Pathways to State Welfare in Korea
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Pathways to State Welfare in Korea

Interests, Ideas and Institutions

Gyu-Jin Hwang

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eBook - ePub

Pathways to State Welfare in Korea

Interests, Ideas and Institutions

Gyu-Jin Hwang

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About This Book

Why has Korean social policy developed differently from that of other East Asian countries? While in many respects Korea can be compared with Taiwan, Hong Kong and Singapore, where economic development has been the chief priority of state action, Korea has also implemented extensive welfare reform, expanding its welfare provision even under recent conditions of economic downturn. Gyu-Jin Hwang traces the development of the Korean welfare state, providing a fascinating case study for observers of East Asian industrial growth and the public management of social risks. Arguing that the extension of state welfare presents a unique challenge to existing theoretical propositions underlying social policy development, he draws on detailed empirical analysis of key policy areas, namely public assistance, national pensions, health care and employment insurance. The book offers a definitive analysis of the development of Korean social policy programmes and the politics of implementing them. The book will be important reading for all those interested in comparative Social Policy and more specifically the development of Social Welfare in Asian countries.

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Information

Publisher
Routledge
Year
2017
ISBN
9781351912617

Chapter 1

Introduction

To have a growing national economy is every nation’s desire. With their remarkable economic growth, the East Asian Newly Industrialised Countries (NICs) – South Korea (hereafter Korea), Taiwan, Hong Kong and Singapore – have been a favoured topic of research over three decades now. This is not surprising when we consider the distinctiveness of their path to growth compared to their Latin American counterparts. But in addition their growth patterns have formed a new development orthodoxy which has achieved a relatively egalitarian distribution of income. However, whereas the East Asian NICs’ inexorable economic growth modified the role of the state, poor economic performance there in the past few years has led us to suspect the vulnerability of societies without adequate social protection mechanisms in place. If until recently observers were seeking to trace the developmental path leading to the economic growth of the East Asian NICs’, the question now is how they have publicly managed social risks.
Amongst the East Asian NICs, Korea’s path towards the public management of social risks has been particularly puzzling. When the decade of the 1990s began, Korea, along with other NICs was seen as one of the prototypes of what has been termed the developmental state, the essence of which is the foremost and single-minded priority of state action in the interests of economic development (Amsden, 1989; Deyo, 1987; Johnson, 1982; Wade, 1990). Within this developmental paradigm, ‘conflict of goals is avoided by the absence of any commitment to equality and social welfare’ (Onis, 1991, p.111). However, many social provisions were introduced under the near totalitarian (authoritarian military regimes’) rules which seem paradoxical, at least in relation to what we could logically expect from a developmental state paradigm emphasising economic growth – perhaps the least congenial policy climate for social provisions to be introduced. Equally puzzling were events of quite the opposite kind where the period of democratisation saw the introduction of new and the expansion of existing social provisions. More recently, the late 1990s witnessed a significant change in Korean social policy: many social provisions have expanded and have been reformed under conditions of economic downturn; it may puzzle us to know why Korea has taken the policy path that it has, which seems to go much beyond the functional requirements in an era of globalisation and also to go against its long–standing developmental strategy of economic growth. What accounts for this unusual pattern of policy development over such an extended period?
Further reasons for being interested in the case of Korea are that it challenges a number of existing theoretical propositions underlying social policy development, notably against the industrialisation thesis, the neo-Marxist thesis and the corporatist thesis. It also raises questions about the validity of existing explanatory frameworks which can be appropriately confining, depending on the choice of analytic time-horizon and on the selection of cases of different sorts of social provisions. For instance, if one asks why social provisions were introduced under the authoritarian rule, then the illegitimate nature of the governments is likely to be a prime analytic focus. However, if one asks about the dynamic process of social policy development in an era of democratic governance, the pluralistic power struggle between political coalitions is likely to be the key. By the same token, the key actors who may play a pivotal role at various sectoral levels, for example, in health care and employment policy, are likely to differ greatly. The point is that we need an integral approach with powerful explanatory variables which could capture not only the important historical events and processes stretching over extended periods but also the diverse actors involved in different sectors of social policy.
This book explores a range of social policymaking episodes in some detail, paying particular attention to the ways in which the rationales of policymakers and their advisors advocating the adoption of one option rather than another are challenged by compelling sets of counterarguments. It seeks to identify various processes of social policymaking, to identify the circumstances under which such processes are likely to occur and to highlight the significance of analytic variables which may determine the power of one over the other at different time horizons. Unfolding the role of these variables over substantial stretches of time would contribute to our understanding of important social policy outcomes. In seeking to do this, I will analyse arguments about the sources of social policy development and change.
This book focuses on Korea alone, where the ideological and political assaults on social policy claimed to conflict with economic growth have been most intense and extreme. In Korea, the state elites’ strategic political concern to minimise economic and social requirements was crucial in shaping social policy. Indeed, it is often argued that the state elites’ perceived political survival needs were a prime motivator in the development of social provisions. However, if we question how this supreme functioning of primacy of interests was created and so successfully persistent, we see the formidable disabling power of ideas. The institutional rules of development which operated during the long phase of economic growth were in fact firmly guided by a set of organised principles and causal beliefs. In the process of linking political survival and economic growth, the state elites formed a belief that economic growth and political stability were mutually reinforcing. In consequence, economic growth became so powerful an idea that all other areas of public policy tended to be readjusted accordingly. How successful was this process of forming and relating ideas or images over time? Why have some social provisions proven to be more persistent than others to changes in the political context? What accounts for social policy development? Why have the key social provisions taken the structure that they have? What conditioned social provisions or enabled them to emerge and develop? These questions are the main concerns of this book.
