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.     

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.     

China's defence industries

Abstract

The implementation of foreign direct investment (FDI) policies in China shows that domestic considerations were not the only factors shaping the course of China's opening up to the world economy. Foreign response was often taken into account as the Chinese government felt its way through the process of reform. Focusing on Japanese FDI in China, this article explores the liberalization of China's FDI regime and traces the impact of China's negotiations with and accommodation to pressure from foreign business and governments.     

Globalisation,Legitimacy, and Pacification: The Emergence of a Global Welfare Regime

The globalisation-induced rollback of social expenditures, and the concomitant increase in inequality and unemployment in developed as well as developing countries, are leading to a crisis of legitimacy for the national capitalist state and the capitalist system as whole. It is argued that the global capitalist class will attempt to offset this crisis of legitimacy through the development of a "global welfare regime" to perform the functions that the nation-state is increasingly unable to fulfil, namely, those of pacifying populations through the handing out of material and symbolic rewards. This article will formulate a working definition of legitimacy, show that this legitimacy is being threatened by globalisation, and then present empirical support for this hypothesis of a crisis of legitimacy. Finally, it will analyse in detail the policies of the international governmental organisations that are predicted to constitute a global welfare regime, showing that they are moving to shore up the faltering stability of unregulated global capitalism.     

The story of two administrative states: state capacity in Hong Kong and Singapore

Abstract

Hong Kong and Singapore are both typical administrative states with an efficient administration and a vibrant market, which had achieved rapid economic growth in the past decades. This article examines the trajectory of their state capacity, highlighting recent problems and challenges. Based on a conceptual framework that captures and links up four dimensions – namely polity, bureaucracy, economy and civil society – their commonalities and differences in response are discussed. Their experience should be of particular relevance to transitional authoritarian states in Asia such as China, which faces similar challenges to reform in the arenas of politics, administration, economics and society.     

Supply and Support for Grassroots Political Reform in Rural China

Evidence suggests that the quality of grassroots political reform varies throughout rural China from fair elections to electoral manipulation. This reflects an uneven supply of reforms. However, top-down implementation is not a complete measure of success when it comes to the introduction of grassroots reform. Rural folks are good judges of institutional qualities, such as procedural fairness. It is their attitudes that are associated with the support for democracy. This is called the supply and support model. I modify and apply this model to rural China, and show that support for democratic institutions and ideals can develop within an authoritarian regime such as the People’s Republic of China.     

Better by design: Korea's neoliberal economy

Abstract

This paper examines the processes of bank and corporate restructuring in South Korea since the 1997–98 economic crisis, and seeks to highlight how the state has intervened in a highly dirigiste manner in order to expedite restructuring in both the commercial bank and corporate sectors. At the same time it demonstrates the clear neoliberal principles that have underpinned the state's attempts to promote restructuring. The state has shown a clear determination to take action against insolvent firms and financial institutions no matter how large or strategically important they may be, to impose hard budget constraints on key economic actors. Furthermore, the state has actively sought to engineer the sale of key domestic firms and banks to foreign investors. We argue that Korea's efforts to create a functioning neoliberal economy have been largely successful and are functional from the perspective of Korean capitalism, if not the perspective of individual Korean firms. Changes in the global economy in the two decades preceding the 1997–98 crisis imposed an increasingly inescapable pressure on the Korean state to effect a neoliberal transformation and Korea's future as a centre of capitalist accumulation has for some time been bound up with the success of the neoliberal project. In conclusion, this paper seeks to draw out the broader implications of this reading of the post-crisis restructuring programme for debates on global economic liberalization and the future of capitalist diversity.     

The United States,Japan, and the European Union: comparing political economy approaches to China

Abstract

This paper examines US, Japanese, and European political economy approaches to China, and their effect on US–Japan and US–EU relationships. Great powers with a greater security concern in dealing with another major country care more about power while those with less of a concern are preoccupied with calculations for wealth. China's rise and its actions have posed a far greater security challenge to the United States and Japan and are driving the two countries closer together. The political economy game involving China reveals a dominant welfare motive among the advanced market economies. The ambition to transform China politically has diminished. China's integration into the global market makes a relative gains approach difficult to implement. Globalization simply limits the ability of a state to follow a politics-in-command approach in the absence of actual military conflict, which explains why the political economy approaches of the United States, Europe, and Japan are not that different in the scheme of things. China's own grand strategy to reach out to the world to outflank the US–Japan alliance has also contributed to a divergent European policy toward China although there are severe limitations to Beijing's ability to drive a wedge between the United States and Europe.     

