The State, Class and Developmentalism in South Korea

Development as Fetish

Hae-Yung Song

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781032087672
• eBook ISBN: 9781000725773
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political Economy
• Index: Politics & International Relations

This book problematises the statist underpinnings of the concept of the 'developmental state, ' in terms of both state–society and national–global relations, challenging the notion that the state is the agent of national development qua being autonomous from the domestic and global economies.

Presenting a thorough and comprehensive critical assessment of the extant approaches and theories of the Korean developmental state in particular, this book demonstrates that the existing literature, including Marxist critiques, only inadequately and partially challenge statism. It examines how statism reinforces and is reinforced by 'Third World Developmentalism', the idea that 'development' is in itself a positive goal and that a nationally autonomous mode of development should be promoted as a means of empowerment. In opposition, this book offers a critique of statism by constructing an alternative theoretical framework, extending Marx's concept of commodity fetishism to state–society and national–global relations.

Drawing on a new theoretical framework and significant Korean literature, The State, Class and Developmentalism in South Korea offers a novel historical interpretation and critique of the developmental state in the Korean context. As such, it will be useful to students and scholars of Asian studies, Development Studies and International Political Economy.

Part I

Forging, reinforcing and reproducing the statist concept of the developmental state

1 Antithesising the state and the market, and the national and the global

Forging the statist concept of the developmental state

With the rise of East Asia, especially the ‘tiger economies’ (Korea, Taiwan, Hong Kong and Singapore), as newly industrialising countries in the 1960s and the 1970s, intensive debate has taken place over the question of how and why these countries could move away from the world economic periphery more successfully than others.¹ In this chapter I assess how the concept of the ‘developmental state’ was formed and consolidated in a general effort to explain the rise of East Asia, on the one hand, and as a critical response to neoclassical explanations, on the other. I do so by looking at the main propositions of neoclassical economics and of key scholars of the developmental state paradigm, such as Chalmers Johnson, Robert Wade and Alice Amsden. I show how the process of establishing the concept of the developmental state was that of augmenting and maximising the role of the state vis-à-vis neoclassical economics’ attempt to undervalue and minimise this role in development. I contend that while the key strength of the account of the successful rise of East Asia that is based on the concept of the developmental state lies in its explanation of the diverse development outcomes within the Third World or Developing World, the concept is g rounded on what I define as ‘statism’. To the extent that the developmental state is defined in terms of its high level of autonomy over other social actors and as the promotor of national developmental against external influence, it posits not only state and market, but also state and global economy as antithetical categories, in which one side inevitably loses autonomy to the other. I describe the theoretical and political problems that result from the juxtaposition of these categories as antithetical, and discuss how the statist conceptualisation of the developmental state, in turn, conditions the ways in which social and economic forces (e.g. democratisation and the Asian financial crisis of 1997/98) are assessed either as external to the developmental state or in terms of the competition between the two sets of categories counterposed as antithetical.

Conceptualising the developmental state: maximising the developmental state

Insomuch as the concept of the developmental state was a critical response to or was initiated in an attempt to establish a vision alternative particularly to neoclassical economics’ assessment of the successful industrialisation of East Asia, I will first of all, discuss some of the key arguments of neoclassical economics before moving on to the key contributors to the conceptualisation of the developmental state.

Neoclassical economics: minimising the role of the state in development

On the question of why and how East Asian economies developed more successfully than others in the world economic periphery, neoclassical economists presented the view that, although there were variations amongst them, these economies showed no or minimal distortion of the market. According to neoclassical economists, the low level of market distortion in East Asia, in particular in Korea and Taiwan, is evidenced by the adoption by these countries of export-oriented industrialisation strategies (EOI), which suggested an openness to the global economy. It was argued that in these countries, the normalisation of the exchange rate and the increase in the interest rate in the mid-1960s followed an initial stage of import substitution industrialisation (ISI) (Balassa 1988: S284).

