who often hid behind the neutral veneer of science; and experimentation with new computer-based tools of planning and management to show that bureaucracy can be just as effective at managing the economy as the market. 

Chile was naturally the main testing ground for the policy prescriptions of the Santiago School. For example, a year or so before Allende came to power, Chile established a government agency called the Institute for Technological Research (Intec). It was tasked with helping national companies and ministries acquire domestic technological expertise. 

In essence, Intec centralised technological expertise in a single government agency and made it available to industry. This was to reduce Chile’s dependence on foreign technology and expertise, all while building up local capacity. In a sense, Intec was the anti-McKinsey of its era. Instead of helping to downsize the public sector and make it more market-friendly, it leveraged the knowledge of designers, scientists and engineers to serve national development.  

Intec was housed in a much bigger institution of the Chilean state – the State Development Corporation (Corfo). Its remit had been to mobilise domestic and foreign capital to spearhead the development of important new industries, such as steel-making, crucial to Chile’s industrialisation efforts. 

Corfo partly shared in the Santiago School agenda, but it was also closely tied to Chilean industrial capital. As a result, it became a frequent target of attacks from the left – including from a young senator called Salvador Allende – who thought it was not strategic enough, especially when it would spin off and privatise the industries it had nurtured. When Allende came to power, it finally became possible to radicalise Corfo, and use it to accelerate Chile’s pursuit of technological sovereignty. 

This is, for example, how the Allende-era Corfo launched the National Electronics Company, which was tasked with building a semiconductor plant in the north of the country. This would have allowed Chile – once a mere exporter of nitrates and copper – to become a technologically sophisticated economy capable of meeting its own development needs. 

Had Allende been allowed to enact the other policy prescriptions of the Santiago School, Chile may have evolved into a South Korea or Taiwan of Latin America. Unlike them, though, Allende’s Chile was not a right-wing authoritarian state that suppressed workers’ rights in favour of industrialisation. The coup destroyed this possibility of a left-wing – and fully democratic – industrialisation in Latin America.

Allende’s pursuit of technological sovereignty required much more than dispatching Intec consultants to rationalise production. He also needed to be confrontational, not least because some of Chile’s most important telecommunications, including telephones and telexes, were in the hands of the very foreign technology multinational that the Santiago School saw as detrimental to national development. That company was ITT, and, by the time of Allende’s election in 1970, it had a highly controversial reputation in the region. 

With roots in Puerto Rico and Cuba, ITT quickly established itself on US territory. During the 1920s, it used its founders’ connection to Wall Street to rapidly expand in Latin America (this greatly helped the American state win the battle for global telecom supremacy against the UK). 

By the early 1950s, ITT was widely disliked by many of its local customers, who complained that it was charging exorbitant fees but barely invested in infrastructure upgrades. As a result, local economies stagnated: left to the forces of the market, telecommunications – an important factor of economic development – became an obstacle rather than an enabler.

The young Fidel Castro – then an aspiring lawyer – even sued ITT’s local subsidiary in Cuba; his law firm won the case, but it was reversed by the country’s dictator Fulgencio Batista. As a consequence, ITT was one of the first companies Castro nationalised in 1960 (shortly after the Cuban Revolution that concluded a year earlier brought him to power).    

Castro’s boldness may have inspired Leonel Brizola, a radical governor in Brazil, who in 1962 proceeded to do the same with ITT’s local properties in his state. There seemed little desire to let these Latin American techno-nationalists do as they pleased. The company mobilised its allies in Washington – and humiliated Brazil into paying a hefty price for such nationalisation, while Brizola and his brother-in-law, the country’s then leader João Goulart, were painted as communists siding with the Soviets. Two years later, Goulart was overthrown by the Brazilian military.

None of this deterred Allende. During his 1970 presidential campaign, he promised to nationalise the firm and put engineers – rather than managers – in charge of strategic decisions there. ITT gave money to Allende’s political adversaries in Chile to try to prevent his victory. When Allende did win, it kept looking for ways to destabilise him – including by pressuring Washington to cut off its loans to Chile and suspend technical aid.