Domestic regulatory reform and transgovernmental networks: Brazil and China in the global competition regime

Developing countries increasingly participate in transgovernmental networks of global regulatory governance, but they do so in different ways. This article aims to provide an explanation for this variation for two of the major emerging powers in the world economy, Brazil and China, in their transition toward more active players in the global competition regime. Distinguishing between bilateral and multilateral transgovernmental networks and examining the domestic factors conditioning the transition of their national competition agencies from rule-takers to rule-promoters or rule-makers through these networks, the article makes theoretical contributions to the linkage between transgovernmentalism and the regulatory state. I argue that differing political needs and the incomplete process of regulatory state formation push domestic agencies to join transgovernmental networks, with a need for greater legitimacy steering the Brazilian regulators to multilateral networks and facilitating their transition from rule-takers to rule-promoters. The Chinese agencies' primary need for expertise rather than legitimacy, by contrast, led them to pursue technical assistance and cooperation via bilateral relationships. The Chinese approach has slowed its transition from rule-taker to rule-promoter where its norms and practices are aligned with the established powers. Such approach will further impede its transition into a global rule-maker in areas of competition law and policy where China's preferences diverge.     

Crisis management and the diversity of capitalism: fiscal stimulus packages and the East Asian (neo-)developmental state

Abstract

This paper contributes to the understanding of East Asian capitalism by investigating the political economy of crisis management in Japan, Korea and China during the global economic crisis. Reacting to the global shock of the economic crisis that began in 2008, East Asian capitalism has remained a distinct state-led model that differs substantially from the liberal, neo-corporatist or welfare state varieties of capitalism in the West. More specifically, this paper studies the fiscal stimulus packages implemented by East Asian countries to address the global financial crisis from 2008 to 2010. We find that East Asian fiscal stimulus packages were comparatively large and supply-side-oriented. Unlike in the West, where a (short-lived) revival of demand-side-oriented Keynesian strategies stimulating consumption could be observed, East Asian countries reinforced industrial policies and supported investment and international competitiveness. We argue that the East Asian variety of crisis management can largely be explained by a path-dependent transformation of the East Asian developmental state into a neo-developmental competition state.     

Power transitions and the rise of the regulatory state: Global market governance in flux

This special issue examines the consequences of the ongoing power transition in the world economy for global regulatory regimes, especially the variation in rising powers' transition from rule-takers to rule-makers in global markets. This introductory article presents the analytical framework for better understanding those consequences, the Power Transition Theory of Global Economic Governance (PTT-GEG), which extends the scope of traditional power transition theory to conflict and cooperation in the international political economy and global regulatory governance. PTT-GEG emphasizes variation in the institutional strength of the regulatory state as the key conduit through which the growing market size of the emergent economies gives their governments leverage in global regulatory regimes. Whether or not a particular rising power, for a particular regulatory issue, invests its resources in building a strong regulatory state, however, is a political choice, requiring an analysis of the interplay of domestic and international politics that fuels or inhibits the creation of regulatory capacity and capability. PTT-GEG further emphasizes variation in the extent to which rising powers' substantive, policy-specific preferences diverge from the established powers' preferences as enshrined in the regulatory status quo. Divergence should not be assumed as given. Distinct combinations of these two variables yield, for each regulatory regime, distinct theoretical expectations about how the power transition in the world economy will affect global economic governance, helping us identify the conditions under which rule-takers will become regime-transforming rule-makers, regime-undermining rule-breakers, resentful rule-fakers, or regime-strengthening rule-promoters, as well as the conditions under which they remain weakly regime-supporting rule-takers.     

