Introduction: South Korea and the Antinomies of Neo-Liberal Globalisation

Transcription

1 Journal of Contemporary Asia Vol. 40, No. 2, May 2010, pp Introduction: South Korea and the Antinomies of Neo-Liberal Globalisation SOOK JONG LEE* & KEVIN HEWISON** *Graduate School of Governance, SungKyunKwan University, 53 Myeongnyun-dong 3-ga, Jongno-gu, Seoul, Korea, **Carolina Asia Center and Department of Asian Studies, University of North Carolina at Chapel Hill, Chapel Hill, USA ABSTRACT This paper introduces the special issue that addresses the challenges of globalisation that face contemporary South Korea. Before briefly introducing each of the articles that comprise the special issue, this paper provides some basic contextualisation, suggesting that Korea is a useful case for understanding the pressures and resistances associated with neo-liberal globalisation that define domestic responses to exhortations for internationalisation made by both domestic and global actors. KEY WORDS: Globalisation, neo-liberalism, resistance, developmentalist state, internationalisation It may seem altogether too late for a special issue on globalisation and South Korea. After all, many well-known economists and not a few government spokespersons have praised South Korea (hereafter Korea) as one of the world s most successful examples of late capitalist development and rapid adaptation to the trajectory of globalisation. Indeed, with relatively poor natural resources, various Korean governments have long pursued an export-led industrialisation strategy and Korean conglomerates (chaebol) have become global companies and are at the leading edge of technological innovation in electronics, automobiles, shipbuilding and so on. Following the Korean War, Korea s phenomenal economic development marked by rapid industrialisation, impressive reductions in poverty and a transition from a poor and aid-dependent country to the world s fifteenth largest economy all attract interest and analysis. The processes underpinning this development have been exhaustively treated in numerous well-known studies of the developmentalist role that the state can play in promoting industrialisation (see Amsden, 1989; Wade, 1990; Weiss, 1999). Such studies recognise that export-orientation does not equate to unbridled internationalisation or liberalisation of the domestic economy as dirigiste policies heavily protect domestic businesses, industries and markets in Korea. When the Asian economic crisis hit in the late 1990s, foreign governments, investors and international financial institutions were quick to point to the Correspondence Address: Kevin Hewison, Carolina Asia Center and Department of Asian Studies, University of North Carolina at Chapel Hill, FedEx Global Education Center, CB#7582, The University of North Carolina, Chapel Hill, NC 27599, USA. khewison@unc.edu ISSN Print/ Online/10/ Ó 2010 Journal of Contemporary Asia DOI: /

2 182 S. J. Lee and K. Hewison developmentalist Korean economic model as a leading factor in the downturn. For these actors, the remedy was more internationalisation and deeper liberalisation. As the Korean state grappled with the impacts of the economic crisis and its long-delayed democratisation, for state officials and the remaining (and struggling) chaebol, liberalisation and democratisation came to be seen as two sides of the same coin. That view received support from International Monetary Fund officials and neo-liberal economists and advisors who demanded extensive restructuring to purportedly let markets work (see Kwon, 2004). With many companies collapsing and unemployment rates soaring there seemed little alternative to further liberalisation. For a range of Western and Japanese investors, the opening of the relatively closed Korean domestic economy offered huge opportunities at bargain basement prices. In response to these exhortations, the government made a range of policy and institutional changes that were meant to open markets, most notably in the financial sector. The chaebol and other companies that survived embarked on restructuring missions, reducing debt, (reluctantly) modifying corporate governance practices and making other changes that enhanced productivity. The chaebol also used the occasion of economic crisis to demand changes to the labour market. Following a period of democratisation and an experiment with tripartism after the economic crisis, it is ironic that labour has rapidly lost its role as a legitimate and productive partner in national policy making. Correspondingly, the political influence of business has been ascendant. The increased flexibility demanded of workers and reduced job security has also challenged organized labour. This is not to imply that the Korean state simply dissolved its economic policymaking structures in favour of a reliance on the market s hidden hand, that the chaebol were broken up, and that there were no domestic pressures for other kinds of change; there was considerable opposition to the restructuring demanded as neoliberal policies were implemented. Such issues have been discussed at length in recent issues of this journal (see Choe and Pattnaik, 2007; Kim, 2005; Lee and Han, 2006; Lee, 2008). With the slogan of Global Korea, the conservative Lee Myung-bak government has demanded not just liberalisation but ever more attention to policies that promoted globalisation. Korea has increased its foreign assistance, encouraged internationalisation amongst its people, demanded that Seoul become an international city, and is seeking to be a more active participant in global governance mechanisms such as the G-20. Since his electoral victory in late 2007, Lee has been promoting global projects and emphasising inward foreign investment (Kim and Kang, 2008). Global Korea has become a brand to be promoted locally and internationally. The articles in this special issue address the nature of South Korea s globalisation, with particular emphasis on domestic impacts. As several of the authors note, and as we have observed above, this particular conjuncture of globalisation has been associated with increased liberalisation. Hence, this period is identified as one of neo-liberal globalisation. Before turning to the individual articles, we want to provide a brief background to the nature of neo-liberal globalisation. Neo-liberalism is a term that has come into common usage over the past three decades and has had a number other names, including market fundamentalism and Washington Consensus (Soros, 1998; Williamson, 1990). Neo-liberalism is

