After a brief period of a self-congratulatory mood which began with the democratic restoration in 1987 and the Seoul Olympic Games in 1988 and culminated in terms of South Korea’s acceptance to the Organisation for Economic Co-operation and Development (OECD) in 2006, both the everyday livelihood of ordinary people and the national economy have been subjected to extreme instabilities and uncertainties. This tendency was radically dramatized in late 1997 by a national financial crisis, which forced millions of South Koreans to instantly lose jobs, incomes, and/or families amid unprecedented scales of corporate bankruptcies and labor reshufflings. The Kim Dae-Jung government managed to orchestrate an impressively quick recovery of the South Korean economy at the macro level, but the instabilities and uncertainties in grassroots livelihood have not been clearly alleviated in spite of the globally prominent performance of several industrial conglomerates locally called chaebol.1
For these chronically jeopardous conditions of grassroots livelihood, the neoliberal ideology and policies have often been to blame in intellectual and political debates. It is true that some of the troubles South Koreans have confronted are quite analogous to those of many developed and undeveloped societies that have undergone drastic neoliberal transitions. However, the contents, conditions, and consequences of neoliberalism should be appraised in the specific political economic context of South Korea since the mid-1980s. In particular, the historical relationship between neoliberalism and the country’s pre-neoliberal developmental politics should be systematically analyzed as the most critical determinant of the socioeconomic conditions of South Koreans’ work and life in the twenty-first century.
In this book, I characterize South Korea’s pre-neoliberal regime of social governance as developmental liberalism and analyze the turbulent processes and complex outcomes of its neoliberal deformation since the mid-1990s. Instead of repeating the politically charged critical view on South Korea’s failure in socially inclusionary and sustainable development, I closely examine the systemic interfaces of the economic, political, and social constituents of its developmental transformation. Developmental liberalism is the developmental state’s (both explicit and implicit) regime of social governance, under which a wide range of social policies have been strategically harnessed for facilitating capitalist industrialization and economic growth as the nation’s prime purpose. South Korea has turned and remained developmentally liberal, instead of liberally liberal (like the United States among others), in its economic and sociopolitical configuration as to social security, labor protection, population, education, and so forth. Ordinary South Koreans have not necessarily been resistant to the state’s developmental liberal position as they have tried to organize their own lives according to a sort of private developmentalism attuned to the socioeconomic opportunities engendered by the nation’s aggressive capitalist development. Such developmental symbiosis, if not collusion, between the state and citizenry was not evenly beneficial to South Koreans even during the heydays of developmental governance. Furthermore, South Korea’s neoliberal transition, initially conceived since the late 1980s, ironically along its democratic transformation, and radically accelerated during the national financial crisis in the late 1990s, turned out incomparably volatile and destructive crucially due to its various distortive effects on the country’s developmental liberal order. The main purpose of this book is to examine the basic attributes of South Korea’s developmental liberalism as the developmental state’s regime of social governance and analyze the conditions, processes, and consequences of the country’s neoliberalization as a post-developmental liberal transition.
1 Social Limits of Development and Democracy: Developmental Liberalism and Its Neoliberal Transition
The South Korean experience of late modernization (or catching-up modernization) has attracted a wide international approbation not just because of its enviable economic result alone. More crucially, South Korea’s vibrant democratization in tandem with its explosive capitalist industrialization and economic growth has led the world to suddenly acknowledge the country’s full modernity. Not surprisingly, South Korea’s acceptance into the OECD in 1996 was taken in South Korea as evidence of its status of an advanced industrial democracy and accompanied by a fervent self-congratulatory mood. The economic and political dynamism of South Korea, however, implicated a structural political economic instability, which kept spawning societal emergencies. Such structural instability has been further intensified by neoliberal globalization, in which South Korea has aggressively, but often clumsily, participated. The self-congratulatory period indicated above turned out to be rather short as compared to the protracted period of back-to-back political economic crises beginning with the national financial crisis in late 1997.
When the country stumbled into the Asian financial crisis as a result of its injudicious participation in (or incorporation by) the global neoliberal financial system, Western neoliberals wasted no time in loudly branding the economic calamity as a pitfall of “crony capitalism”. In fact, it was a disguised ideological attack on the East Asian model of developmental political economy as epitomized by the so-called developmental state. Despite (or because of) a decade of its haphazard subscription to neoliberal ideologies and policies, the South Korean government did not try to openly refute the deceitful neoliberal framing of the economic crisis. Nor were South Korean grassroots (seomin) particularly defensive of their country’s past of developmental political economy. In fact, an awakening was spreading among them that national economic development might not ultimately enhance the material welfare of those social groups who had sacrificed or had been forced to sacrifice their interests under the patriotic slogan of “national regeneration” (minjokjungheung) and that their arduously won democracy might not be usable in rectifying such political economic betrayal.