The evolution of regime imaginaries on the Chinese Internet

ABSTRACT

This study examines popular perceptions about the ruling state on the Chinese Internet before and along the state’s project of ‘online public opinion guidance.’ We chose two historical moments from 2011 and 2016, and systematically captured and analysed massive amounts of speech traces on Weibo that contain the term tizhi, a discursively flexible, yet distinctive, concept onto which sentiments related to the state are projected. Combining semantic network clustering and critical discourse analysis, our analyses have revealed, historically and macroscopically, the relative dominance of differing ways of evaluating regime legitimacy on the Chinese Internet. Among other things, the previously dominant legitimacy-challenging imaginary grounded in (Western) democratic references has imploded and become absorbed by a nationalist, ‘civilizational competition’ discourse that enhances regime legitimacy. Additionally, the legitimacy-criticizing imaginary within the party-state’s ‘reform framework’ has become depoliticized into administration-focused compartments. By exploring the ‘regime imaginaries’ held by ordinary people, this study complements the scholarship on Chinese state legitimacy that predominantly focuses on historico-structural analyses, policy initiatives, or the party elite’s normative justifications. It also makes methodological and conceptual advances for researching the complex cultural frames, political tropes, and repertoires of local references that comprise regime imaginaries.     

Currency convertibility, cost of capital control and capital account liberalization in China

This paper provides a synthetic view of the capital account liberalization, capital control and currency convertibility issues in China. A quantitative analysis following Henry’s study¹ fails to provide clear links between liberalization, diminishing capital controls and Chinese stock market returns. An institutional explanation is then offered to complement the quantitative analysis. We suggest that the property rights regime is an indispensable institutional variable when studying this topic. Originating from the current property rights regime; price distortion, moral hazard and monetary overhang are the main impediments towards capital account liberalization and full convertibility. Therefore, property rights reform should be given the first priority in Chinese economic reform. He is the author ofProperty Rights, Renminbi Full Convertibility and Economic Development [Chanquan Zhidu, Renminbi Ziyou Duihuan yu Jingji Fazhan] (Wuhan, China: Wuhan University Press, 2003). This research is supported by National Natural Science Foundation of China (Project No. 70273030). The authors thank Dr. Sujian Guo, Mr. Robin Child and two anonymous referees for their helpful comments and Miss Cate Bain and Mrs. Patricia Merton for their proofreading. The authors are responsible for any remaining errors.     

Off balance: The unintended consequences of fiscal federalism in China

This paper argues that neither the developmental state nor the marketpreserving federalism models are applicable to contemporary China. Despite superficial similarities with elements of each model, the political economy of reform in China violates key assumptions and expectations in both. In contrast to the expectations of the developmental state model, the center has not systematically allocated credit to the most productive sectors of the economy; instead the latter has had to rely on informal finance. And in contrast to the expectations of market-preserving federalism, fiscal decentralization has lead to a host of unintended consequences at the local level—namely, the hoarding of off-budget revenues for public goods provision, reliance on informal finance for private sector development, and local protectionism. These unintended and informal coping strategies depart substantially from the core components of both the developmental state and market-preserving federalism models. At present, China’s financial order is very chaotic. For example, a lot of funds have been lost through off-budgetary channels and systems. It is quite common for [local governments and agencies] to wantonly collect fees and fines, to levy various charges, and to set up “little money lockers” without authorization... Such chaotic situations have not only seriously affected the government in exercising macro-economic regulations and control over fiscal revenues, and disrupted the unity in our national administrative order, but also provided an environment and conditions for corrupt behavior. —President Jiang Zemin, January 2001¹ the author ofBack-Alley Banking: Private Entrepreneurs in China (Cornell University Press, 2002). The earliest version of this paper was presented at the 2000 Annual Meeting of the American Political Science Association in Washington D.C.     

Responsibility to Protect or Right to Punish?

Abstract

This essay argues that the new global regime of R2P bifurcates the international system between sovereign states whose citizens have political rights, and de facto trusteeship territories whose populations are seen as wards in need of external protection. Under the direction of the UN Security Council, the International Criminal Court has become an integral part of the international R2P regime by allowing for the legal normalization of certain types of violence (such as Western counterinsurgency efforts), while arbitrarily criminalizing the violence of other states as ‘genocide’. In place of this unequal global regime, the essay concludes by arguing for an internally-driven process of political reform and legal reconciliation, as pioneered in South Africa.     

