Fighting Unemployment in Twentieth-Century Chile

Ángela Vergara

• Publisher: University of Pittsburgh Press
• Year: 2021
• ISBN:
  9780822988311
• Topic: Historia
• Subtopic: Historia de Latinoamérica y el Caribe

In Fighting Unemployment in Twentieth-Century Chile, Ángela Vergara narrates the story of how industrial and mine workers, peasants and day laborers, as well as blue-collar and white-collar employees earned a living through periods of economic, political, and social instability in twentieth-century Chile. The Great Depression transformed how Chileans viewed work and welfare rights and how they related to public institutions. Influenced by global and regional debates, the state put modern agencies in place to count and assist the poor and expand their social and economic rights. Weaving together bottom-up and transnational approaches, Vergara underscores the limits of these policies and demonstrates how the benefits and protections of wage labor became central to people's lives and culture, and how global economic recessions, political oppression, and abusive employers threatened their working-class culture. Fighting Unemployment in Twentieth-Century Chile contributes to understanding the profound inequality that permeates Chilean history through a detailed analysis of the relationship between welfare professionals and the unemployed, the interpretation of labor laws, and employers' everyday attitudes.

PART I

DISCOVERING UNEMPLOYMENT (1900s–1920s)

CHAPTER 1

THE GLOBAL DEBATE ON UNEMPLOYMENT

In 1910, Luis Malaquías Concha Stuardo, a Chilean lawyer and son of the leader of the Democratic Party, went to study political economy at the University of Paris, La Sorbonne. Paris fascinated Latin American social reformers at the time. Home to the first musée social and a diverse intellectual community, the city of lights had hosted the 1900 International Exposition and sponsored a large pavilion dedicated to social and economic reform. The young lawyer attended one of Charles Gide’s seminars. Gide, a prominent French economist, had authored numerous treaties that were widely read in Latin America at the time.¹ In September, Concha Stuardo was one of the few Latin Americans who attended the First International Conference on Unemployment. At the conference, he listened to Léon Bourgeois, a colleague of Gide known for his work on solidarity and mutualism. Bourgeois declared unemployment a global threat and “probably, the most serious of social ills.”² Concha Stuardo also learned about unemployment in industrializing countries, the efforts of William Beveridge to build a comprehensive system of social insurance in Great Britain, and the US preference for “private” and “individual” solutions. Upon his return to Chile, he served in the Parliament (Chamber of Deputies, 1915–1918) and participated in the social legislation committee.³

Concha Stuardo’s international experience reveals how models and ideas of social reform circulated at the time. Like him, many Latin American lawyers, medical doctors, and criminologists traveled to Europe, read treatises about political and social economy, and followed news from around the world. They built networks and exchanged ideas, influencing public policy, statecraft, and institutional practices.⁴ They participated in international and regional meetings and joined organizations such as the International Conference on Unemployment. Like the US Progressive Era generation, Latin American social reformers negotiated between global and regional forces. Immersed in their social and economic reality, they implemented, adapted, and, sometimes, ignored international norms.⁵ In Latin America, as Daniel Rodgers argues for the case of Progressive Era politics, “nothing, to be sure, came through the transnational networks of debate and connections unaltered.”⁶

During the first decades of the twentieth century, ideas about unemployment circulated across national borders and states. They were part of the larger debate about social legislation, the efforts to regulate the workplace, and the rise of scientific and technical approaches to solve social problems. Social reformers, political economists, and labor organizations agreed that the state should establish mechanisms to protect unemployed workers and improve the labor market. The First International Conference on Unemployment (1910) and, after 1919, the meetings of the International Labor Organization (ILO) established a global framework for understanding and confronting unemployment that included the development of labor exchanges or placement services, statistical departments, and, in some cases, unemployment insurance funds.

This chapter analyzes the global debate about unemployment between 1910 and the late 1920s. To trace the circulation of ideas, it focuses on the influence of the International Conference on Unemployment, the ILO, and foreign scholars on Latin America’s unemployment policy. Although experts from the North Atlantic usually disregarded the reality of Latin America, their proposals provided regional experts a starting point to discuss the labor market and, in some cases, build new institutions such as statistical departments and placement services. The case of Argentina and its National Department of Labor, analyzed at the end of this chapter, illustrates the connections, dialogue, and disagreements between regional and international experts.