So Allende simply went ahead and took over the company. By today’s standards, it was an unprecedented blow against the power of Big Tech. From now on, ITT – just like hundreds of other strategic companies nationalised by Allende’s government – would be run from Corfo, the State Development Corporation. And its focus would be the national development strategy, not boosting profits. 

This proved easier said than done. The initial phases of Allende’s revolution were so exciting that workers at many enterprises that were not initially deemed strategic – including a caramel factory – demanded that they be taken over as well. Second, the US ambassador – and he surely wasn’t alone – did his best to deprive Allende of cadres who could run these nationalised firms. This was done by spreading what today we would call “fake news”: that Allende would eventually close the borders and prevent managers and engineers from leaving the country – so they had to move out now. 

This was the context in which Allende embarked on a startling initiative to use computers and telex networks to make up for the lack of qualified managers: Project Cybersyn. While its history has been masterfully explored by Eden Medina in Cybernetic Revolutionaries (2011), it’s important to emphasise the broader intellectual and policy links between Cybersyn and the Santiago School.

First of all, many of Allende’s young economists and engineers were steeped in the world of dependency theory. Some of them even brought courses on development and dependency to the engineering faculty of their universities. Once these youthful technocrats moved to government positions in the Allende administration, they surrounded themselves with many of the Brazilian dependency theorists who were in exile in Chile at the time. Others, such as Andre Gunder Frank, were in Santiago to offer advice and criticism. 

Second, Cybersyn was a project that grew out of Corfo and was housed in Intec, Chile’s state-owned consulting firm. The German designer of its Operations Room, an Intec employee, was an avid reader of dependency theory as well, citing Gunder Frank in his essays. 

Third, Cybersyn was meant to furnish the software for the practical realisation of the theoretical aspects – such as the nationalisation of ITT (which also ended up in Corfo) – preached by the dependency theory. And just as the Chicago School and neoliberalism eventually found allies in Silicon Valley’s platforms, the Santiago School and its brand of technology-aware dependency theory made good use of socialist cybernetic software such as Cybersyn. 

The realisation of that original Santiago vision today would certainly require newer and better software. Yet the approach’s basics – the idea that technology is geopolitics by other means; that technological progress is no guarantee of social and economic progress; and that power is what allows some countries to innovate and condemns others to stagnation – remain highly relevant in our own world of Big Tech.

Granted, Allende was hardly a tech wizard. In fact, he made plenty of tech blunders – at one point even inviting ITT to check his office for bugs. Yet it was under his leadership that a minor Latin American country systematically pursued a geopolitically informed technology policy – and didn’t shy away from confronting powerful corporate actors.

It’s this bold stance – combined with an intellectually dynamic framework – that made Allende’s demise a tragedy. The 1973 coup not only deprived Chile of its precious democracy – it also robbed us of a world in which countries could stand up to powerful companies, defend their own technological sovereignty, and harness innovation to build a more equal and just world. 

Instead, the problems that affected Chile in the pre-Allende period became the problems of the whole world – or, at least, the world outside Silicon Valley. What the Uruguayan writer Eduardo Galeano – a friend of Allende and part of the broader Santiago School universe – wrote of his region in his classic Open Veins of Latin America (1971) still rings true: “Latin America is condemned to suffer the technology of the powerful, which attacks and removes natural raw materials, and is incapable of creating its own technology to sustain and defend its own development.” Only today, his insight applies to the whole planet.

What we got instead was a world run by half a dozen ITTs – all legitimised through the notion that innovation is a matter of ideas and ideals, not of sheer power relations and military strength. For all his shortcomings, Allende, who won the Chilean elections despite opposition from both ITT and the CIA, knew that innovation in the real world was not at all like this. And that’s why, for all his contributions to democratic socialism, his greatest legacy may be in mobilising the Santiago School, showing the world a path towards democratic technology.

[See also: The parallels between Argentina and Britain’s inept political class]

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