Popular Front Rule, 1938-41
Led by the centrist Radical Party, the administration of the Popular Front assimilated the Socialists and Communists into the established bargaining system, making potentially revolutionary forces into relatively moderate participants in legal institutions. Although the official Popular Front ended in 1941, that bargaining system, with Marxist parties usually backing reformist Radical presidents, lasted until 1952.
Aguirre Cerda, like all Chilean presidents in the 1930s and 1940s, essentially pursued a model of state capitalism in which government collaborated with private enterprise in the construction of a mixed economy. The Popular Front promoted simultaneous importsubstitution industrialization and welfare measures for the urban middle and working classes. As in the rest of Latin America, the Great Depression and then the onset of World War II accelerated domestic production of manufactured consumer items, widened the role of the state, and augmented dependence on the United States. All these trends dissuaded Marxists from demanding bold redistributive measures at the expense of domestic and foreign capitalists.
Aiming to catch up with the more affluent West, Chile's Popular Front mobilized the labor movement behind national industrial development more than working-class social advances. Although workers received few material benefits from the Popular Front, the number of legal unions more than quadrupled from the early 1930s to the early 1940s. Still, unions represented only about 10 percent of the work force.
Prior to his illness and death in November 1941, President Aguirre Cerda labored to hold his coalition together, to overcome the implacable opposition of the right-wing parties, and to fulfill his promises of industrialization and urban social reform. The Socialists and Communists quarreled incessantly, especially over the PCCh's support of the 1939 German-Soviet Nonaggression Pact between Hitler and Stalin. Early in 1941, the Socialist Party withdrew from the Popular Front coalition because of its animosity toward the PCCh, its rival claimant to worker loyalty and Marxist inspiration. Because the Conservatives and Liberals blocked nearly all legislation in Congress, little social reform was accomplished, except for improvements in housing and education. To appease rightwingers , the president clamped down on rural unionization.
From the 1920s into the 1960s, this modus vivendi between urban reformers and rural conservatives held fast. Progressives carried out reforms in the cities for the middle and working classes, while denying peasants union rights. Thus were preserved the availability of low-cost foodstuffs for urban consumers, control of the countryside for latifundistas (large landowners), and domination of the rural vote by right-wing politicians. From time to time, Marxist organizers threatened to mobilize the rural work force, and time and again they were restrained by their centrist political allies, who needed to reassure the economic and political right-wingers. When peasants protested this exploitation, they were repressed by landowners or government troops.
The greatest achievement of the Popular Front was the creation in 1939 of the state Production Development Corporation (Corporación de Fomento de la Producción--Corfo) to supply credit to new enterprises, especially in manufacturing. Partly with loans from the United States Export-Import Bank, Corfo contributed greatly to import-substitution industrialization, mainly for consumer items. The economically active population working in industry grew from 15 percent in 1930 to 20 percent in 1952, where it hovered for two decades. From the end of the 1930s to the start of the 1950s, Corfo supplied almost one-fourth of total domestic investments.
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