THE INTERNATIONAL ASSOCIATION ON UNEMPLOYMENT

Since the late nineteenth century, experts and international bureaucrats had discussed social reform through international conferences, exhibits, associations, and publications. These venues not only built long-term networks that circulated ideas around the world but also influenced local policies and statecraft.⁷ In the case of unemployment, the Società Umanitaria de Milan hosted a small conference on unemployment in 1906 that coincided with the World Expo. The meeting “brought together scientists and activists, scholars and interested parties, to shed light on various facets of [the problem of unemployment], in order to draw attention of the public authorities.”⁸ Along with discussing the causes of unemployment, experts examined different instruments to solve the problem including labor exchanges and insurance. More importantly, presenters turned away from “the old moralist interpretation of unemployment” that blamed the unemployed and recognized its economic causes and “involuntary character.”⁹ Following the Milan meeting, a group of European professors and public servants started planning a larger conference to discuss and compare measures to confront unemployment. In 1910, they met again in Paris and founded the International Association against Unemployment.

The First International Conference on the Problem of Unemployment reflected a growing consensus on the need to regulate the labor market and protect unemployed families. The conference took place in Paris in September 1910 and brought together delegates from twenty-six countries. A wide range of specialists, professors, and bureaucrats attended the conference and agreed that unemployment posed one of the most serious and complex problems to modern society. They identified many political and economic obstacles to implementing an effective program to help the unemployed, but the delegates recognized the need to meet, compare policies, and collaborate across borders. The conference encouraged states to develop labor statistics, job placement agencies, and some form of unemployment insurance. These three elements became the basis of a modern and global policy on unemployment and a foundation for the ILO’s view on unemployment. ¹⁰

Drawing on growing acceptance of scientific and technical solutions to social problems, the delegates at the conference believed that they could solve unemployment through data collection and labor statistics. Since the mid-nineteenth century, statistics had become a widely accepted scientific tool to understand society and provide governments with information on economic, demographic, and social problems. An efficient statistical office symbolized a modern state.¹¹ Harold Westergaard, a Danish professor and expert in statistics and demography, summarized the conference’s view on statistics. Labor statistics, he explained, revealed not only the number of jobless people, but also the causes and characteristics of unemployment. By collecting information on the unemployed (e.g., age, place of birth, language, educational level) and the duration of unemployment, local and national governments could better assist people out of work.¹²

Statistics was the first pillar in the fight against unemployment, but counting the unemployed proved difficult. Westergaard argued that “Unemployment is, undoubtedly, one of the most important problems and at the same time the most complicated problem of modern statistics.”¹³ Collecting unemployment statistics was a complex process that revealed how states, employers, and society understood work and defined the workforce.¹⁴ Should labor statistics be limited to one industry or have a national scope? How could labor statistics count seasonal and agricultural workers? How could statistics differentiate between people “out of work” and those who “resisted work”? How did statistics consider the place of women, many of them who worked at home? How often should states collect unemployment statistics? Some scholars differentiated between the economically active and the economically inactive population, but the distinction still puzzled and divided sociologists, statisticians, and demographers.¹⁵ In the end, the conference presenters considered statistics a vital part of a successful unemployment program and encouraged national governments to set up statistical offices.

The second pillar of the fight against unemployment, the conference presenters argued, was the placement office or labor exchanges. Throughout the nineteenth century, a wide range of systems, including public, private, and nonprofit agencies, helped people find work. By the turn of the century, public labor exchanges, either run by municipalities or by national authorities, had become common in Europe. Civil servants also used these services to distinguish between employable and unemployable individuals.¹⁶ At the conference, presenters argued that placement agencies could coordinate employment policies and guarantee the operation of unemployment insurance systems. By advertising jobs, connecting job seekers with employers, and recording information and statistical data, placement agencies could contribute to fight unemployment. Alessandro Schiavi (from the Società Umanitaria de Milan) believed that a modern placement service should have a technical orientation, maintain a well-organized archive, and serve all workers.¹⁷ Experts also explored the role of placement services in internal and international migration, arguing the importance of collaboration across borders. Because placement services had a long history in Europe, presenters were optimistic about their future. A municipal officer from Strasbourg believed that “of the three questions that the conference deals with (statistics, placement, insurance), the question of placement seems to me the most practical one.”¹⁸

The most contentious issue at the conference was whether social insurance should cover the risk of unemployment. Many industrial nations had established some form of unemployment insurance, such as voluntary insurance and support for mutual aid societies and labor unions. While some European countries subsidized and supplemented benefits already provided by trade unions, known as the Ghent system, others, such as Great Britain and Germany, were considering state and compulsory insurance. The British National Insurance Act of 1911 represented the first and most ambitious effort to implement a broad social security coverage that included the risk of unemployment. Influenced by William Beveridge, author of Unemployment. A Problem of Industry and one of the conference presenters in 1910, the Act provided compulsory insurance to workers in certain trades mostly affected by unemployment at the time. Contributions from employers, employees, and the state funded the insurance, a tripartite system that became the norm in social insurance programs around the world.¹⁹

