Capital and the Lagos Presidency: Business as Usual?

Business-state relations in Chile's new democracy had been relatively tension-free for the first two governments of the centre-left Concertación de Partidos por la Democracia. However, during the first two years of the third Concertación administration, under the presidency of Ricardo Lagos, the relationship soured dramatically. At first glance, an ideological shift in the ruling coalition's centre of gravity would seem to explain the change in business-state relations. During the first two governments more conservative factions of the centrist Christian Democratic party had controlled the Concertación. Lagos, on the other hand, represented the left pole of the coalition and his socialist credentials brought the long shadow of the past on his presidency. This, however is an insufficient cause, three additional conditions must also be taken into account. The first one considers changes in the institutional and economic context that eroded the private sector's confidence in the Concertación's commitment to maintain the free-market socioeconomic model imposed under military rule. The second and third conditions are a decline in the electoral fortunes of the Concertación in favour of conservative parties and a shift in power relations among employers' associations towards more confrontational factions.