Neoliberal electricity: energy, experimentation and the purification of the economy

[Pido disculpas por lo largo y desordenado del post: es un copy/paste de un paper en construcción y de apuntes para una presentación en el último ISA en Buenos Aires, más inserciones varias para hacer el texto algo más legible].

Introduction: neoliberalism in the making

In 1975 the Comisión Chilena de Energía Nuclear (CCHEN) submitted to government evaluation the Plan de Energía Nucleoeléctrica (PEN), a detailed technical and economic program to introduce the first commercial nuclear plant by 1989. By the mid-1970s the PEN had become one of the most important and ambitious technological programs in the country. Embedded in the ambience of fascination towards (nuclear) technology that had imbued Latin America, and propelled by the geopolitical race against Argentina, the Chilean government – particularly during Pinochet’s military regimen – trained several dozen army engineers in nuclear operations and engineering, signed multiple assistance and research agreements, created extended networks of institutional and technical allies, and, more importantly, enrolled ENDESA and CHILECTRA – national symbols of Chile’s technological capabilities – imbuing the PEN in an epic narrative of technological and industrial development. The PEN seemed not only necessary, but inevitable given its inertia: the technological momentum of the PEN was too strong to stop the motion of events. All the pieces were aligned and a lot of effort had been invested: the PEN had built an irrevocability that seemed impossible to revert. But it was: in 1979, the Comisión Nacional de Energía (CNE), established the year before by the arriving team of Chicago-trained economists to explicitly “transform the energy sector into a market”, drafted a 220-pages document arguing for the cancellation of the NEP.

The story about the cancellation of the PEN can be told in several ways. Here I will choose one in particular: a story about neoliberalism in Chile. But in lieu of understanding neoliberalism as an epochal and abstract force, the case at hand lends itself to inquire neoliberalism as a set of situated material and knowledge practices – and therefore unfolding in specific sites and through specific controversies.

Çaliskan and Callon have coined the idea of “processes of economization”, the processes “through which behaviours, organizations, institutions and, more generally, objects are constituted as being ‘economic’” (Çaliskan and Callon 2010, 2). This paper deals with processes of neoliberalization: the technologies, practices and circuits through which objects are given a neoliberal ontology – or the processes with which an object is re-economisized to be constituted in a neoliberal shape. These processes involve all sorts of apparatuses, devices and models (MacKenzie 2006; Muniesa et al. 2007; Pinch and Swedberg 2008). Objects have to be measured, valued, forecasted, audited and prioritized, and it is through those qualifications that neoliberalism is sparkled into being.

In what follows I will try to show how these processes of neoliberalization were put forward for the case of energy in Chile. More specifically, I will argue that in order to enact an energy market, a process of purification had to be performed: the deployment of new evaluation techniques and economic theories with which factors, rationales and entities not aligned with neoclassic economics were isolated and erased. My main argument is that the CNE managed to halt the NEP by enacting a new energy object: one that would comply with – and would put forward – a neoliberal world. And this was done by three purifications.

Processes of purification: producing neoliberal electricity.

The first process of purification was to eliminate “political” elements from economic decision-making. Because, needless to say, the NEP was a political project. It was, first of all, a geopolitical program. Energy was viewed as a strategic asset. For the NEP energy was a factor “altering the force equilibrium in large political-economic influence zones”, and thus “the survival of nations” depended on the capacity of states “to generate energy” (CCHEN 1975, 3). Second, the NEP was also framed as an environmental project (CCHEN 1975, 6). And thirdly, and most importantly, the NEP was imagined as a modernizing artifact: the NEP would boost the technological and industrial development of the country. “The benefits derived from this project”, argued CChEN, would trigger a wave of development, such as the “enhancement of scientific-technical level and infrastructure, preparation of the industry and improvement of quality standards.” (CCHEN 1975, 10).

But CNE had a different take. The CNE was established in 1978 by Sergio de Castro – head of the Ministry of Economy and perhaps the crucial figure in the unfolding of Chile’s neoliberal experiment and ultimate icon of the Chicago Boys (Valdés 1995). The CNE had the explicit task of “creating a real [market] price system, eliminating state monopolies and introducing new private actors into the energy sector” (I7 2012). To CNE’s eyes the NEP – and the energy sector at large – was too “political”. And CNE had to eliminate this distorting effect. And to that end the CNE redefined the meaning of “social benefit”. [En el texto me refiero a dos maneras en que esto se realizó; acá me remitiré solo a una] The CNE’s report states that “The basic objective of electricity planning is to determine the generation, transmission and distribution works that would serve the demand securing the maximum benefit for the community” (CNE 1979, 22. Emphasis added). But how to define “maximum benefit for the community”? The report goes on developing a particular explication: (1) if two energy programs seek maximum social benefit, then their costs have to be equal, and if moreover (2) an inelastic demand is assumed, then demand should be also equal to both programs. Thus (3) against equal costs and demand, to maximize social benefit is to minimize total actual costs: “social benefit” was purified to mean the least expensive project. Other social objectives, namely geostrategic, environmental or developmental, were secluded and eliminated.

