The new Korean political economy: beyond the models of capitalism debate

Abstract

A key theme within the literature on the evolution of the Korean political economy since the 1997/8 crisis has been the extent to which Korea remains a ‘developmental state’ or has pursued radical neoliberal reform. These debates have not only reflected a concern with understanding the Korean economy but with a wider set of questions relating to the future of capitalist diversity within a globalized economy. By the late 1980s Korea had come to be regarded as a model of successful state-led late capitalist development. Korean modern economic history has insured that questions relating to the extent that it has pursued neoliberal reform have been of keen interest to students of political economy globally. This paper argues that substantive neoliberal reform has taken place in Korea since 1997. The thesis that a new ‘developmental state’ is in process of consolidating itself is simply wrong. However, the state's reform program interacted with material conditions and political coalitions at the meso level in a complex and uneven manner. In certain critical sectors, such as finance, a neoliberal regulatory regime has been consolidated. In others, such as telecommunications, developmentalist regulatory structures have proven to be highly resilient. In order to fully understand the complexity of the contemporary Korean political economy it is necessary, therefore, to prioritize the importance of meso-level analysis.     

State intervention and neoliberalism in the globalizing world economy: lessons from Singapore's regionalization programme

The recent 1997-98 Asian economic crisis has thrown Asia's divergent pathways to development into serious question. Protagonists of neoliberalism argue that their agenda is now becoming a global orthodoxy when several ailing Asian economies have accepted IMF packages which come with neoliberal economic programmes. Drawing on lessons from Singapore's regionalization programme, this article contends that it is far too early to conclude that Asian developmental states are giving up their governance of domestic economies. Instead, there is evidence that these Asian developmental states are re-regulating their domestic economies to ride out of the economic crisis. The article first starts with the debate between neoliberalism and state developmentalism in our understanding of global political economy. It then examines the political economy of Singapore's regionalization programme through which Singapore-based transnational corporations are strongly encouraged by the state to regionalize their operations, followed by a critical discussion of the impact of the recent Asian economic crisis on the re-regulation of the regionalization programme by the state in Singapore. Some lessons for Asian emerging economies are suggested in the concluding section.     

Crafting and dismantling the egalitarian social contract: the changing state-society relations in globalizing Korea

Abstract

Between the late 1960s and the early 1980s, the Korean developmental state implemented a series of drastic egalitarian educational policies that were primarily geared toward social integration. While promoting social mobility and educational expansion, they provided the basis of the egalitarian social contract in Korea's educational policymaking for decades. Since the 1990s, however, the Korean state has implemented neoliberal education reforms that led to the rapid dismantling of the egalitarian framework for the country's educational policymaking. These neoliberal reforms were strongly supported by the affluent middle class that prefer elitist education and can afford expensive private education. The general direction of change in Korea's educational policymaking suggests both significant change and continuity in the character of the Korean state and its relations to society since the 1990s. The contemporary Korean state still maintains a highly strategic and activist orientation in adopting and implementing policies although its policies are increasingly neoliberal in content. In doing so, the Korean state is gradually abandoning its broad social base and mobilizational capacity, while increasingly connecting with the upper segments of the middle class.     

The political economy of education and skills in South Korea: democratisation,liberalisation and education reform in comparative perspective

The success story of Korean economic development is intimately linked with the so-called developmental state; and education policy, as part of centrally orchestrated industrial policy, played a critical role in the country's rapid industrialisation, which allowed for high employment rates, relatively modest social inequality and remarkable social mobility. However, the Korean success story has started to show ‘cracks’ – with labour market dualisation, rising inequality and ‘over-education’. While acknowledging the importance of the East Asian financial crisis as external shock for the Korean political economy, we suggest more fundamental problems in the socio-economic and socio-political underpinnings of the developmental state and its education and skills formation system for understanding how Korea's economic and education miracle turned into ‘education inflation’, skills mismatch and social polarisation.     