My central argument is that the development of social policy in Korea is a unique political process, the best explanations for which rest upon issues about the functioning of institutions and the extent to which institutional pathways in many respects pre-determine events. In large part, the progress of social provisions is channelled through the distinctive institutional pathways which are created by a multiplicity of frameworks in which the interests of central political actors, the institutional rules of the game and policy ideas interact. As I shall suggest in Chapter 2, Korea’s unique path to social policy development can best be explained by an analysis of institutional pathways, considering institutions, ideas and interests as integral and endogenous explanatory elements, without privileging any over the rest. This bears on the complex set of interrelationships between them where each may be the determinant of another at a different point in time and intersect over time in a complex manner. In order to study this, it may be very fruitful to examine institutions and the causes and effects associated with them over a longer time horizon in analysing social policy development and change.
Political decision-makers are undoubtedly the primary actors in shaping social policy. The interests of political elites in building and sustaining their bases of support powerfully condition policy development and change. The politically driven choices of state elites are more influential than broad social and structural forces in pursuing and implementing the state’s strategies. When the political goals of policymakers change, policies are likely to change. Powerful as this interest- based theorising may be, state actors’ decisions are often greatly constrained or empowered by a set of institutional conditions. Institutions not only establish the rules of the game for political struggles but also influence the ability of policymakers to achieve the degree of insulation from social pressures that may allow relatively autonomous initiatives, building on or reacting against the actions of their predecessors (Pierson, 1994). Thus, changes in the political and institutional context become equally important to the changes in the political goals of policymakers in shaping social policy. This institutions-centred theorising urges us to construct political explanations of social policy development at the intersection between choice and institutional constraint.
As I shall suggest in Chapter 2, what is often missing in this equation is the insight from the idea-oriented theorising which can play a role in mediating and bridging the gaps at this intersection. By ideas, I mean the policy ideas which would refer to ‘programmatic ideas’, namely, specific policy alternatives such as monetarism, as well as ‘policy paradigms’ which are coherent sets of assumptions, organised principles and causal beliefs about the functioning of social, economic and political institutions such as neo-liberalism (Blyth, 2002; McNamara, 1998; Berman, 1998; Walsh, 2000; Campbell, 1998, 2002; Jacobsen, 1995; Yee, 1996; Hall, 1993). Beyond this, I shall suggest, policy ideas can become more than a framework of ideas and standards in which specific policy proposals are embedded. In the Korean context, for instance, few would dispute that social policy has been in many respects an extension of economic policy and is often thought to be subordinate to and defined by economic objectives (Holliday, 2000). Created by the state elites in the process of pursuing their particular interests, economic growth became a hegemonic paradigm. As is well established in the literature (Gramsci, 1971; Foucault, 1977; see also Lukes, 1974), hegemonic paradigms are those which we think are in our own best interests but which have actually been designed by more powerful actors. Convincing though they may seem, they do not necessarily work in the public interest, and often do quite the opposite. It is therefore the process whereby ideas, structures and actions come to be seen by the majority of people as rational, logical and beneficent, when in fact they are constructed and transmitted by powerful minority interests to protect the status quo which serves those interests. The subtle tenacity of hegemonic paradigms lies in the fact that, over time, they become deeply embedded, part of the cultural air we breathe.
The ideational process of forming, relating and framing ideas or images is essentially much more political than one might suspect. The economic growth paradigm was formed by the state elites for their perceived needs in political survival, which in turn conditioned the extent to which social provisions were configured and reformed. Yet the growth of the national economy itself became the source of constraints on the state elites’ options, leading to the demise of authoritarian regimes. Thus, examining the way in which hegemonic paradigms are formed through a political process is a necessary step towards understanding why social policy has been configured in a particular way and why this ever changes in direction over time. The more hegemonic policy paradigms become, the more they determine the survival of subset policy ideas. Because policy paradigms establish assumptions, justifications, strategies, purposes and means of the course which action takes, they set out rules and norms. Once expressed and articulated, they become extremely powerful in favouring one line of activity rather than another. As these ideas change, the locus and nature of the activities change too. The survival of policy ideas often depends on the extent to which they fit these broader policy paradigms, which can become something beyond road maps.
The theoretical framework guiding this analysis of institutional pathways to social provisions will be presented in Chapter 2, while the empirical support appears in the four chapters which follow; these examine the institutional pathways of the key social provisions in each –public assistance, national pensions, national health insurance and employment insurance. The story of each social policymaking episode is built around the three key variables which are central to this analysis: the primacy of interests; the politics of ideas; and the functioning of institutions. The final chapter revisits these variables and seeks to develop a broad view of the factors which condition or facilitate the progress of social policy, identifying the key historical elements determining the institutional pathway of the development of social policy in Korea.