China: Administrative Corruption — Experience in a Comparative Context

As a new world economy emerges what is being learned about the accompanying phenomenon of administrative corruption? To probe this question we combine study of current developments in China with prevailing theories of corruption. The administrative corruption experience, as it has unfolded during the economic development thrust of the Deng reform era, is described and analysed in a comparative context. In specifically interjecting the American experience we suggest that a balanced control response to corruption —rather than an elimination focus—could be a fruitful avenue for policy and research, and that informal, social approaches to corruption control are pregnant with possibilities. China's experience offers a significant opportunity to push the margin of wisdom on these issues as they relate to economic and political development.     

Licensing,Accreditation and Quality Improvement

This article provides an explanation of why consideration is needed of historical practice issues when designing new regulatory regimes. It also suggests some practice techniques that can be applied both to existing and new regulatory regimes to enhance the effectiveness of the regulation. It does so by exploring the problems faced by existing service providers and regulators following the introduction of a new regulatory regime intended to raise the standard of out‐of‐home care services in NSW. This involved agencies making the transition from a licensing regime based on minimum standards under the Children (Care and Protection) Act 1987 to accreditation, employing optimum practice standards, under the Children and Young Persons (Care and Protection) Act 1998.     

Enigma of all enigmas: Capitalist takeover? Assessment of the post-mao economic transformation

Post-Mao’s economic reforms have led many China analysts to observe that post-Mao China has been moving toward capitalism or “capitalist takeover” has occurred in post-Mao China. This observation has a significant implication both for the US foreign economic policy and in the study of regime change in post-Mao China. The purpose of this article is to revisit and reassess the economic transformation in post-Mao China to obtain a holistic understanding of the central reality in post-Mao China on the one side, while on the other to rebut the assertion of “capitalist takeover” in post-Mao China. Through a systematic survey of party documents, policy statements, leaders’ speeches, official newspapers and magazines, general academic studies on the post-Mao reform in English and in Chinese, this article examines the post-Mao economic transformation along the three key empirical dimensions in terms of systemic change: the existence of capitalist elements, the ownership structure, and the role of the market in the Chinese economy. The findings based on fresh empirical evidence suggest that China has not made any significant change from communism toward capitalism in any of those fields despite the considerable change made in the past 20 years. Sujian Guo was a former policy analyst at the Party Central Committee during 1987–1991. He is currently a Ph.D. candidate in Political Science at the University of Tennessee, Knoxville, writing a dissertation entitled “The Totalitarian Model Revisited: Assessing the Post-Mao Regime Change.” His areas of specialization are Comparative Politics, International Relations and Political Methodology. His research interests have focused on comparative communist and post-communist studies, democratic transition/democratization, regime change in post-Mao China, China/Asian politics. His publications include numerous articles in some of the above areas. His most recent articles appeared inCommunist and Post-Communist Studies, Issues & Studies, andJournal of Northeast Asian Studies.     

Immigration,Globalization, and Unemployment Benefits in Developed EU States

At a time of mounting concern about how traditional welfare states will react to globalization, there has been increasing interest in specifying how global economic forces affect welfare policies in industrialized states. Building on theories from the political economy and comparative institutional literatures, we analyze the influence of an important aspect of globalization—the flow of immigration. Focusing on states in the European Union, we present a theoretical model that illustrates the interactive relationships between immigration, EU labor market integration, and domestic institutions. Our findings highlight how immigration in conjunction with domestic political institutions affects unemployment provisions, while labor market integrative forces remain in the background. The story of immigration and unemployment compensation in the EU is less about the opening of borders and the market forces of integration and more about the domestic political pressures.     

Separated Powers in the United States: The Ideology of Agencies,Presidents, and Congress

Government agencies service interest groups, advocate policies, provide advice to elected officials, and create and implement public policy. Scholars have advanced theories to explain the role of agencies in American politics, but efforts to test these theories are hampered by the inability to systematically measure agency preferences. We present a method for measuring agency ideology that yields ideal point estimates of individual bureaucrats and agencies that are directly comparable with those of other political actors. These estimates produce insights into the nature of the bureaucratic state and provide traction on a host of questions about American politics. We discuss what these estimates reveal about the political environment of bureaucracy and their potential for testing theories of political institutions. We demonstrate their utility by testing key propositions from Gailmard and Patty's (2007) influential model of political control and endogenous expertise development.