Appropriating Nature in Crisis-ridden Greece: The Rationale of Capitalist Restructuring,Part 1

The ongoing crisis in Greece constitutes an emblematic case of repressive capitalist restructuring. In this first part of a two-paper series, we argue that public debt is used as a vehicle for furthering the neoliberal transformation of Greek society with serious implications for the appropriation of nature. We present theoretical considerations about nature in capitalism, the rationale of neoliberal capitalist restructuring, as well as the relation between nature and neoliberalism. We finally present the timeline of the Greek crisis, as well as how the three structural adjustment programs wrought a severe capitalist restructuring upon Greece.     

Liberalization as a Development Strategy: Network Governance in the Korean Mobile Telecom Market

This study analyzes Korea's often noted yet seldom studied spectacular rise to become one of the important global players in the mobile telecommunications industry. The Korean “leap frog” occurred in the context of liberalization under the worldwide liberal telecommunications regime. This article finds that network governance—the emphasis on the use of partnerships and network transactions with global firms as well as the local private sector—is the reason for Korea's success. It examines the origins of and driving forces acting upon the liberalization policy, and discusses how the state and telecom firms cooperated to develop the mobile market. It also assesses the new governance that is taking place in Korea's telecom market by focusing on the changing roles of the state in three major aspects: provision, regulation, and foreign entry barriers into the mobile market. While the Korean government promoted a market‐conforming telecom market and private ownership, this article argues, it formulated rather different governance principles from the U.S. model of liberal governance.     

Compressed modernity and its discontents: South Korean society in transtion

According to conventional economic indicators, since late 1997 history has been reversed for South Koreans since late 1997. Their current financial crisis, which would have led to a moratorium without the emergency bail-out packae from teh International Monetary Fund, seems to require not only economic austerity for business firms and citizen but also a total devaluation of their developmental ‘micacle’ in the latter half of the twentieth century. South Koreans' dilemma, if evaluated from a broad historical and theoretical perspective on their compresed modernity, is that the vary mechanisms which made their explosive economic growth possible tend to create various hazardous consequences in social, political, cultural as well as economic life. Patriarchal political authoritarianism chaebol's despotic and monopolistic business practice, abuse and exclusion of labour, neglect of basic welfare rights, ubiquitous physical dangers, and ideological self-nagation are particularly serious examples of such hazards of the uniquely South Korean modernity.     

Charismatic Economies: Pentecostalism,Economic Restructuring,and Social Reproduction

Pentecostalism is one of the world's fastest growing religions, expanding most quickly in Latin America, sub-Saharan Africa, and parts of Asia. To make sense of this expansion in so many developing regions, I suggest that Pentecostalism fosters norms and behaviors that harmonize with neoliberal economic restructuring. I frame this theoretically with Polanyi's notion of double movement. In our current era of weakened state governance vis-à-vis neoliberal trade and fiscal policy, non-state sites of reaction have emerged. Pentecostalism is one such site, and, in contrast with Polanyi's example, I suggest that Pentecostalism has embedded the self-regulated aspects of neoliberal capitalism. I make this argument by using the feminist political economy theorization of social reproduction to interpret a number of empirical studies of Pentecostalism. Pentecostalism addresses dilemmas of social reproduction engendered by neoliberalism, and so may be said to embed this form of economic organization in human social life in a way that reinforces neoliberal capitalism.     

Korean foreign direct investment in Europe: The determining forces

Korea's more complete integration into the world economy has been stunted by past government policies aimed at preserving comprehensive control over the domestic economy. This situation has recently changed owing to prevailing structural weaknesses in the Korean economy and the dictates of the global competitive environment. Consequently, the level of Korean overseas investment has escalated, particularly in Europe — the Triad region which has traditionally attracted limited inward FDI from Korea's large chaebol companies. This paper examines the determining forces that lie behind this trend. It is recognized that early Korean investments in the EU were principally driven by reactionary motives when confronted by actual or anticipated policy threats. While it is argued that the pretext for such investment has not significantly diminished, the imperatives of globalization together with emerging economic conditions in both east and west Europe have provided considerable incentives for more proactive FDI strategies to be adopted. The recent announcements by senior chaebol of intended large‐scale investments in Europe suggest that this new pattern is becoming increasingly apparent.     

