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This essay is a historical case study of southern Chilean rural society and its transformation across the twentieth century. It moves beyond questions of unionization and political parties in the agrarian sector to debates about land, subsistence and exploitation to show how notions of “moral economy” in rural politics were formed and transformed in ongoing dialogue with the policies and discourses of the Chilean welfare state. Using judicial records, newspapers, government documents and interviews with almost all the major protagonists, it explores the contradictory effects of both class and ethnic strategies of agrarian restitution, tracing three generations of mobilization in a Mapuche community. Through local evidence, it demonstrates how the Pinochet dictatorship (1973–1990) reorganized and dusted off a state discourse on market-based, efficient agrarian exploitation that had been central to all official explanations and justifications of agrarian reform offered between 1964 and 1973.