Overview of the transformation of Korean capitalism As discussed in Jeong (1997), the statist regime of accumulation that had sustained the 30-year-long boom since the 1960s began to malfunction in the 1980s and crumbled with the 1987 Workers’ Great Struggle, resulting in the falling rates of profit and the long downswing in the 1990s. Having produced ‘miraculous’ growth, by the late 1980s the statist accumulation regime was running into its limits. The 1997 economic crisis was not a thunderbolt from the blue but, instead, the inevitable consequence of the demise of the old statist accumulation regime without its replacement by a new one, and despite the attempts by the
hegemonic bloc to restructure the Korean economy along neoliberal lines since the 1980s. Indeed, the rate of profit of the non-farm business sector, measured by the ratio of pre-tax profits to net fixed capital stock, fell from approximately 12-16 per cent over the period 1970-86 to just 5.1 per cent (the lowest level since 1970) in 1996, the year before the 1997 crisis (see Figure 11.1). The recent development of capitalism in Korea since the beginning of the statist accumulation regime can be divided into three periods: its heyday, between 1961 and 1987; the transition period, between 1987 and 1997; and the period since 1997, when neoliberalism has prevailed. Shin and Chang (2003) and Weiss (2003) have argued that the developmental state, rather than the market fundamentalist minimal neoliberal state, has continued to function on the grounds that the Kim Dae-jung government resorted to Keynesian state intervention, such as the injection of as much as 150 trillion Korean won of public money for the restructuring of the financial sector in order to escape from the 1997 economic crisis.2 However, what matters is not the degree of the intervention of the state but its nature. The Korean government has intervened in the economy in order to enforce on the economic actors nothing other than neoliberal market principles, such as the competitiveness discourses or so-called global standards. The essential role of the neoliberal state resides in establishing market institutions and enforcing market discipline. It must also be remembered that the recovery hinged upon the intensified exploitation of working people, rather than government intervention. However, it is hard to argue that the new neoliberal regime of accumulation has become firmly established in Korea after the 1997 economic crisis. All-out neoliberal restructuring after the crisis has mainly led to
lower growth rates and increased inequality, without succeeding in establishing a new accumulation regime such as a ‘finance-led regime of accumulation’ or a ‘knowledge-based economy’. Indeed, the so-called democratic governments of Kim Dae-jung and Roh Moo-hyun failed to establish a new stable accumulation regime despite the ten-year long neoliberal restructuring since the 1997 crisis, as was epitomized by President Lee Myung-bak’s presidential campaign catchphrases in 2007, such as ‘Lost Decade’, or ‘Saving the Economy’, despite their ideological and exaggerated tone.