A Legitimate Paradox: Neo-liberal Reform and the Return of the State in Korea

Abstract

This article examines the neo-liberal reforms that the Kim government implemented in post-crisis Korea. It argues that by embracing the reforms, the state, paradoxically, re-legitimised itself in the national political economy. The process of enacting the reforms completed the power shift from a collusive state-chaebol alliance towards a new alliance based on a more populist social contract - but one that nonetheless generally conformed to the tenets of neo-liberalism. Kim and his closest associates identified the malpractices of the chaebols as the main cause of the crisis, so reforming the chaebols would be the key to economic recovery. Combining populism and neo-liberalism, they drew on support from both domestic and international sources to rein in, rather than nurture, the chaebols.

From technological catch-up to innovation-based economic growth: South Korea and Taiwan compared

“…The Kim DaeJung regime's post-crisis reforms implemented after 1998, under the supervision of the International Monetary Fund, continued along the lines of President Kim Young-Sam's neoliberal programs (Hundt, 2005), which included the completion of trade and financial liberalisation, privatisation and corporate governance reform and labour-market deregulation. However, the state's authority increased while the chaebols' power decreased in the reform process, due to the widespread blame for the latter's reckless borrowing and expansionary behaviour that had brought the whole nation into a crisis (Woo-Cumings, 2001;Hundt, 2005). Kim Dae-Jung established a number of ad hoc organisations, such as the Planning and Budget Commission, the…”

Understanding the rise and decline of shareholder activism in South Korea: the explanatory advantages of the theory of Modes of Exchange

“…Some scholars argue that its decline was related to the growing hegemony of neoliberalism in Korea Kim and Park 2008). This is related to a general consensus that in recent years Korea has experienced a pronounced shift toward the neoliberal model (Hall, 2003;Kim, 1999;Ha and Lee, 2007;Hundt, 2005;Lee, 2006). As Lee and Kwak's (2009) review of the literature points out, these authors refer to three types of evidence -the establishment of an independent financial regulator; the dramatic increase in foreign ownership of financial institutions (by 2003 foreigners owned more than 34% of Korean shares by value, up from just 13% at the end of 1996 WSJ 2003) and the segmentation policies for banking, securities, and trust activities -as evidence to support the view.…”

“…As Lee and Kwak's (2009) review of the literature points out, these authors refer to three types of evidence -the establishment of an independent financial regulator; the dramatic increase in foreign ownership of financial institutions (by 2003 foreigners owned more than 34% of Korean shares by value, up from just 13% at the end of 1996 WSJ 2003) and the segmentation policies for banking, securities, and trust activities -as evidence to support the view. It is argued that these reforms precipitated the institutional death of the Korean developmental state (Hundt, 2005;Lee, 2006). explicitly link the rise of neoliberalism with the decline of the MSM.…”

A final flowering of the developmental state: The IT policy experiment of the Korean Information Infrastructure, 1995–2005

“…Analyses of Korean state-business relations include a shift "from dominance to symbiosis" (Kim, 1988); "governed interdependence" (Weiss, 1988); a "pragmatic mix of government guidance with private initiative" (Jeon, 1994); the "patron-client relation" (Nam, 1994); a shift from "the stern but stable statedirected symbiotic partnership to a more unruly and erratic partnership" (Moon, 1994); "embedded autonomy" (Evans, 1995); "public-private reciprocity" (Fields, 1997); the shift from the developmental state to the "post-developmental" or "market-driven state" (Kim, 1999;; "path dependency" (Jang, 2000); an "eclecticism beyond orthodoxies" (Clark, 2002;Clark & Jung, 2004); a "state-Chaebol alliance based on a more populist social contract" (Hundt, 2005); a "transformative state in which the state acted as senior partner rather than commander-in-chief" (Cherry, 2005); and the demise of "Korea, Inc." (the statebanks-Chaebols complex) and the rise of "neoliberal consensus" (the coalition of Chaebols, technocrats, politicians, economic experts, and NGOs) (Lim & Jang, 2006;Lee & Han, 2006). …”