The politics of corporate crises in West Germany

This article examines the experience of corporate crisis in the major industrial economy of Western Europe. West Germany's experience of corporate crisis is analysed by reference to its legal framework, political context and economic history. Particular attention is given to two modes of crisis management: ‘bank‐led’ rescue and ‘the crisis cartel’. Case studies include AEG, Grundig, the steel corporations of the Ruhr and the Saar, shipbuilding corporations and Krupp. The argument draws on the evidence of mounting problems of corporate crisis management to assess the prospects for the theory and practice of the social market economy in West Germany.     

China's engagement-oriented strategy towards North Korea: achievements and limitations

In response to the challenge of unstable North Korea (weak economy, weapons of mass destruction [WMD] development), China has followed an engagement-oriented strategy based on diplomatic persuasion, economic interaction and moderate economic sanctions. Intensified engagement (2009–2012) facilitated North Korean convergence with China in respect of economic reform but divergence has persisted over WMD development. Despite the widening of divergence since 2013, China has refrained from applying crippling sanctions. This article seeks to explain these diverging results and their implications for China's strategy towards North Korea. Reviewing recent literature and data, it will argue that Chinese economic input reinforced the trend of economic reform that formed the basis of political consolidation under the new hereditary regime. On the other hand, the prospect of stable dependence on China ran counter to that regime's pursuit of WMDs as the basis of security and diplomatic diversification. These mixed results reveal the limits of China's strategy: its economic input involuntarily reinforces North Korea's WMD potential but it is not prepared to accept the risks of enforcing WMD restraint by crippling sanctions either. With limited room for manoeuvre, the attainment of China's strategic objectives ultimately depends upon policy change from the US or South Korea.     

Digital Restructuring: Gender,Class and Citizenship in the Information Society in Canada

‘Digital restructuring’ denotes a phenomenon integral to but also distinct within economic and political restructuring broadly conceived. The concept of restructuring can be modified with ‘digital’ to forefront the important technological dimension of global restructuring, as well as to indicate developments associated with the new ‘information economy’. Digital technology and digitization have been integral to the scope and speed of the global economic and political restructuring of recent decades. They have constituted the technological conditions for some of the more characteristic aspects of this process; from the flexiblization or outright shedding of labour, to the mobility of production and capital and the globalization of trade and financial markets. This paper seeks to debunk much of the corporate and state mythology of digital restructuring currently in circulation by drawing upon the analyses of digital technology and restructuring advanced by critical scholars and progressive social movements, and to highlight the dangers to progressive political movements and discourses posed by the very nature of these representations.     

Eclipse or reconfigured? South Korea's developmental state and challenges of the global knowledge economy

Abstract

Globalists and former students of the Asian developmental state maintain that the latter has succumbed to the forces of globalization. They believe that the global knowledge economy involves the thorough integration of the global economy, continuous innovation and networks rather than hierarchies and that these factors are foreign to the operational logic of the developmental state and thus render it obsolete. This article contends that the global economy is not as open as supposed, and that the challenges posed by the knowledge economy, while genuine, tend to be uneven. Focusing on Korea's information technology sector and relying on documentary and interview data, the present article suggests that, while the Korean state no longer relies on its erstwhile finance and regulation strategies, it has continued to articulate development visions and sought to achieve them through deploying public resources to structure the market. Rather than going into eclipse, the Korean developmental state has been reconfigured.     

Political party and party system institutionalization in Southeast Asia: lessons for democratic consolidation in Indonesia,the Philippines and Thailand

