The lunch provided by the Catholic church at the San Miguel soup kitchen varies little from day to day - soup of vegetables and rice, a piece of bread, salad and a glass of milk. For most of the 40 children who eat there, it is the only meal of the day.

The food, bought with money from abroad, is cooked by women with rotten teeth and cracked hands who take the leftovers home to their menfolk.

Few residents of this working-class neighborhood in southern Santiago - once known as the "red community" because of the high concentration of leftists - can find a steady job.

The soup-kitchen families are part of what Chile's fiscal planners call the "social coast" of the near-miraculous recovery of the Chilean economy over the past four years.

Whether the results have been worth the cost, including unemployment expected to top 13 per cent this year, purchasing power down to 1969 levels and what one farm-worker activist called "the writing off of a whole generation of our children," is a subject for debate here.

Through severe austerity, drastically slashing public welfare budgets, eliminating price subsidies and refusing to bail out inefficient businesses in the name of high employment, Chile's military government has transformed the country from a highly politicized, deficit spending populist model into one of the world's best examples of growing free-market capitalism. There is no Congress or election to change or slow the government's economic program.

Inflation has been reduced from an estimated 700 to 1,000 per cent in 1973, when the current military regime overthrew the Marxist coalition of Salvador Allende, to a projected 70 per cent this year.

Foreign reserves have grown from less than $10 million to more than $700 millionA. Chilean goods, for the first time in years, are beginning to compete on the world market.

Even supporters of the government's economic policy agreement's economic policy agree, however, that the poor have paid for Chile's transformtion.

"The government made some very hard decisions," said one informed foreign observer, "but the fact is, it worked. They've cut inflation, and they've reached a new starting point."I've asked myself all the questions about social costs," he said, "and I don't like it, either. But they have to admired for their consistency."

Alvaro Bardon, president of Chile's Central Bank, is one of the small group of economic planners that the military and anti-Allende business leaders assembled before the 1973 coup to plot the country's future economic course.

Like most of the planners, he is young, energetic and quite candidly does not allow his political beliefs to overlap into his balance books.

"Frankly," Bardon said in a recent interview, the success of the economic program "has been spectacular."

"Who would have ever thought you could do such a thing in Chile? We were always too political, we never wanted to make sacrifices.That's why we ran up such a huge debt."

One of the ways of reducing that debt, now totaling $5.2 billion, with yearly principal and interest payments of $1.2 billion - 40 per cent of Chile's yearly foreign earnings - is allowing inefficient businesses to collapse. Survivors are strengthened to compete on the international market.

Toward this end, the overnment has greatly reduced tariff barriers and allowed competitive foreign imports to flow into Chile.

The current lever of imports, bringnging everything from japanese television sets to American prepackage foods into Chilean stores, has raised considerable ire lately.

Government critics protest that money spent on imports for the rich and middle class comes directly out and middle classes comes directly out of the mouths of the poor, who have not only lost their jobs but who can't afford Chilean bread, let alone American pizza. While the government maintains that most of its money goes to the purchase of non-luxury, capital and raw-material goods, critics watch the public expenditures nose-dive and drow their own conclusions.

While literally every consumer good is available here, most are priced at international levels, while Chilean salaries remain those of a Third World, developing economy. The result, as one local economic magazine pointed out, is that while the average Chilean laborer works 4 1/2 times an many hours for a quart o milk as his European counterpart, he only has to buy a quart of imported whichky.

Milk prices have increased because, as with other commodities, subsidies for Chilean producers have been eliminated and local dairies now have to compete with imported powdered milk.

Several months ago, the government turned a deaf ear to domestic milk producers who asked for government funds to help strengthen their herds and tide them over until they could become more competitive.

Reportedly, Finance Minister Sergio de Castro told them to "eat their cows" if they couldn't sell their milk at competetive prices.

While this Marie Atnoinette attitude has numerous critics here and abroad, and domestic industries have gone bankrupt at alarming rates, the government appears satisfied.

"We have cleaned out almost everything," said one economist with close government connections, "and we are ready to begin growing again."

"To do what we've done here," he said, "you have to be a real son of a bitch. If you start looking at the faces of the poor people, you can't get anything done."

The elimination of elections, and consequent elimination of the government's need to win votes, he admitted, has made the process much easier.

Besides, he said, things will be better for everyone in the long run. Unemployment is down from the 20 per cent of to years ago, and salaries and purchasing power are slowly climbing.

But critics say the improvements have been too slow, and that the ground lost will never be reclaimed.

Agricultural workers have been particularly hard-hit by the government's policies, and their litany of complanits includes drastic cutbacks in agricultural extension and rural education programs and elimination of free medical care and supplies subsidized by the Allende government. Much of the land parceled out to peasant cooperatives has been returned to large landowners.