Once “political” elements were secluded, a second process of purification was needed: it was necessary to eradicate the state. Indeed, the NEP was thought, operationally and politically, as a State project. As early as 1938, Hernecker et al.’s Política Eléctrica Chilena assessed that as a “service of extreme public utility [electricity] has to be exploited directly by the State, because being an intense-investment industry, the electricity sector “can only economically survive in monopolistic regimes”, and because “the dominion over electric energy permits the dominion over the country” (Hernecker et al. 1938, n/p). The NEP continued this tradition of state-led energy management. The PEN, indeed, argues that being “one of the fundamentals infrastructures for National Security,” energy planning “must constitute a fundamental State preoccupation” (PEN 1975, 3). The NEP, concomitantly, rested heavily on ENDESA. As one public servant from CCHEN remembers, “we thought it was appropriate that state enterprises were the ones in charge of this [PEN], for example ENDESA, that had the support of [being national leaders in] energy production” (I3, 2012). The PEN report visibly marks the importance of ENDESA within the project. First, all the demand projections, fundamental to justify the need of a nuclear plant, had been designed and endorsed by ENDESA (PEN 1975, 5). Second, the NEP relied on ENDESA modelling and feasibility operational programs (PEN 1975, 7). Finally, the future operation of the plants would be administered by ENDESA (PEN 1975, 11). In brief, with the ubiquitous participation of ENDESA the PEN could construe itself as a State entity, thus securing its relevance, feasibility and irrevocability.

But the CNE, drawing on the classic utilitarian and instrumental notion of rationality as deployed in the classic homo economicus, understood ENDESA, and any state-owned firm, as ontologically corrupt. One of the main objectives of the CNE was “to have control over [energy] projects that State companies were unfolding, of which we did not know if they were good or bad, because that [evaluative] function had been ran by [State] companies too autonomously” (I5 2012). At the heart of this diagnosis – the inability of state-owned firms to evaluate their own performance – laid a very particular assumption: that to manage a firm in which the agent has not invested is an incentive for the agent to maximize agentic – and not social – gains. And this pointed expressly to ENDESA, the epitome of this deviated economic configuration. “Let’s talk things clearly”, an important former CNE officer remembers saying to a room crowded with ENDESA engineers when announcing its privatization, “you have never felt that this company belongs to the State, nor to Chile, you feel this firm belongs to you, with the difference you have never put a dime on it” (I4 2012). ENDESA was run by bureaucrats that had transformed the company into a gigantic political, inefficient and corrupted machine.

To fully impose a neoclassical economic framing to eliminate political elements and delegitimize ENDESA was not enough. It was necessary to destabilize NEP’s collective cosmology. And this meant a third purification: to attack the engineering culture sustaining the project. Indeed, the NEP was sustained on the grandeur and prowess of Chilean engineers: progressive men, with state-of-the-art expertise and bold visions for the country (Ibañez 1983). Under this model, engineers not only endowed Chile with national technology, but they became integral parts of the Chilean State and its modernization: ENDESA, proud carrier of the State interest in national development, was home for the best engineers and the icons of a ‘Chilean technology’. As a former CCHEN officer put it, for the “concept of doing engineering that we had in the seventies [in ENDESA], ENDESA would have transformed the nuclear [program] into a veritable school” (I4, 2012). Moreover, energy planning had always been an engineering task. Engineers – trained in State universities and public servants in State-owned companies – were the only valid spokespersons when it came to electricity management –and this sentiment remained strong by the late 1970s.

The newly established CNE clashed with this engineering epistemology, and made every effort to delegitimize it. First, and following the assumption that economic agent cannot be rational if they have not invested in the firm they manage, the CNE stigmatized engineers as individuals with the propensity to fall into technological monstrosities: engineering, freed from every economic boundaries, creates aberrations. One of the founders of the CNE puts it this way, “while the PEN was run by ENDESA it was basically a rather technical project and something typical of technicians and engineers… they have always liked to build new and different things, especially if they are not framed within a rational economic system” (I4 2012). Besides being out-of-control, engineers were also incompetent: their knowledge was not valid. As an official from CNE remembers, the PEN was “managed by military polytechnicians extremely incompetent”. The main claim of the CNE was that military polytechnic engineers, beyond any quarrel about nuclear energy, were not professionally and academically prepared for duties outside combat-related activities. As a former CNE officer explains, to military polytechnic engineers “are really sappers, guys that what they really should do is to study how to rapidly assemble a bridge… But in that time [1970s] they generated a kind of school, a military polytechnic school in which in four years you supposedly give him a title of engineer [la carrera de ingeniería en una universidad tradicional dura 6 años]. But in those four years these guys also have to follow the military career, then it is far less than four years.” (I4 2012).