In equating ‘export-oriented’ strategies with ‘openness’ or ‘outwardness’, neoclassical economists commonly carried out comparative assessments of a number of countries that adopted either ISI or EOI and the corresponding growth rates (Balassa 1980; Kruger 1978, 1980; Lal 1983; World Bank 1987). The conclusion typically drawn is that the more open an economy was, the higher the resulting economic growth was: ‘growth performance has been more satisfactory under export promotion strategies than under import substitution strategies … there is little doubt about the link between export performance and growth rates’ (Kruger 1980: 288–9). In a similar vein, after classifying 41 developing countries into ‘strongly outward’, ‘moderately outward’, ‘moderately inward’ and ‘strongly inward’ categories for the periods of 1963–1973 and 1973–1985, the World Development Report (1987) concluded that ‘strongly outward’ countries performed best, while ‘strongly inward ones’ performed worst. The correlation between EOI and economic growth identified by neoclassical economists is maintained on the grounds that EOI allowed the effective allocation of resources according to comparative advantage, overcoming the limited size of the domestic market and maximising specialisation (Balassa 1988: S280–1; see also Bhagwati 1978, 1988; Kruger 1978: ch. 12). This suggests that neoclassical economics is based on the belief that the world economy is an open system, leaving plenty of room for upward mobility insofar as market-conforming policies are implemented and markets are liberalised.

This optimistic neoclassical vision that the world economy does not pose a serious obstacle to Third World development is closely related to its view on state intervention in the economy. Alongside EOI strategies and economic liberalisation, neoclassical economists found additional, arguably more important, evidence of a low degree of market distortion in East Asia at the level of state intervention, which they argued was kept to a minimum, or was at least less pronounced than it was in other, less successful countries (Fei 1983: 34). In other words, according to neoclassical economics, as much as state intervention is counterproductive to development, it is unnecessary. With reference to the case of Korea, Balassa argues, for example, that the emergence of the exports of textiles and clothing occurred in response to (market) incentives rather than as a reaction to any particular government policy or statutory decision (Balassa 1988: S285). Even if government intervention is recognised, it is seen to have been reduced in subsequent years, and its main contribution is limited to the construction of a modern infrastructure and the provision of a stable system of incentives which aims at the elimination of administrative obstacles to exports (Balassa 1988: S285–7). Balassa (1998: S288) then concludes that ‘[t]he neutrality and stability of the incentive system, together with limited government intervention, well-functioning labor and capital markets, and reliance on private capital, thus appears to have been the main ingredients of successful economic performance in East Asia’. This amounts to what Chang calls ‘self-cancelling state intervention’, which suggests that various measures of state intervention cancelled each other out to produce a neutral incentive structure (Chang H-J 1993: 134; 1999: 2–3).

However, it is important to recognise that neoclassical economics’ advocacy of free-market fundamentalism or reservations against state intervention has been expressed increasingly in a less direct form. One of the reasons for this was that it became difficult to propagate the benefits of free-market policies in the face of the failure of the stabilisation and structural adjustment programmes implemented in many developing countries on the recommendations of the World Bank and the International Monetary Fund (IMF) during the 1980s. Furthermore, it became hard to ignore that state interventionism was being credited with East Asia’s rapid development by scholars like Alice Amsden and Robert Wade, which shall be discussed below. Consequently, state intervention was acknowledged, though to a limited extent, as a positive contributor to Third World development within neoclassical economist circles. One example of this was reflected in the World Bank report The East Asian Miracle (1993). In this controversial report, the World Bank indicated a shift in its attitude towards state intervention and stated that ‘economic policy advice must be country-specific’, and that ‘their [Northeast Asian countries] success depended on the ability of governments to establish and monitor appropriate economic-performance criteria related to the interventions’ (World Bank 1993: vi).

However, the World Bank’s recognition of the diversity of country experiences and the significance of the role of government in development sits uneasily with the original neoclassical view. For instance, while the World Bank claimed to pay attention to the role of public policy and the particular institutional contexts within which policies were implemented in East Asia, it also posited that ‘some important government interventions in East Asia, such as Korea’s promotion of chemicals and heavy industries, have had little apparent impact on industrial structure’ (World Bank 1993: 9). State intervention was recognised positively to the extent that it offset other distortions, such as how import restrictions were compensated by export promotion (World Bank 1993: 22). According to the World Bank, an effective bureaucracy and a strong state led by technocrats, with what they described as ‘deliberation councils’, as in Japan and Korea, were favourable to development, as long as they helped to establish competition in the market, provided transparent rules to all participants and private sector groups, and created ‘a business-friendly environment’ that was ‘generally hospitable to private investment’ (World Bank 1993: 14).