In spite of such awakening, South Korean grassroots were being told to sacrifice themselves again in order to rescue their national economy from a supposedly impending collapse. This time, the slogan of “pains-sharing” ( gotongbundam ) replaced the previous nationalistic ones, suggesting that they would not be subjected to lopsided sacrifices. More specifically, they were persuaded to trust the political pledge that state and business elite would equally share whatever sacrifices required for the emergency relief of the national economy. Before the crisis, the slogan of “growth first, distribution later” under the military-led authoritarian developmentalist regimes had been rather straightforward in demanding asymmetrical sacrifices from grassroots, whereas the renewed developmental drive by the democratically elected governments had continued, though deceptively, to subject them to uneven losses. The unfair nature of the developmental political economy, as it had long been critically recognized by grassroots, was nothing new. But the inefficacy of the democratic polity in rectifying the unfair political economy was deeply disappointing. The neoliberal developmental drive of the Kim Young-Sam government—in particular, economic expansion on the basis of internal and international financial deregulation—only pushed the national economy into a financial calamity, and the next democratic government under Kim Dae-Jung had to exhort South Korean grassroots (along with state and business elite) to go through still another stage of self-sacrificing. The neoliberal formula for economic restructuring was not conducive to pains-sharing at all, and even a “Latin Americanization” of South Korea began to be frequently hinted at in media reports and intellectual debates. The beginning years of the twenty-first century have been marred by pervasive grassroots discontents about their developmental alienation, while a handful of corporate conglomerates are strengthening their dominant position in the national economy and many sectors of the world economy.
The South Korean experience of modernization and development presents a fundamental question as to the ultimate goal of national advancement or social progress in the modern era. On the national political level, economic development and democratization have been upheld as almost universal targets of national advancement. Neither of these two targets has been easy to achieve, so that the South Korean performance has attracted widespread international envy. However, the South Korean industrial economy and democracy have become subjected to deep-seated popular disenchantments from inside. And, as indicated above, South Korean grassroots seem to have due reasons for such discontents in their everyday life. There is a pressing need to formulate an appropriate analytical framework for comprehending such grassroots discontents.
For such grassroots citizens’ despair, the country’s defective welfare system has frequently been to blame. The limited efficacy of South Korean democracy in channeling the outcomes of national economic development into the equitable and sustainable socioeconomic benefits of the general citizenry has been deplored not only among South Koreans themselves but also by the broad international community, including the United Nations (Chang, K. 2012a). In domestic and international scholarship, South Korea’s failure in a political evolution into an effective welfare state has often been analyzed as an outcome of a relative deficiency of social democratic impetuses such as broadly organized labor activism, an influential working-class party, progressive civil society, and so forth. Such observations may not be irrelevant but the existing conditions and structures of the developmental state’s (non-social democratic) social governance have remained largely unexplored. Some scholars of social policy have tried to highlight some developmentalist nature of South Korean, and East Asian, welfare systems under the concept of the “developmental welfare state” (Kwon, H. 2005). Such approach is apparently flawed by hastily classifying South Korea/East Asia as a welfare state while offering no convincing clue to their “welfare laggard” reality even at the stage of advanced industrial economies.
We should closely examine the systemic interfaces of economic management, political rule, and social policy in South Korean (and East Asian) development in order to reveal the specifically extant regime of social governance in this part of the world. That is, instead of dwelling on separately practiced scholarships on (developmental) industrial policy, (procedural versus substantive) democratization, and comparative welfare states, I propose developmental liberalism as an actual regime of developmental social governance placed on the interfaces of economic, political, and social constituents of South Korea’s developmental transformation. Under developmental liberalism, a wide range of social policies have been strategically harnessed for facilitating capitalist industrialization and economic growth as the nation’s prime purpose. I do not deny that South Korea has been a “welfare laggard” or “liberal” as evinced by its problematic conditions in labor protection, income distribution, social security, and so on, but intend to emphasize that it has been developmentally liberal, not liberally liberal like the United States. The developmental state was not simply antagonistic against social welfare but proactively managed popular interests and resources so as to developmentally redefine and subordinate otherwise social policy concerns. In effect, it did not even epistemologically allow social policy (and social citizenship) to exist as an independent political agenda except residual measures for poverty alleviation.2 It should be indicated that most of grassroots citizens have not necessarily opposed the state’s developmental liberal position and instead endeavored to manage their own lives according to a kind of private developmentalism attuned to various socioeconomic opportunities generated along their nation’s expeditious capitalist industrialization and economic growth. There has been a sort of developmental liberal alliance between the developmental state and its political economic constituencies.
Developmental liberalism, both as the developmental state’s regime of social governance and grassroots South Koreans’ political economic culture, was as much beset with crucial social risks as instrumental to utmost material gains. All kinds of differential endowments in financial, human, and sociopolitical capital have been developmentally amplified into socioeconomic inequalities that are as intense as South Korea’s economic growth itself. All structural instabilities and vulnerabilities embedded in the country’s aggressive capitalist industrialization and global economic expansion have been directly translated into ordinary citizens’ privatized risks in livelihood. Most critically, South Korea’s slapdash neoliberal transition, firstly conceived since the late 1980s and radically accelerated during the national financial crisis in the late 1990s, turned out incomparably volatile and destructive because of its crucially distortive impacts on the country’s developmental liberal order. If the political economic processes and social ramifications of South Korea’s neoliberal transition are examined in the immediate historical context of its hitherto developmental liberal conditions, we will be able to much more systematically understand why so abrupt, so pervasive, so perplexing, so disruptive, and so painful are South Koreans’ symptoms of neoliberal social dislocation.
2 Summary of the Chapters
The main purpose of this book is to examine the basic attributes of South Korea’s developmental liberalism as the developmental state’s regime of social governance and analyze the conditions, processes, and consequences of the country’s neoliberalization as a post-developmental liberal transition. The following pages of this book are divided into three parts which, respectively, cover: (1) a general introduction to developmental liberalism and its historico-political backgrounds (Chap. 2), (2) socioeconomic conditions and consequences of neoliberalization in the developmental liberal context (Chaps. 3, 4, 5, and 6), and (3) double-layered neoliberal tran...