[Interview] Self-defeat and arrogance: the South Korean capitalist model

Posted on : 2014-08-11 17:04 KST Modified on : 2019-10-19 20:29 KST
Professor traces the history of capitalism as practiced in S. Korea, and argues for a new, civic progressivism
 Kangwon National University professor
Kangwon National University professor

By Lee You-jin, staff reporter

“The South Korean Capitalist Model,” a recent book by Kangwon National University professor and “progressive participation economist” Lee Byeong-cheon, could well be called a history of the South Korean social economy. The subtitle of the book, published by Book World, is “Beyond Self-Defeat and Arrogance, From Rhee Syng-man to Park Geun-hye.” It’s an analysis of the 70-year history of the South Korean economy since liberation from Japanese occupation in 1945, in terms of what it calls the “South Korean Capitalist Model.”

Since the social structure theory from the 1980s and the post-Marxist debate of the 1990s, Lee has been a consistent voice for reflection on “stale progressivism” with the semiannual journal “Citizen and World,” where he has been editor-in-chief since 2002. He has no shortage of experience with being an active player in the heated debate over economic discourse. His latest book shows him making an effort to leave that debate behind and strike a balance between progressivism and conservatism. “It’s a time when we need to move beyond arrogance and self-defeat toward affirmation, reflection, and a new approach,” he writes in the foreword.

“For [South Korean] conservatives, the first Constitution’s [in 1948] idea of seeking harmony between political democracy and economic/social democracy is an inconvenient truth,” Lee said. “But the progressives have their own dilemma, with the conservatives monopolizing the perspective on the country’s success.”

The situation he describes is one where it is difficult either to acknowledge that “success,” or to offer a logically cohesive analysis of social and economic history. In his book, he takes a critical view of both perspectives, while undertaking a chronological analysis of the South Korean capitalist model with the clear aim of establishing a new progressive perspective. In particular, he looks at the issue of the chaebol, the alpha and omega of the South Korean growth model. To research the book, Lee spent ten years tracing the history of the chaebol and persistently analyzing the mechanisms of the developmental dictatorship of President Park Chung-hee (1961-79).

“The South Korean model is one where the entire national economy’s growth hinges on the performance of a select few chaebol, where the energy and lives of the working masses are mobilized under an authoritarian framework,” Lee explained. “The chaebol reaped all the benefits of an irresponsible monopolistic system.”

To Lee, the “1.0 period” of the South Korean capitalist model is Park’s regime, not that of predecessor Rhee Syng-man (in power from 1948-60). Rhee’s system, in Lee’s view, was not only one of “Cold War anti-Communist crony capitalism,” where the dictatorial Liberal Party government and a few privileged chaebol were locked in regressive coalitions and collusion as they fed off US aid. More to the point, he said, it “lacked a vision and policy for modernizing the economy.”

The Park regime, 1961-1979 in contrast, had the elements of a “modified market economy” under state leadership, and the policy framework to monitor and regulate the chaebols’ economic performance.

“The Park system was a two-sided, contradictory model of state-mobilized capitalism where the government and civilians cooperated,” Lee said. “Some progressives hold that modernization could have been achieved without Park Chung-hee, but that’s hardly the universal answer.”

According to Lee’s analysis, this was the system that produced accelerated growth for the chaebol power structure, and the source of the obstacles that currently afflict the chaebol-dominated market economy, impeding the national economy’s development after the failure to steer the system in a direction of greater distributive justice, social welfare, and engagement.

“Model 2.0,” in Lee’s analysis, refers to the period between the successful struggle for democracy in 1987 and the foreign exchange crisis of 1997. For Lee, this period marked a belated “double revolution” with the successful introduction of political democracy paving the way for modernity. Both progressives and conservatives have acknowledged the triumph, but today’s climate, with its polarization and rampant undemocratic practices in all areas of life, suggests it may all have been just an illusion.

“Of course, there are considerable vestiges of barbarism in Cold War-era anti-communist nationalism and the obsession with economic growth. This democracy was not socio-economic in nature; rather, its framework was established in the political domain. Our failure to cross the threshold of socio-economic democracy is an issue of the present day, and new questions need to be asked about that,” Lee said.

Lee also says that the Kim Dae-jung and Roh Moo-hyun administrations (1998-2008) moved too quickly to entrust everything to the market, and that they were ultimately frustrated in their attempts to achieve socio-economic democracy because they allowed the chaebol with their abundant capital to behave with impunity.

The Korean Model 3.0 points to the dark reality of capitalism in Korea, which has developed in this way. In Lee’s analysis, the Korean public shouldered the largest share of the cost of authoritarian modernization, while the bulk of economic power was transferred to a symbiotic alliance of South Korean chaebol and international finance and capital.

“Just like Lee Myung-bak before her, President Park Geun-hye has pursued policies of relaxing regulations, privatization, and flexibilization. The sinking of the Sewol ferry was an example of the boomerang effect of the government’s efforts to cut taxes, relax regulations and establish social discipline,” Lee said.

In Lee’s view, the Korean model has imitated the American and Japanese models, but South Korea has rejected the path of reform that these countries have chosen. In the case of the US, there are many charitable donations, a strong opposition to monopolies, and bankruptcy laws that are generous to debtors. South Korea, on the other hand, has clung to an irresponsible capitalism that is largely indifferent to the public interest.

The South Korean Capitalist Model: Beyond Self-Defeat and Arrogance
The South Korean Capitalist Model: Beyond Self-Defeat and Arrogance

The Korean model 4.0 ought to have the objective of becoming a public country, a just welfare state, but this is stymied by the physical and ideological power of the irresponsible conservative system. This is why Lee had no choice but to write, “South Korea is still one of those abnormal countries in which rational progressives and conservatives are unable to engage in constructive competition, and even the European approach to social market economy is denounced as leftist or even communist.”

“South Korea has become a country of monopolies and cozy relationships between the public and private sectors that is controlled by a small number of rich individuals and chaebols under the protection of the state. Today, we are living in a period when South Korea as a whole is the Sewol ferry. What is needed is a civic progressivism that has the vision and strategy to unite everyone, transcending arrogance and self-torment,” Lee said. This book could be called the first step toward a history of the South Korean capitalistic economy.

 

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