[V]ery rapid growth of the type experienced by Japan, the Four Tigers [Korea, Taiwan, Hong Kong and Singapore] … has at times benefited from careful policy interventions.… Unlike many other governments that attempted such interventions, HPAE [High-Performing Asian Economies] governments generally held costs within well-defined limits … interventions that became too costly or otherwise threatened stability were quickly modified or abandoned.

(World Bank 1993: 24)

While the neoclassical vision of East Asian development as explained by the World Bank acknowledged the positive attributes of state interventionism as an aid to successful development, it also had a propensity to concomitantly minimise it. It did so by relegating the role of the state to a momentary function, which was not critical but rather coincidental to serving the market, which it did by ‘getting the basics right’ (World Bank 1993: 5). As one critic put it:

[the] report makes an all-out effort to assert that East Asian economic success has nothing to do with government. If the government is to deserve any credit, it only does so because its myriad interventions … must have, by some magical coincidence, jelled into a neoclassical formulation.

(Kwon 1994: 635)

The neoclassical view of the rapid growth of East Asian economies relies on specific conceptual underpinnings. It is constructed on the juxtaposition of the state with the market, and on the assumption that minimum intervention of the former in the latter equals minimum distortion of the market, which is an important precondition for successful development. While there was ambivalence on the role of government in East Asia to some degree, the view central to neoclassical economics is that state intervention was kept to a minimum and was momentary. This neoclassical reading has direct policy implications for other developing countries. If the successful development of East Asian economies is explained by the integration of those economies into the global economy through free trade and the liberalisation of their markets from state intervention in order for development and high growth to be achieved, other developing countries ought to pursue EOI as opposed to ISI, open themselves to international market competition and minimise state intervention or its reduction in the economy.

Against the market-centred neoclassical economists’ interpretation of East Asia’s successful development being based on the principle of ‘the minimal state’, an alternative vision, the essence of which was captured in the concept of the ‘developmental state’, was put forward by amongst others, Chalmers Johnson, Robert Wade and Alice Amsden. Work by each of these authors will be assessed, in turn.

Johnson’s developmental state as social mobiliser

Chalmers Johnson was the first to coin the term ‘developmental state’ and arguably made for the first time a systematic attempt to explain the model of ‘the developmental state’ in the East Asian context (e.g. Woo-Cumings 1999a).² In his book MITI and the Japanese Miracle: The Growth of Industrial Policy 1925–1975 (1982), Johnson describes how the effective implementation of industrial policies by the MITI (Ministry of International Trade and Industry) contributed to the rapid economic growth of Japan. His initial interest was limited to identifying particularly Japanese characteristics of capitalist development, on which he further elaborated in his book Japan: Who Governs? The Rise of the Developmental State (1995). He extended the application of the idea of the developmental state to both Korea and Taiwan in subsequent works (Johnson 1987; 1998). According to Johnson, ‘the “developmental state” actually exists in time and space in East Asia and also exists as an abstract generalization about the essence of the East Asian examples. It is both particular and generalizable’ (Johnson 1999: 43).

In his conceptualisation of the developmental state within the context of Japan, Johnson defines the specific characteristics of the Japanese economic developmental model as ‘the state-guided capitalist developmental system’ and ‘a plan-rational economy with market-rational political institutions’ (Johnson 1995: 29). According to him, the Japanese system is a unique combination of what he sees as two opposite and distinctive systems: on the one hand, an Anglo-American model; on the other, a socialist system. He maintains that the Japanese system differs from Anglo-American democracies, which he defines as ‘regulatory states’, where the state is primarily concerned with the forms and procedures of economic competition, without engaging in substantive matters (Johnson 1982: 308; 1987: 159; 1999: 37). At the same time, the Japanese system also diverges from socialist planned economies: it involves high levels of social goal-setting but without the known consequences of state socialism, such as inefficiency (Johnson 1995: 10). According to Johnson, this unique synthesis of two economic systems explains and is responsible for the successful industrialisation of Japan, where the goal of development was achieved ‘without falling into the trap of authoritarian displacement of the market and private enterprise’ (Johnson 1987: 164).

