Debating Economic Democracy in South Korea: The Costs of Commensurability

ABSTRACT:

In the 2012 Korean presidential election, both liberal and conservative parties fought their campaigns on the slogan of “economic democratization,” marking a strong departure from past presidential elections and the growth-first policies of the then-incumbent conservative administration. Both parties pledged to tackle growing social polarization and the concentration of economic power by reforming the corporate governance of Korea's large, family-led conglomerates (chaebol), to the degree that chaebol reform itself became synonymous with economic democratization. This focus led to a series of heated exchanges among liberal-left reformers about the vision of economic democratization being promoted, with one camp favoring the creation of a “fair market” through the restructuring of the chaebol and another promoting the protection of the chaebol’s management rights over their affiliates as a desirable strategy for the creation of a Korean welfare state. This essay examines the long-standing tensions between these two liberal-left perspectives and argues that the capital-centric and market-based visions these camps promoted risk confining intellectual debate over the meaning of economic democracy within boundaries that serve dominant political interests.     

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.     

The Transformation of Korean Business Groups after the Asian Crisis 1

This study examines the evolution of Korean business groups after the economic crisis. In particular, we investigate the post-crisis changes in their business structure and corporate governance system, which are argued to be major precipitating factors leading to the economic crisis. Our analysis suggests that the divestment intensity of non-core, highly indebted and low intra-group trade firms was higher for groups which survived the economic crisis, compared to the bankrupt groups. Besides, most surviving groups did not pursue diversification as actively as before the crisis, and their financial conditions remained favourable in the post-crisis period. The corporate governance of the groups has also improved in terms of corporate transparency, implementation of monitoring mechanisms and their accountability to shareholders. Therefore, it seems that Korean business groups have successfully implemented radical corporate transformation to adapt to the changed business environment after the crisis. But, the dominance of family management still remains as an important feature of Korean business groups.     

Inclusive partners? Internationalising South Korea’s chaebol through corporate social responsibility-linked development cooperation

Abstract

In recent years, non-traditional or ‘emerging’ donors such as South Korea have organised their development cooperation models in a manner that seeks to complement the capacities of the private sector by extending the overseas activities of domestic businesses. To better understand this process, this article examines the role of South Korea’s large, family-led conglomerates (chaebol) in its growing international development sector. In particular, we focus on how the concept of corporate social responsibility (CSR) has been used to link the role of its large, and frequently scandal-ridden, private companies to international development, and, by extension, how it has helped to internationalise state–business networks long associated with the Korean developmental state. We examine two strategies through which this has been carried out. The first is by extending the logic of creating shared value (CSV, a derivative of CSR) to aid and infrastructure projects in which chaebol and other state-linked businesses have participated. The second is by directly embedding CSR-based aid initiatives in the value chains of the specific chaebol themselves.     

Chaebol and the Turn to Services: The Rise of a Korean Service Economy and the Dynamics of Self-Employment and Wage Work

ABSTRACT

This article examines the growing insecurity for the Korean self-employed who were once responsible for a large proportion of domestic service operations. Since the 1980s, changing regional and domestic economic circumstances, the restructuring of regional and chaebol manufacturing operations and liberalisation of the domestic service economy had led to enterprise diversification into the distributive sectors and the systematisation of the domestic service economy. Conducting a historical analysis of service sector development and decomposing the Korean Economically Active Population survey (1989–2011), this article charts the process of Korea’s distributive sector development and its effect on the self-employed. It argues that chaebol systematisation of Korea’s service sector consolidated the domestic economy after 1997 and exerted pressure on the country’s self-employed. Large businesses formalised the service sector, displaced the self-employed, and instead generated mostly non-regular wage work, proletarianising a significant segment of the service workforce.     

Dangerous Liaisons? State-Chaebol Co-operation and the Global Privatisation of Development

This article analyses the relationships between private and public sectors in shaping the South Korean development assistance agenda. Since 2008, subsequent Korean administrations have made development assistance a keystone of their foreign policy. Fast growing middle-income countries seem to be favourite development partners for these administrations and the parallel increase in the overseas expansion of Korean chaebol in these developing partner markets suggests that interactions between private economic interests and development assistance exigencies have been numerous. Based upon fieldwork on Korean development assistance, this article shows that Korean conglomerates are both informally and structurally included in decision-making processes as a result of the specific governance architecture inherited from the developmental state era. But recently, since its accession to the Development Assistance Committee in 2010, Korea has also been institutionalising private actors’ inclusion in official development assistance delivery mechanisms. This should be understood as part of a global agenda that has increasingly privatised development formulation and delivery. The inclusion of chaebol in official development assistance through institutional mechanisms might actually be more aligned with Organisation for Economic Co-operation and Development norms than the existing literature suggests.     

The Public Sphere and the Rise of South Korean Civil Society

This article examines how civil society in South Korea emerged as a social force and developed a distinctive relationship with the state. It is argued that political, institutional and cultural factors are no less important than economic relations in accounting for the distinctive nature of South Korean civil society. The article explores the dialectical relationship between the state and Korean civil society and its political and social consequences. For example, the dynamic interplay between the formal and informal structures of political power and the role of various civic organisations in political and other processes of social transformation are discussed. It is argued that the complex relationship between the state and civil society should be theorised in terms of mutual empowerment and synergy in the sense that civic organisations and groups have contended for, or negotiated, power. Hence, observers should bear in mind an alternative hypothesis that different historical conditions may well determine structural changes that have diverse outcomes in the political and cultural arenas, especially in an era of globalisation.     

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.     

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.     

从“大宇”到“SK”:韩国财阀走上制度转型之路

韩国财阀是导致金融危机爆发的根本原因。韩国大宇汽车公司被美国通用汽车公司收购以及SK集团领导人崔泰源被判入狱在韩国乃至世界引起了极大的震动和激烈的争论。大宇和SK集团事件的象征意义在于 ,前者代表了韩国政企风险伙伴关系的真正解体 ,后者则代表了彻底改变财阀内部治理制度的真正开始。