3 South Korea and the Antinomies of Neo-Liberal Globalisation 183 something of a catch-all for a range of supposed market-orientated ideas and interests and an ideological position on the role of market and state in economic life. It entails an economic, social and political policy package emphasising fiscal discipline for governments, trade, investment and financial liberalisation, deregulation, decentralisation and privatisation. While these policies have remained constant, in practice, regimes implementing these have variously limited the welfare state; decentralised labour relations and weakened the unions (Portes, 1997: 238). Neo-liberalism is also associated with ideas about freeing capitalism of the spatial locks that have constrained its mobility in terms of an increasingly disarticulated production and the flows of finance and capital (Gamble, 2006: 26; see also Westra, 2009) This makes neo-liberal globalisation a useful conceptualization of capitalist development in a world where production has been globalised through supply chains that extend everywhere. Globalisation itself may not be especially new (see Petras, 1999), but the manner in which neo-liberal policies are made global, embedded for states, corporations and workers is defining of the contemporary epoch, even in a period of global financial crisis. Neo-liberals agree with laissez-faire liberals that the state s economic role should be limited but they do not want to eliminate the states role for it plays a critical part in expanding free markets (Jameson, 2000: 58). For neo-liberals, the state s role has to be market facilitating, as much through its monetary and fiscal policies as by the extension of market mechanisms to the political and social spheres (see Robison and Hewison, 2005). Neo-liberals have more in common with political conservatives than with their liberal counterparts when they seek a state that can regulate society and its politics. States are required to discipline societies precisely because the marketisation of the economy and society leads to fragmentation and disorganization (Akram-Lodhi, 2006: 161). Essentially, neo-liberals view society in Hobbsian terms (see Gamble, 2006: 28-9). Hence, state economic roles have not been minimised and reduced in size as much as reorganised and made to serve the interests of economic marketisation and capital while also disciplining societies. Jayasuriya (2006: 242) is correct when he observes that the need to manage society means that the construction of the state cannot be left to market forces. When combined with globalisation, the term neo-liberal globalisation is used to denote an extrapolation of neo-liberal positions to enhance the global expansion of capital; with the political and economic social models outlined above it refers to the normalisation of neo-liberal policies as international best practice. Scholte (2005: 1) observes that the: reigning policy orthodoxy holds that globalization works best when it is approached with wholesale marketization through privatization, liberalization and deregulation. Thus, neoliberalism takes the maxims of traditional laissezfaire economics and applies them to the currently emergent global order. He also explains that the state remains central in the era of neo-liberal globalisation: To be sure, deregulation has not... meant no regulation. On the contrary,... neoliberalism emphasizes the need for laws and institutions that