Abstract

This article analyses the Kim Dae-jung government's industrial realignment (‘Big Deals’) policy in post-crisis Korea, which offers a valuable insight into the state's role in managing the transition from a developmental state to a free-market economy and into the changing nature of government–business relations. Although Kim was committed to creating a free-market economy in Korea, as the ‘Big Deals’ got under way critics accused him of violating market principles and employing tactics of intervention and coercion used by previous authoritarian regimes. The ‘Big Deals’ experience suggests a further stage in the evolution of the Korean developmental state; the dismantling of state powers and the implementation of neoliberal reforms in the 1990s had led to the emergence of a ‘transformative state’ in which the state acted as ‘senior partner’ rather than ‘commander-in-chief’. The transitional state charged with the task of rebuilding the economy after 1997 regained some of its lost powers and used some familiar methods of achieving its ends. However, it also demonstrated by the nature and scope of its interventions that it was gradually evolving and adapting to meet the changing economic environment. Although Kim's actions prompted allegations from the chaebol and their conservative allies of a return to autocratic economic management by the government, it was clear that the developmental state had not been resurrected. Rather, these criticisms serve to highlight the continuing antagonism in the state–business relationship; neither side had developed new strategies for dealing with each other and their relations were still characterized by mutual mistrust and staunch chaebol resistance to key reforms demanded by the government. Although suspicions of a permanent return to extensive state intervention were unfounded, they nevertheless diminished the prospects for the creation of a cooperative relationship between the state and big business that would be a crucial factor in revitalizing the Korean economy.     

The politics of bank bailout in Japan: a cognitive capture and leadership view

Abstract

This article explores why the Japanese government did not decisively intervene on behalf of bank bailouts at the early stage of the banking crisis of 1997–98 and investigates the institutional and political context behind the use of fiscal money for bank bailouts in 1997–98, 1998–99, and 2001–05. In contrast with prevailing views, which emphasize the conflicts of interest or differences in policy preferences between politicians and bureaucrats and their captured nature either by bankers’ special interests or political/bureaucratic interests, this article argues that Japanese policymakers shared a congruent policy preference — that is, minimizing the disruptions in the existing institutional arrangement in government-bank-firm relations and this congruence in policy preference (or ‘cognitive capture’) compelled the government to take a creditor-centered approach to the banking problem — i.e., letting banks resolve their own problems. It also argues that a strong political leadership that can break with the ‘cognitive capture’ and sustain government's resolute commitment to solving the nonperforming loan problem is an essential factor for successful bank restructuring.     

Taiwan and the geopolitics of late development

Abstract

Through a case study of Taiwan, this paper seeks to address recent debates surrounding the transformation of developmental states in East Asia. Whilst a number of authors have cited the Taiwanese state as being both cautious and resilient in the midst of global restructuring, this paper seeks to critically engage with such arguments by highlighting the dynamic and mutually constitutive relations between the forms of social relations that underpin late development and the wider geopolitical system in which such development occurs. Specifically, Taiwanese industrialisation can be viewed as an outcome of the US intervention in the Chinese civil war and subsequent exclusion of China from the regional political economy in the period between the Korean and Vietnam Wars. The Kuomintang (KMT)'s retreat to Taiwan established the basis for the autonomous developmental state, and the US underpinned this state through military protection, aid and access to its own domestic market. However, the relative decline of US hegemony and the readmission of China into the international system have posed significant challenges to Taiwan's developmental state. The US sought to redress its trade imbalance with East Asia by placing pressure on Taiwan to liberalise its political economy. Furthermore, the very process of development itself served to undermine the autonomy of the state as it came under pressure from new social forces. Taiwan has more recently been faced with a dilemma of closer integration with the mainland or the maintenance of its de facto economic and political independence at the risk of becoming isolated from the global trading system.     

Projecting the Arena of Inclusion: The Case of South Korea in Pursuing a Phased Inclusive Growth Process

South Korea created a mechanism that fuels inclusive growth, a process that coevolves economic growth and social well‐being. This study attempts to elaborate on the context and preconditions for development that would manifest salience policy implications for moving up the industrial value chain and attain inclusive growth. We contend against the view of simplified growth cum equity that is used to elucidate the success of Korea's socioeconomic development (economic miracles). Our findings informed us that there were intense measures taken throughout different phases of Korea's industrial development. In addition, we observed in many occasions intense negotiations between the state, firms, and civil society for social welfare and a better working environment. This led to a pursuit for inclusive growth in the post catching‐up phase that blended together many inclusive agendas, realizing growth that coevolved industrial upgrading and social welfare. This article seeks to explain how Korea populated its arena of inclusion in the process of pursuing rapid industrialization. The overview of different phases of development provides normative principles that are useful as a guide for other economies which aspire to attain similar development.     