Johnson finds the origins of this distinctive model of Japanese economic development in its imperialist and wartime experiences, which he believes provided a strong impetus for development based on nationalism. His analysis shows that, for instance, both the Chinese communist revolution and Japanese economic development were motivated by what he describes as ‘revolutionary nationalism’, which he says was instigated as a matter of national survival in order to combat Western imperialism (Johnson 1999: 53–4; see also Woo-Cumings 1999a: 6). In addition, Johnson argues that since the Meiji Restoration in 1868, which he understood as a state-led campaign for modernisation, a particular model of state–society relations had been in place, where ‘the state has always taken precedence over interests based on the economy, the society, or other private concerns’ (Johnson 1995: 8). According to Johnson, the Japanese state, when equipped with institutional heritages of state-led modernisation under conditions where development was rendered a matter of national urgency, was able to mobilise its society more effectively towards the goal of national development, and gain national legitimacy by devoting itself to a widely believed-in revolutionary project of development (Johnson 1987: 140; see also Woo-Cumings 1999a: 7, 20). Similarly, in the cases of Korea and Taiwan, countries which had experienced colonialism, civil wars or the threat of war with North Korea and mainland China, respectively, effectuated economic nationalism, leading these countries to choose economic development as a strategy of national survival (Woo-Cumings 1999a: 7–9). In this manner, seeking the origins of the developmental state in the historical legacy of revolutionary nationalism in East Asia, Johnson assigns to the model of the developmental state as one of its core properties the state’s ability to mobilise society for the overall goal of national development, and in this way the state becomes what I describe as the social mobiliser for development.

In an attempt to explain how the developmental state’s role as the social mobiliser played out, Johnson examines the inner state structure of the Japanese state; that is, state bureaucracy on the one hand, and how it intervened in the economy on the other. First, he locates the efficacy of the Japanese political system for delivering economic development in what he calls ‘soft authoritarianism’, where bureaucrats or, in his terms, ‘developmental elites’, were granted great political power and insulated from electoral and judicial accountability (Johnson 1987: 140). He notes that through the separation of reigning and ruling – where politicians reign, and bureaucrats rule (Johnson 1995: 29) – bureaucrats could achieve a high level of autonomy from politicians, who are prone to seeking popular support in the short term rather than seeking to implement long-term developmental goals (Johnson 1987: 142, 151–2). At the same time, he argues, state elites were autonomous from private businesses, which created a system of ‘public-private cooperation in which the state independently develops national goals’ (Johnson 1987: 156), and the private sector operated under the overall guidance of a pilot-planning agency, the MITI. Johnson contends that this system worked positively for development as it reduced uncertainties and risks: the government plans and ‘lay[s] out clearly what the elite’s fixed-term goals are so that private enterprises and households can adjust to them with precision and over a definite period’ (Johnson 1987: 142).

Johnson’s conceptualisation of the developmental state had a significant influence on subsequent discussion of the subject, inspiring critics of neoclassical economics and laying the ground for the consolidation of the concept of the developmental state by other authors. While Johnson claimed that he did not intend to challenge the world of academic economics, his contention that the economic success of Japan was attributable to state-plan rationality and efficient bureaucrats distinguishes itself from the neoclassical argument that the positive aspects of the state in East Asia were absent or at best limited. The developmental state postulated by Johnson as social mobiliser, where the state...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• Introduction: the developmental state, ‘Third World developmentalism’ and the fetishism of national development
• Part I Forging, reinforcing and reproducing the statist concept of the developmental state
• Part II Theorising the developmental state beyond statism
• Part III The global and social origins of the Korean developmental state and its transformation
• Conclusion: democratisation, fetishisation and the transformation of the developmental state
• Bibliography
• Index