4 184 S. J. Lee and K. Hewison uphold markets and promote their efficient operation. So neoliberal deregulation has only prescribed the removal of those rules and procedures that allegedly interfere with market dynamics, damage incentives and compromise efficiency. Such measures include wage and price controls, subsidies, fixed exchange rates, a number of taxes and fees on business, and progressive taxation of personal income (Scholte, 2005: 10). Neo-liberal policies have now been implemented so broadly that they are seen as orthodox; they are the natural policies for delivering progress and development (Gamble, 2006: 32). At the same time, all along, these ideas have been consistently and strongly rejected and contested, not least in the struggles over employment and wages (ul Haque, 2004: 1). Even so, neo-liberal policy has had remarkable resiliency in the face of vehement opposition. Some of this resiliency derives from its embedding in state policies and in the ideological structures of international financial institutions, the mainstream media and educational institutions. Its resiliency also draws on the globalist nature of neo-liberalism that specifies the optimum conditions for a generalised capitalism rather than for particular or national capitals (Gamble, 2006: 26). For states, labour and capital, as investment and production have become truly global, the extension of neo-liberal demands has had major impacts. Production organised along value chains shapes and reshapes relationships between businesses, states and labour, where the emphasis is increasingly on flexibility in production. At the same time, as Jameson (2000: 53) has reminded us, [c]ommodity production is now a cultural phenomenon... that is about global brands and images. As we see in contemporary Korea, this branding can include whole nations. While production (and consumption) is being deterritorialised as never before, states and labour remain nationally focused (ILO, 2007: 1). Even so, global production requires that states, businesses and labour respond in ways that enhance competitiveness in multiple ways the competitiveness of products, firms, markets and countries (as potential sites of investment and production). Individual states respond to this competition in many ways, facilitating flexible labour markets and through monetary, fiscal, tax, investment and industry policies. These policies are regularly measured for rankings of national flexibility. Many states strategically engage their economies in production chains while implementing multi-layered industrial policies that include complex combinations of value-adding strategies. In addition, to remain attractive production sites, states increasingly concede that national borders and even ethnicity need to be re-imagined if investment and production is to be maintained. Borders and cultural exclusivity cannot be permitted to continue to impede investment, trade, or the flow of required labour. Deepening globalisation has become a state mantra for moving beyond crisis, developmentalist state models and lower-technology and lower-labour cost technologies to a modernised, globalised, market-driven and mass-consumption economy. These aims are expressed in exhortations by government, business and international organisations for each country to do better. South Korea is claimed to lag in terms of globalisation. According to the 2009 KOF Globalization Index of the Swiss Economic Institute, South Korea ranked just 59 th among 208 countries,

5 South Korea and the Antinomies of Neo-Liberal Globalisation 185 standing 87 th in economic globalisation, 37 th in political globalisation, and 78 th in social globalisation (ETH Zurich, 2009). Moving up these league ladders is seen as a measure of success. In this special issue, each of the articles considers aspects of the challenges posed for the population as the Korean state adopts neo-liberal policies that are meant to further promote the country s globalisation. These articles do not measure globalisation against any index, but question how changes to economic and political governance have impacted democratisation, participation, education, work and the accepted definitions of Korea, nation and what it means to be Korean. Haeran Lim examines the political economy of economic reform in the era of neoliberal globalisation and considers the ways in which the state s role has changed. She finds that the developmental state is not dead but that it is being changed as political and economic conflicts are played out. While economic crisis, democratisation, globalisation and technological progress have all boosted the political clout of business, the state remains important for planning and implementing economic change. Kwang-Yeong Shin explores the impacts that globalisation has had for the working class. As other authors in this special issue note, this era of embedding Korea more deeply into global circuits and processes has coincided with the transition to democratic government. Shin notes the paradox that, while democratisation has empowered workers, globalisation and neo-liberal reforms have undermined organised labour. Globalising processes have resulted in a far more fragmented working class and a huge rise in the number of vulnerable and contingent workers. With the system of company unions weakened and the struggles of contingent workers expanded, social movement unionism has emerged and Shin sees a possible future for the union movement in this development. Referring to the contemporary period as an age of global migration, Chulwoo Lee questions the contention that there has been a decoupling of nation and state, suggesting that the nexus is being renegotiated and readjusted. Using legal cases and other state policies, Lee highlights how Korea s definition of citizenship is challenged on issues of diaspora, ethnicity and migration. Examining the tensions between territory and people demonstrated in contestation over political participation, Lee seeks a nuanced understanding of how global transformations reshape national understandings. The Korean state has emphasised the need to remake the nation as a multicultural Korea. Dongsung Kong, Kiwoong Yoon and Soyung Yu argue that the relatively large inflow of immigrants in recent years is based in policies driven by the demands of business and the desire to manage ethnicity. They see no evidence of any serious policies that might aim for a more culturally diverse South Korea. None the less, the authors remain optimistic that future immigration will lead to a more ethnically and culturally diverse society, especially as the younger generation seems more open on racial, religious and language difference. Moon-Gi Jeong and Soo-Gil Oh take up the changes that have been made by government in responding to the challenges of democratisation and globalisation. Dealing with committee governance developed under President Roh Moo-hyun s Participatory Government initiative, they raise questions regarding the representation of non-state actors. Jeong and Oh find some improvement in the