Chapter 2

Analytical Foundations: Interests,Ideas and Institutions

Introduction

Scholars have endeavoured for many years to make sense of the origins and progress of modern social provisions. Indeed, detailed research on the main factors contributing to or retarding their progress has generated two clear analytical perspectives. One emphasises the factors which are essentially demand-driven, such as industrialism, capitalism and corporatism, whereas the other focuses on supply-driven factors, such as the role of the state and institutions.
Within this existing scholarship, institutional analysis has much to offer in explaining the politics of contemporary social policy. Once in place, according to this tradition, institutional pathways are often irreversible and largely regulated by feedback effects. The end result is often considerable theoretical consensus indicating that change is unlikely to occur under conditions of normal politics, whereas policy change and crisis are significantly correlated. Yet crisis itself tells us very little about what solutions will be chosen, nor the form in which they will be introduced. Further, efforts to change policy do not subside or disappear simply because there is no crisis or perceived crisis potential. At any given time, a series of ideas about changing existing practice is being debated, studied, discussed, and considered within various policy networks and many of these ideas are put before policymakers and acted upon (Grindle and Thomas, 1991, pp.83-84). This chapter considers the aspects of this broader context which are most relevant for social policy development.
In a study of the institutional pathways of social provisions, I shall suggest, focusing only on the functioning of institutions is insufficient. Institutions cannot be the ultimate motors of any political action. Actions are motivated by interests and ideas while institutions work as mediating variables, playing a critical role in selecting which interests and ideas will prevail. I shall argue that the interplay between interests, ideas and institutions generates the source of policy change. Policy change is likely to occur when there is some change in the political goals of policymakers and in the political context within which they operate. The goals of policymakers are often primarily shaped by their interests, yet whether or not there is available a range of ideas which helps to win arguments and whether or not the functioning of institutions works to their advantage often condition the successful adoption of various strategies to achieve policy goals. Hence, in order to make sense of any form of institutional pathways, institutions and their causes and effects should be interpreted as an integral part.

