The Chilean experience
Sir: Tim Congdon reports (19 September) that Chile has made a remarkable economic recovery since introducing strict monetarism and he argues that this cannot be put down to the oppressive approach to law and order in that country. Congdon's 'easy test' of this `Galbraithian theory' takes the form of a comparison with Argentina, where a great deal of oppression combined with a very partial implementation of monetarism produced no economic recovery.
Mr Congdon is mistaken, however, in concluding from these facts that oppression is not necessary to restore price stability. All that we can infer from his data is that an oPpressive approach to law and order is not a sufficient condition to bring about an economic recovery like Chile's. But since nobody in the world believes that it is, it is rather a waste of time to show that it is not.
The view Galbraith might more plausibly be thought to hold is that monetarism only in combination with a degree of repression can restore price stability, but to refute this Mr Congdon would have to find a country in which monetarism worked without any oppression. I hope he can.
Peter Urbach The London School of Economics and Political Science, Houghton Street, London WC2