6 186 S. J. Lee and K. Hewison representation of citizens in the national policy process, but that decision making remains limited to a small number of participants, most of them public officials. While Koreans now enjoy more freedom to express their opinions, organise their interests and challenge established authority, Hyun-Chool Lee finds what might be characterised as a democratic deficit in the formal structures of participation and governance. He scrutinises the Korean National Assembly s capacity to deal with the issues and challenges of globalisation. Lee examines the Assembly s responses to the Korea-Chile and Korea-US Free Trade Agreements and discerns an imbalance between the parliament and the executive administration. He concludes by looking at ways in which the state s capacity for dealing with global issues could be strengthened by enhancing participation, responsiveness and checks and balances. In the final article in this special issue, Sangjoon Kim assesses a significant social response to increased job insecurity following neo-liberal reforms that, through increased flexibility, make global competition a local reality. A notable response has been increased investment in education, most especially by Korean families. Businesses and governments have demanded an increasingly individualised response to education and training. One result has been a massive private education system absorbing enormous social and economic resources as individuals and their families prepare themselves for a more competitive future with fewer certainties regarding employment and well-being. Acknowledgement In December 2008, a group of academics were brought together by the Graduate School of Governance of SungKyunKwan University (SKKU) and the Journal of Contemporary Asia to discuss globalisation and its local impacts. This symposium on Globalisation of South Korea: Its Impact and Opportunities was financially supported by the Graduate School of Governance s Brain Korea 21 fund. The special issue coeditors wish to express their gratitude to the Graduate School of Governance at SKKU, all of the participants who generously provided their papers, ideas and support, and Vedi Hadiz, Jim Glassman, Richard Westra and Geoff Gunn members of the Journal of Contemporary Asia editorial board who attended. References Akram-Lodhi, A. (2006) What s in a Name? Neo-conservative Ideology, Neo-Liberalism and Globalization, in R. Robison (ed.), The Neo-Liberal Revolution. Forging the Market State, Houndsmill: Palgrave Macmillan, pp Amsden, A. (1989) Asia s Next Giant: South Korea and Late Industrialization, New York: Oxford University Press. Choe, S. and C. Pattnaik (2007) The Transformation of Korean Business Groups after the Asian Crisis, Journal of Contemporary Asia, 37, 2, pp ETH Zurich (2009) KOF Index of Globalization, (downloaded 10 December 2009). Gamble, A. (2006) Two Faces of Neo-liberalism, in R. Robison (ed.), The Neo-Liberal Revolution. Forging the Market State, Houndsmill: Palgrave Macmillan, pp ILO (2007) International Labour Migration and Development: The ILO Perspective, Geneva: International Migration Programme, International Labour Office, migrant/download/perspectiv_dev.pdf (downloaded 1 January 2008). Jameson, F. (2000) Globalization and Political Strategy, New Left Review, 4 (new series), pp Jayasuriya, K. (2006) Economic Constitutionalism, Liberalism and the New Welfare State, in R. Robison (ed.), The Neo-Liberal Revolution. Forging the Market State, Houndsmill: Palgrave Macmillan, pp

7 South Korea and the Antinomies of Neo-Liberal Globalisation 187 Kim, Y. (2005) DJnomics and the Transformation of the Developmental State, Journal of Contemporary Asia, 35, 4, pp Kim Y. and H. Kang (2008) Conservatism, Pragmatism, Globalism Sweeping Korea, The Korea Times, 30 January, (downloaded 10 December 2009). Kwon, E. (2004) Financial Liberalization in South Korea, Journal of Contemporary Asia, 34, 1, pp Lee, S. (2008) The Politics of Chaebol Reform in Korea: Social Cleavage and New Financial Rules, Journal of Contemporary Asia, 38, 3, pp Lee, S. and T. Han (2006) The Demise of Korea, Inc. : Paradigm Shift in Korea s Developmental State, Journal of Contemporary Asia, 36, 3, pp Petras, J. (1999) Globalization: A Critical Analysis, Journal of Contemporary Asia, 29, 1, pp Portes, A. (1997) Neoliberalism and the Sociology of Development: Emerging Trends and Unanticipated Facts, Population and Development Review, 23, 2, pp Robison, R. and K. Hewison (2005) Introduction: East Asia and the Trials of Neo-liberalism, The Journal of Development Studies, 41, 2, pp Scholte, J. (2005) The Sources of Neoliberal Globalization, Geneva: United Nations Research Institute for Social Development, Overarching Concerns Programme Paper Number 8, October. Soros, G. (1998) The Crisis of Global Capitalism, New York: Public Affairs. ul Haque, I. (2004) Globalization, Neoliberalism and Labour, Geneva: United Nations Conference on Trade and Development Discussion Papers No. 173, July, UNCTAD/OSG/DP/2004/7. Wade, R. (1990) Governing the Market, Princeton: Princeton University Press. Weiss L. (1999) State power and the Asian crisis, New Political Economy, 4, 3, pp Westra, R. (2009) Political Economy and Globalization, London: Routledge. Williamson, J. (1990) What Washington Means by Policy Reform, in J. Williamson (ed.), Latin American Adjustment: How Much has Changed? Washington D.C.: International Institute for International Economics, pp