The Tasks of Keynesianism Today: Green New Deals As Transition Towards a Zero Growth Economy?

The world economy today is facing the juncture of two simultaneous crises: the deepest recession since the end of World War Two and an unprecedented world ecological crisis. Does Keynesianism offer viable ideas to face this combined crisis, alternative to the neoliberal policymaking that has prevailed during the last thirty years? Historically, if viewed from a longer-term perspective, the form of Keynesianism that has predominated, is military Keynesianism, defined as macro-economic policymaking by capitalist governments aimed at stimulating aggregate demand for goods. Thus deficit spending was already applied by the British government when it competed with other European states to gain world hegemony, in the late 17th and the 18th century. Again, whereas for a limited period of time after World War Two, a civilian type of Keynesianism has 'coexisted' with military Keynesianism, especially in Western Europe, – the military form of Keynesianism has clearly prevailed in the era of globalization, especially in the US. Keynesianism offers possibilities for a shift from current policymaking, but only if its mode of application is radically different from its historical modes. An ecological Keynesianism needs to fulfil both a social criterion – promotion of employment – and an ecological standard – countering capitalism's inherent tendency to destroy its natural surroundings. Three examples of an ecological Keynesianism initially come to mind: the state's use of transfer and investment measures so as to accelerate the shift from reliance on fossil fuels towards reliance on renewable energy; state intervention to discourage incineration of waste, and to enhance reliance on recycling; and conversion of military production facilities into units which produce for the sustenance of life on earth. The significance of these shifts can be illustrated by employing a model of social reproduction that diverges from Marx's and Keynes'. Yet while an ecological Keynesianism does offer ample possibilities to address today's combined crisis, the given policymaking needs to be understood as transitional. A solution to the world's ecological crisis is only possible via the transition towards a stationary state – a zero growth economy at the world level which protects the interests of the global South.     

Defection of North Korea's ideologist a sign of regime crisis

Abstract

The defection of Hwang Jang‐yop, one of North Korea's major ideological authorities and a senior member of the leadership, is a clear indication of regime crisis in Pyongyang. Hwang's assessment of the nature of the Kim Jong‐il regime, which he regards as incapable of reform and committed to war with South Korea, will strengthen those in Seoul who argue for a tough approach to be taken in negotiations on security issues with North Korea. At the same time, his remarks on the extent of communist influence in South Korean politics may influence the outcome of the 1997 presidential elections.     

Following in China's footsteps? The political economy of North Korean reform

Since the coming to power of Kim Jong Un in 2012, the North Korean government has recently announced, and to some degree has implemented, a new set of economic management policies known as the June 28th measures in 2012 and the May 30th measures in 2014. Both of these sets of measures seek to build upon the abandoned reforms of the early 2000s through restructuring North Korea's highly inefficient collective farm and state-owned enterprise management system. In addition, the government has intensified ongoing efforts at building special economic zones for the purpose of attracting foreign investment. As such, the country is attempting to emulate the reforms adopted by China in the late 1970s. Although the success of these efforts is by no means guaranteed, they do serve to question mainstream analyses that suggest that Juche Self-Reliance or S?n'gun Military First Politics ideologies will inhibit any genuine attempt at economic reform in North Korea. We argue, in contrast, that ongoing changes to North Korean state and society mean that, a cyclical stop and start rhythm to the reforms notwithstanding, such attempts at economic reform are likely to continue. However, we also argue that while the contemporary reform drive resembles and may indeed reproduce some of the successes of the Chinese experience, North Korea faces significantly greater challenges, including the greater decline of North Korean industry, local resistance to reform, and the dangers of inflation. Furthermore, North Korea faces a highly challenging external security environment that undermines the ability of the regime to attract investment and by extension the political standing of reformist elements within the country. Given this contrast with the international environment surrounding China's own reform experience, our analysis emphasises the importance of geopolitical context in shaping experiences of economic reform and of development more broadly.