Experts could not agree on how and why to insure the unemployed. Raoul Jay, the French expert in social legislation, argued that the final goal was “general and compulsory insurance against unemployment.”²⁰ Others were less confident. Some warned that implementing massive unemployment insurance programs could bankrupt social security offices, while others feared that a public agency would be unable to control the fair distribution of benefits. Supporters of public insurance questioned how a union and community-based system, basically a local arrangement, could respond to a national problem such as unemployment. At the heart of the debate about unemployment insurance was the control of the unemployed. Experts were concerned that insured workers would resist employment or quit their jobs in favor of public benefits. The Director of the Labor Statistics Office in Amsterdam, Ph. Falkenburg, argued that “the question is whether the unemployed had voluntarily left work or not, and the cases when the unemployed had rejected a job offered to him outside the city.”²¹ Falkenburg concluded that it was imperative to know the cause and reasons for the continuity of unemployment and, only based on that, allocate benefits. By selecting, supervising, and managing insured workers, insurance offices could guarantee the distribution of payments.

The conference had many shortcomings. Few representatives of the labor movement attended, and most participants favored social reform and a middle ground between communism and laissez-faire. It was also almost entirely a European event, with the exception of the United States; the rest of the delegations—from Australia, Canada, New Zealand, South Africa, Japan, Argentina, Chile, and Mexico—played no role in the discussion. The Argentine government sent two lawyers from the National Department of Labor, Juan G. Beltrán and Manuel Gálvez, and one diplomat, Belisario Montero. With three members, the Argentine delegation was the largest Latin American delegation and the only of the three attending to give a formal, although brief, presentation. Argentina also became the only Latin American country included as a permanent member of the International Association on Unemployment.

Most presentations ignored women workers and women’s unique experience with unemployment. Only two speakers, the French socialist Lydia Pissarjevsky and A. J. de Marguerie (who did not list an affiliation), briefly addressed the problem of unemployment and insurance for women. Pissarjevsky, who represented the Comité international fémenin, stressed the difficulties of counting unemployed women: “The female worker deprived of her regular job commonly resorts to cheap labor, home work or, finally, prostitution.”²² Because of the informal nature of women’s work, Pissarjevsky argued, unemployment insurance would not help women. Instead, she advocated promoting union rights, fighting against prostitution, establishing a minimum salary for workers in traditional female trades, such as seamstresses, and expanding women’s political rights. In contrast, A. J. de Maguerie argued that no differences existed between men and women, as both were industrial workers and resorted to home work in times of layoffs. Advocating the equality of women’s experience also allowed Maguerie to demand equal treatment in economic life.²³ Both interventions were short and provide only a glimpse into the “women issue.”

After four days of intense debates, presenters agreed to form the International Association on Unemployment, which maintained national sections and published a journal quarterly. Based in the Belgian city of Ghent, the association operated in Europe, but influenced debates and policies in other parts of the world. The association invited governments to create their own national sections and exchanged publications. In 1911, Luis Varlez, the secretary of the association, wrote to the director of Chile’s Labor Department, Eugenio Frías Collao, and encouraged him to form a national section.²⁴ Chile did not create a national section, but the association’s ideas (discussed in the next chapter) informed the country’s unemployment policies. The annual meetings were interrupted by the First World War, and its journal stopped appearing in 1914. Throughout the 1920s, the association and its members’ careers became intertwined with the work of the ILO, which became the leading voice in the global debate about unemployment.

THE INTERNATIONAL LABOR ORGANIZATION (ILO) AND UNEMPLOYMENT

The international debate on unemployment, job security, and social policy intensified after World War I. The war had awakened the old ghosts of social revolt. The Bolshevik revolution of 1917 shook the foundation of the existing capitalist and imperialist world order. In Western Europe, the end of the war created a broad political consensus to legislate and establish social protections for all citizens.²⁵ In Germany, the Weimar Republic (1919–1933) expanded the role of the state in social policy and built the foundations of the welfare state, including the approval of a comprehensive and compulsory unemployment insurance (1927).²⁶ In Latin America, countries such as Argentina and Chile had experienced high rates of unemployment during WWI and implemented the first measures to count and assist the unemployed.

In this international context, social and labor reform became part of the peace negotiations and the Treaty of Versailles (1919). In Part XIII, the Treaty called...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgments
• Introduction
• Part One. Discovering Unemployment (1900s–1920s)
• Part Two. Experiencing Massive Unemployment (1930–1938)
• Part Three. The Road to Full Employment
• Epilogue. Unemployment, Dictatorship, and Neoliberalism
• Notes
• Bibliography
• Index