The Latin American country Chile, stretching from Peru to Argentina, provides an intriguing link between a nation's political life and its economic vibrancy or lack thereof. From 1933 to 1973, Chile had many political parties which contested in elections that threw up eight consecutive presidents of six different ideological persuasions. These presidents attempted various economic reforms, none of which lasted for long. Indeed, the pendulum swung from one side to the other, finally leading Marxist Salvador Allende to be elected president in 1970. Allende increased his government's control over all aspects of the economy, starting by printing money to pave the way for the 'Chilean road to socialism'.

Allende's attempts to redesign the economy soon ran into trouble. By 1973, Chile's per capita annual GDP growth rate nosedived to minus 4.3 percent, inflation was at a whopping 600 percent and negative growth in the wage levels made even housewives join protest rallies. All these led not to civil war but mass disenchantment, which made it easy for General Augusto Pinochet to assume power in September 1973.

With a cabal of advisers who clamped down on all political rights, Pinochet went on to rule Chile until 1990. Initially, Pinochet was at a loss as to what to do with the economy. He tried to run it through a central command. But when his attempts failed, he filled the Ministry of Finance with so-called 'Chicago Boys'. These were Chilean economists who had studied macroeconomics at that bastion of free-market capitalism, the University of Chicago. Many Chilean intellectuals ridiculed these economists for their belief in market-based solutions and for their lack of hesitation to work for Pinochet. But their task was to create and make Chile's macroeconomic architecture work.

The 'Chicago Boys' quickly set out to lower tariffs, slash subsidies, loosen up the labour market, privatise the pension system, increase exports, allow competition to flourish in the marketplace and open up the economy. They accomplished all these while scaling back the government's role. True, they were able to push for reforms because there was no resistance to what they did. They did not have to deal with the messiness of satisfying competing and contradictory political interests. Still, after a series of false starts, Chile's annual growth finally started averaging at five percent from 1985 till 1996.

In 1990, through a referendum, Chilean voters decided to freely elect their post-Pinochet government. Meantime, so successful had Chile's economic reforms become in generating wealth that the elected governments decided to maintain and continue on with the Chicago boys' policies. Envying Chile's growth rates, neighbouring countries such as Argentina, Peru and Bolivia too started getting their own US-trained economists to devise policies to resuscitate their regions. All these reform measures have yet to solve a myriad of Latin American ills but by most indicators, they have delivered more than the alternatives.

Still, academics say the lesson from Chile is not that a regime such as Pinochet's is more likely to adopt free-market reforms. It is not. But when it does, the benefits come at a very high cost to society. A lack of opposition, though initially celebrated, allows no one to correct policy errors or subject the dominant views to scrutiny. Over time, such one-sidedness leads to resources, time and international reputation being squandered. Pinochet's regime was unique because of its longevity that made it possible to stick to free-market prescriptions. But given how the world has changed since, there is reason to believe that such a regime might have been the last of its kind.