Thus military engineers were underprepared compared with their peers graduated from Universidad Católica or Universidad de Chile. Moreover, these military quasi-engineers had Spain as their epistemic reference in nuclear matters: the nuclear engineering doctoral program at Madrid Polytechnic University was the preferred destiny for PEN engineers. But for CNE experts the US was the only valid knowledge source. Anything different from a US doctorate was dimmed as inferior or, as a former CNE – with a PhD from a prestigious US university – puts it, indecent: “once you had a couple of guys that understood the [nuclear] issue”, he remembers explaining the decision of sending military officer to get their master degrees in the US after the PEN’s cancellation, “the fight is over; if they send an intelligent officer to study in a decent university he would realize that this is not just to follow the Spaniards” (I3 2012).

Conclusions

In sum, in order to organize an energy market, a neoliberal world had to be enacted, and this meant the application of specific expert practices, theories and technologies to neoliberalize energy. And this was done via 3 purification processes:

  • First, through the application of optimization and elasticity theory, a new definition of “social benefit” as cost-effectiveness was deployed.
  • Second, through notions coming from classic economics and utilitarian philosophy, state-owned firms were put forward as corrupt and suboptimal.
  • And third, through the attack of the NEP’s epistemic references, engineers were deemed as irrational, technical and underprepared.

Three years later, in 1982, the infamous DFL1 was enacted – the “electric law” (ley eléctrica) deemed as the most neoliberal of its kind in the world (Bauer 1997). The cancellation of the NEP was an experimental opportunity to test some of the principles applied later in the DFL1. How other sectors – health, land use, labour, education – were engineered into markets and through which techniques, theories, models, technologies and evaluative devices were they neoliberalized? More research is needed on the material and knowledge practices of neoliberalism in Chile. But the results of this paper may shed some light on these questions.

Manuel Tironi

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Comments

  • joseossandon  On December 3, 2012 at 4:56 am

    Hola Manuel. Me sigue gustando mucho esta historia. Seguro que será un muy buen paper. Me quedé pensando en tu concepto de “neoliberalización” y su diferencia con “economización” en C&Ca. Según entiendo lo que cuentas es pre-mercado. Acá (como en las otras cosas que pasaron en las reformas de los 70s en áreas como salud, educación, trabajo, etc… en Chile) aun no había ni bienes, ni empresas en competencia ni remates ni nada por el estilo. Todo esto es otra historia (y que, pensando en Caso Chispas, Enersis o Hisdroaysen, sin duda valdría la pena contar también). Pero lo tuyo es antes. Es el proceso que permitió pasar de imaginar y organizar la energía ingenierilmente (quizás a la ciudad de la eficiencia de B&Th) a verla neo-clásicamente desde el Estado y las políticas públicas. Preguntas:
    1. ¿Estarías de acuerdo entonces conque neoliberalización, como verbo, no sería el proceso de hacer objetos y agentes calculables en el mercado, sino que se trataría de enmarcar la política pública con una epistemología a la Chicago?
    2. ¿No crees que el proceso que reemplazo de economistas por ingenieros en la toma de decisiones de las políticas de energía que describes quizás más que corresponder a una historia a la Callon, se podría contar como un conflicto de campo? (Nunca pensé que diría esto). Pero estaba pensando en Dezalay & Garth y también en Fligstein, y la idea del remplazo en aquello que se asume como válido a la hora de evaluar determinado ámbito de acción, no vía socio-técnica, pero invalidando a la elite alternativa.

  • tomasundurraga  On December 3, 2012 at 5:28 am

    Muy interesante caso Manuel, gracias. Excelente la conceptualizacion de las purificaciones y la racionalidad neoliberal. En la forma que cuentas la historia pareciera que no hubo resistencias de los ingenieros versus los economistas, o que fueron subyugados por decreto. Mi pregunta es por la opinion/reaccion del ejercito frente a esa disyuntiva. Mi impresion es que en esa epoca en particular el ejercito tenia mayor respeto por la capacidad ingenieril antes que la racionalidad economica. Pudiste recolectar algo sobre esa disyuntiva?