Lilits of the Existing Approaches

The first generation of literature to ask why social policies develop was very much rooted in the functional or structural perspective, seeking to capture the logic of development historically. Central to this view is the ‘system that “wills”, and what happens is therefore easily interpreted as a functional requisite for the reproduction of society and economy’ (Esping-Andersen, 1990, p.13). For example, one key to the logic of industrialism is the claim that the process of industrialisation undermines the traditional social support mechanisms found in rural societies because populations migrate towards cities and urbanisation occurs. From this perspective, the development of welfare is an almost automatic response to the upheaval created by industrialisation. Therefore, it comes as no surprise to see broadly similar social provisions emerging in societies with different traditions, economic growth standing as the root cause of their development (Rimlinger, 1971; Wilensky, 1975; Wilensky with Lebeaux, 1965). Clearly, this line of reasoning carries some compelling elements. However, many social provisions in Korea were introduced as early as the 1960s, before industrialisation took place. Perhaps it would be less anomalous if national pensions in the late 1980s were counted as modern social benefits, for they certainly expanded when Korea became one of the newly industrialised economies. National pensions, however, were not introduced chiefly to benefit citizens, but intended to mobilise domestic capital (Chapter 4).
Unlike industrial determinism which places little emphasis on ideological factors, the logic of capitalism or neo-Marxism regards social policy as either a response to threats to the interests of the ruling class (i.e., the Bonapartist interpretation), or pre-emptive mechanisms to protect against such threats (i.e., the Bismarckian interpretation). For neo-Marxists (Gough, 1979; O’Connor, 1973; Offe, 1984), social provisions emerge and progress because state action promotes the needs or requirements of capital (accumulation); because states take pre-emptive action to prevent working class discontent (legitimation); and because states require a response to class conflict. The extent of class struggle becomes the key determinant. The development of the welfare state is therefore a necessary response to the contradictions within capitalism and social policies are regarded as a form of social control (Piven and Cloward, 1971; Squires, 1990). This neo-Marxist perspective can be very powerful in explaining the Korean pattern. From the First to the Fifth Republic (1948-1988), the governments introduced a series of welfare laws and increased welfare expenditures during a period of political turmoil evidenced by constitutional violation, but restored the status quo when their political legitimacy was no longer at stake (Ham, Cheol Ho, 1986). As capitalism developed, monopolistic capitalism became vulnerable through its intensifying contradictions. In turn, these contradictions became threatening to the current regime, so it introduced social policy measures to counter these threats (Moon, Soonyoung, 1993). Both these applications pave the way to a deeper understanding of the various roles and functions of social policies. Nonetheless, such explanations are bound to a specific type of political regime. They also fail to account for the increasingly beneficial character of the social security system in modern Korea. More importantly, they ignore the fact that the unintended consequences of welfare state legislation may significantly strengthen the defensive powers of the working class.
A more convincing view comes from the corporatist perspective which places its theoretical core of power in the complex tripartite arrangements involving the state, organised employers (capital) and organised labour. From this perspective, state control over prices and markets, including wages and investment decisions, appears to be considerable. Trade unions and business organisations are incorporated by a political structure in the national planning (Taylor-Gooby and Dale, 1981). Distinct from the class mobilisation thesis whereby collective social provisions are seen as a reflection of the strength of the labour movement and its political leverage through electoral control of the state, in this view a compromise between capital and labour is mediated by the state within a capitalist framework. Social policy is sometimes seen as a product of this bargaining procedure, which generates concessions from the state. According to Offe (1984), social policy develops in the form of social services introduced by political elites in order to manipulate organised groups, such as trade unions, and to strengthen the state’s power in relation to the economy as well as society. This in turn enables them to maintain social order, led by structural integration and equilibrium. Political elites play a mediating role in managing the problems created by industrialisation. Social policy is viewed as ‘a consequence of the purposeful action of the state in its attempt to maintain an integrated corporate structure’ (Midgley, 1986, p.226). Taking their lead from this view, a group of Korean scholars have observed that until the late 1980s state labour policy was authoritarian, coercive and exclusionary, meaning that any tripartite agreement between large business organisations, their workers and the state was absent from the scene. Therefore, they conclude, the underdevelopment of state welfare in Korea is caused by the weak structure of corporatist arrangements (Choi, Jang-Jip, 1984, 1987, 1989; Im, Hyug Baeg, 1987; Shim-han, Young-hee, 1986-1987). Yet after the democratisation movement (1987-1989), firm-based welfare began and has continued to grow. This move enabled employees to achieve better welfare provisions, but at the same time by providing welfare benefits employers were able to control their employees where necessary (Park, Charnim, 1996). Therefore, social policies are seen as a product of bargaining procedures which generate concessions from the state.
Plausible as this perspective may seem, if our attention is not merely to contrast political regimes before and after democratisation, it is misleading or insufficient perspective in several ways. First, prior to democratisation, social programmes owed little to trade unions or businesses (e.g., workmen’s compensation, national health insurance, nati...

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