My go-to book to understand this (and the entire dictatorship) is Ascanio Cavallo’s “Historia Oculta del Régimen Militar” a very good chronicle with a lot of inside sources. Cavallo is a journalist though, so probably other sources should be contrasted.
That being said, the Chilean dictatorship was not the rule of a single man, even if Pinochet was the most prominent member of it and the de facto President of the country for a long time. But he had internal opposition in the military Junta that orchestrated and executed the coup against Allende and for a while it was not obvious that Pinochet was going to preside over the Junta.
Admiral Merino, commander in chief of the Navy, and General Leigh of the Air Force wanted the presidency to rotate between the members of the Junta, especially as Pinochet only joined the coup organization a few weeks before. Pinochet, as commander in chief of the Army, managed to use his position as leverage and finally took the executive power position, while the Junta began to act as the legislative power. Leigh, especially, remained an antagonist to Pinochet and they had a lot of infighting during the early times of the dictatorship, until Pinochet eventually managed to force him to resign and was replaced by General Matthei.
During this time, Pinochet and the military forces had the duty of “rebuild” the country, this meaning the reform of most laws and the undoing of nearly everything that the Allende government had done, with some exceptions like the nationalization of copper mines. The Parliament was closed and replaced by the Junta. Pinochet and the other generals didn’t trust the politicians of the country, not even the right-wing ones that had asked the Army to intervene and overthrow Allende. They believed that politicians had a big chunk of responsibility in “destroying” the country during the Unidad Popular days and the Pinochet cabinet remained with a majority of military members, with not many professional politicians participating.
There were two main exceptions to this rule. As I’ve said, the Junta wanted to completely rebuild the country and economically they were helped by the experts of the Catholic University of Chile, that had contacts with Chicago and were disciples of Milton Friedman. After a period of military intervention in the economy and a very nationalistic approach that wasn’t too different from the pre-1970 economical management, the Chicago school of thinking began to prevail and the economy was liberalized. This produced a shock that ended up with the crisis of 1982, with the chilean peso falling in value a lot, huge disemployment and the intervention from the government to save the banking system. All these problems caused a big social uproar, after almost 10 years of “silence” and this only grew as 1988 approached. By the time of the plebiscite, protests and clashes between protesters and cops were held in a everyday basis and that undermined the strength of Pinochet’s rule. The crimes against human rights also began to be more well-known to most Chileans and Cesar Mendoza, a member of the Junta, was forced to resign due to his participation in some crimes. The Junta, thus, was not strong enough to resist the social uproar, even if Pinochet remained relatively unscathed from crime allegations.
The other exception was the Constitution. Pinochet and the Junta wanted to change the 1925 one that had allowed the political system to destroy itself (which is kind of ironic), and they began to create a new one with the help of right-wing politicians and lawyers, of which Jaime Guzmán, the leader and founder off the conservative right wing party UDI (Democratic Independent Union), was the most prominent. A plebiscite was held in 1980 to get citizens to approve the new Constitution, in a hugely irregular process with no electoral register, no neutral international observers, amongst other things. The opposition, or what remained of them, especially the Christian Democrats (DC), led by former president Frei Montalva, did what was in its power to oppose the plebiscite and then to vote against the Constitution, but it was in vain and the new 1980 magna carta was approved. This made Pinochet the constitutional president of the country, not just a de facto one. The Constitution established an 8 years period for his presidency, and after that a new plebiscite was to be held to confirm Pinochet or not in his position for another 8 years. During this time a law of political parties and a new electoral registry had to be developed. The regime did what was in its power to not fulfill these obligations but eventually had to soften its position. Negotiations with the opposition began to be held and the right wing parties that supported Pinochet were keen to be given more participation within the regime. After a lot of years they felt that the dictatorship couldn’t last forever and wanted the democracy to return (at least the protected democracy that was established by the Constitution). Members of the Constitutional Court (that had been named by Pinochet) began to put pressure on the Junta to pass the laws necessary for the 1988 referendum to take place. Pinochet, even if powerful, was not in a comfortable position, with the opposition on the streets and his own parties wanting more participation.
The plebiscite had to take place and it was seen as a form of validation for the regime. They thought that they could win and govern until 1996, even if they knew that it wouldn’t be easy. After 15 years the regime had to give some space on TV and other media to the opposition and that was a fatal blow for the dictatorship. On that day of October 1988, millions of Chileans went to vote and Pinochet knew he had lost. Still, the military chiefs thought that the results could not be recognized and prepared to do a sort of “selfcoup”. But Pinochet encountered the opposition of General Matthei and Admiral Merino who didn’t believe the situation could be saved by using their forces. It was going to lead to a dangerous position for themselves and both men publicly recognized that they had lost the referendum. Pinochet had to do the same and quickly prepared some reforms that ensured that the next government wouldn’t have too much margin to undo what the dictatorship had done in 17 years. But that’s a story for another day.