  • manueltironi  On December 3, 2012 at 8:35 am

    Gracias Jose y Tomás. Sobre el primer comentario de Jose: estaría totalmente de acuerdo; ese es de hecho mi argumento: no se estaría ante un proceso de economización tipo C&C sino que un proceso a través del cual un objeto de mercado se vuelve un objeto ‘neoliberal’ de mercado, y eso significa básicamente convertirlo en un objeto neoclásico. Sobre el segundo punto de JO, también 100% de acuerdo. Creo que la controversia profesional/disciplinar/de campo es parte clave de la historia, aunque no la enmarco desde ahí. Y me da la impresión que ahí hay una herida aún abierta. Me toca trabajar mucho con ingenieros, y para ellos (sobre todo los que se dedican a la “gran ingeniería”, esa de grandes artefactos, los hidráulicos, eléctricos o de transportes) es súper importante la visión-país, el rol (fuerte) del estado, el proyecto nacional, algo que se fue convirtiendo en un anatema entre los tomadores de decisiones (que empezaron a venir de la economía).

    Sobre el comentario de Tomás. A lo mejor no quedó claro en el post, pero aquí se trata no sólo de ingenieros, sino que precisamente de ingenieros militares. Y esto es importante en dos sentidos. Primero porque el mundo militar siempre ha sido un mundo más de clase media, muy estatal, desarrollista y republicano. De hecho son famosas las peleas dentro de la Junto entre los defensodres de “El Ladrillo” y G. Leigh, a quien llamaban el “keynesiano” (y, en general, el proyecto neoliberal siempre fue visto como extraño dentro de los cuarteles; ver el trabajo de la Verónica Valdivia Ortíz de Zárate o de Ascanio Cavallo). Entonces hablando de campos, aquí no sólo hay una pugna entre ingenieros y economistas, sino también entre distintas culturas políticas -y, muy importante, de clase- representadas en el choque entre el ingeniero militar polítécnico y el economista de la PUC. En segundo lugar, el tema militar fue muy relevante para, precisamente, imponer “El Ladrillo”. De ahí la baja intensidad de las controversias dentro del ejercito. Según Valdivia Ortíz de Zárate, el ejercito chileno siempre se ha caracterizado por su verticalidad y su alta disciplina, entonces lo que decía Pinochet, en tanto General, era un mandato que sus subalternos aplicaban sin chistar (además, como lo muestra Cavallo, Pinochet fue muy astuto al diseñar el gobierno con un ministro que era siempre militar, por tanto 100% disciplinado, y un subsecretario civil y técnico, usualmente un Chicago Boy, designado por él y con el mandato de reportarle directamente; o sea control total). Una anécdota: me contaba uno de los entrevistados que cuando Pinochet quería imponer una resolución que sabía conflictiva dentro del ejercito (por ejemplo cuando re-estructuró Corfo y privatizó empresas, algo que fue muy duro dentro del mundo estatista-militar), Pinocher se vestía de militar y no de civil, para dejar en claro a los ministros (todos militares) que lo que diría lo haría en su condición no de presidente de la república sino de máximo jefe de las fuerzas armadas…

  • FM  On December 3, 2012 at 10:11 am

    I suggest publicizing this research in Socionergie, a list for sociologists of electricity: http://listes.cines.fr/info/socioenergie

  • joseossandon  On December 4, 2012 at 5:32 am

    Bueno estar de acuerdo🙂 pero una pregunta más. Entonces dices “no se estaría ante un proceso de economización tipo C&C sino que un proceso a través del cual un objeto de mercado se vuelve un objeto ‘neoliberal’ de mercado”. Mi impresión, sin embargo, es que lo que describes no es la transformación de un objeto de mercado a un objeto neo-liberal de mercado. De hecho, hasta el final de tu historia aun no hay mercado (intercambio, precios, consumidores, empresas, etc). Todo esto pasa antes. Pero no es por eso menos importante. Las reformas sociales de los 70s en Chile (a diferencia de los 80s donde los nuevos mercados comenzaron a funcionar) parecen hacer otra cosa. Dejaría tu frase así: “no se estaría ante un proceso de economización tipo C&C sino que un proceso a través del cual un objeto de políticas públicas se vuelve un objeto que puede ser evaluado según las categorías de la economía neo-clásica”. Neo-liberalización, entonces, en el sentido que tu apuntas, no sería hacer de algo económico (igual transable, calculable), sino que hacer de algo “económico” en el sentido de analizable por la economía, aun sin mercado, el paso clave de la economía a la Becker. Y que quizás para el caso de Chile tiene que ver en particular con la difusión de la “evaluación social de proyectos” como modo de hacer comparables diferentes políticas públicas. En el libro de Rosende (ed) queda la sensación de que el actor clave respecto a este tema habría sido E. Fontaine. Quizás hay algo que buscar por ahí. Otra cosa nada que ver… de ingenieros y economistas, parece bueno este artículo en E&S: http://www.tandfonline.com/doi/full/10.1080/03085147.2012.661623
    slds

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