Capitalist Development in Korea

Labour, Capital and the Myth of the Developmental State

Dae-oup Chang

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781134046447
• Edition: 1
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

Contrary to the widely-held view that the East Asian "developmental state" is neutral in terms of the relationship between capital and labour – a benign co-operation between state officials and businessmen to organise economic development – this book argues that in fact the developmental state exists to promote the interests of capital over the interests of labour. Dae-oup Chang asserts that there has been a deliberate mystification concerning the reality of this process. This book presents a radical, Marxist critique of state development theory. It both explains the exploitative functions of the state, looking at the emergence of the particular form of capitalist state in the context of the formation and reproduction of capital relations in Korea; and also traces the origin and development of the process of mystification whereby the capitalist state has been characterised as the autonomous developmental state. In addition, the book provides a comprehensive analysis of labour relations in Korea both before and after the 1998 financial crisis, demonstrating continuing capital relations, state transition and class struggle.

1 Introduction

New reformism and the late blooming of statism in Korea

Back in the early 1990s, it was very common to see the state described as a public enemy in Korea. Under the influence of the theories of state monopoly capitalism and Leninism with a strong Stalinist twist, ‘revolutionary’ sectors and groups in universities and workplaces concentrated on developing the best possible strategy to break down the state apparatus that exercised its force against the struggle of the working class in order to sustain ‘monopoly capitalism’. At that time, the state was regarded as an enemy not only by this hard-line Marxist–Leninist movement, but also by the wider democratisation movement, which saw the state as a big bureaucratic body that overshadowed civil society by exercising its overwhelming force against democracy and civil rights. In this sense, all reformist political movements shared a common idea about the state: ‘a public enemy’. From the other side, the state was also often described as ‘evil’, not because of its strong anti-labour and anti-democracy policies, but because of its heavy-handed interventionist policies in private businesses. Capitalists often argued that the state hindered more effective economic development by controlling the financial markets and, therefore, undermining the rule of the market that would bring national prosperity.

As time goes on, there seems to have been a significant change in the reception of the state by the dissident movement and more generally by ordinary citizens in Korea, while capitalist views on the state still keep repeating the free-market and anti-state rhetoric. After the presidential election in December 2002—the result of which turned out to be a victory for the quasi-nationalistic reformist candidate Roh Moo-hyun over the hard-line conservative candidate—many Koreans did not hesitate to express an expectation greater than ever before, an expectation that the state would bring greater democracy and fairer economic development, in which fast economic growth goes along with better distribution. For many political dissidents, even some Marxist academics, Roh’s victory was conceived as a ‘social democratic’, if not revolutionary, development in which people, having suffered from suppression by the brutal state and, having managed to fight back, finally won the state apparatus. It was believed that the state, as it had been a tool of the military and capitalists, would become a vehicle to deliver democracy and economic justice. Certainly, in comparison with the previous military governments or even with the so-called citizens’ government of a Nobel Peace Price winner, Kim Dae-jung, Roh’s government, which, not to mention the president himself who has been actively engaged with the humanitarian movement as a political reformer, consists of many former political dissidents, looked good enough to satisfy people who remembered the dark days under the military regimes or the unfair treatment of Kim’s government toward the working class in overcoming the economic crisis in 1997. In this sense, it was no surprise that president-elect Roh, even before officially coming into office, faced criticism from capitalists, noticeably the KBF (Korean Businessmen Federation), who expressed their fear about Roh’s government by describing Roh as a ‘socialist’ (New York Times, 10th February 2003), in spite of his repeated attempts to assure them that his government would not harm free-market based development.

Having seen this, one would say that the ‘state’ became a centre of the discourse of the reforms of Korean society as a vehicle to realise the aspiration for reforms of Korean society. However, to be fair, Roh’s government could hardly be called in principle socialist or even social democratic, in the sense that it did not pursue, in any measures, fundamental reform that might have possibly undermined the principle of capitalist development based on the rule of the market. To be more correct, this wide-spread reformism and political aspiration in Korea in 2003 resembled a statist belief that the state could be a vehicle to largely resolve the social problems caused by economic inequality without, however, critically undermining the operation of the capitalist economy. It also resembled the statist idea in the sense that it understands the nature of the state as determined by those who ‘occupy’ the state apparatus. Certainly, there was nothing new about the idea that the interventionist state could bring healthy economic development through enhancing better distribution, a system of social safety net and even labour-friendly working conditions. Nonetheless, this resurrection of the rather out-dated statist belief in Korea, having seen all the market-based reforms after the demise of the Keynesian interventionist state all over the world, appeared to be strong enough to attract particular attention.

This resurrection of statist reformism in Korea reflected first the fact that there had been growing discontent with market-based reforms pushed forward during the four years after the economic crisis and the IMF’s bail-out, during which unemployment and the polarisation of the quality of living between the social classes massively increased. It also showed that the statist argument about the so-called ‘developmental state’, adopted by former political dissidents and reformists, had developed as a strong political alternative to market-based reforms. Outside Korea, this statist argument about the state in Asian NICs (Newly Industrialising Countries), including Korea, enjoyed its heyday long before it became an alternative theory offering a strategy for a more balanced economic development in Korea. From the 1980s, when the state was still regarded as the public enemy in Korea, the theories of the developmental state began to dominate both the explanation of the particular form of the state in Asia and an alternative economic development strategy in late-developing countries, providing detailed analyses of the extraordinary performance of the state, particularly with respect to its role as an economic promoter. Largely due to the fast capitalist development in the region and the subsequent improvement of the living condition of the population, the statist exposition of the role and nature of the state in Asian NICs attracted many scholars in the West and became a more relevant explanation than the liberal argument that largely ignored the role of the state in Asian economic development.

It was after the emergence of the Asian crisis that neo-liberal advocates seemed to have a great opportunity to blame the ‘developmental state’ for causing so-called transparency problems. Given the undermining of the real practices of the developmental state in the aftermath of the crisis, it seemed unnecessary to refer to the neo-classical argument in order to confirm the demise of the so-called developmental state as well as that of the theories of the developmental state. However, contrary to the poor performance of the ‘developmental’ states, the ‘developmental state theories’ could now enjoy another popular reception, this time not in the West but in the East, by arguing that the developmental state had been a relevant strategy of the Asian miracle, but it was now generally declining due to the deregulation of the market caused by the reforms pursued by neo-liberal agencies, particularly the imperialist financial capital from the US and elsewhere in the West. Those statist counter-arguments were based on the idea that the globalisation process did not allow the national economy, which relied on state regulation of the market, to sustain the Asian model of economic development any longer (Wade 1998, 2000; Wade and Veneroso 1998a, 1998b; Jayasuriya 2000, 2001). Thus, the theory of the developmental state successfully came back to mainstream political and economic discourse, if not in the West, certainly in Korea. Indeed, it was these statist arguments that have been welcomed and swiftly introduced in Korea by social democrats and radical academics as an alternative, in an urgent need to form a political alliance against market-based reforms under the Kim Dae-jung government. Once the statist agenda was recognised as an alternative to the neoliberalist reforms, the early literature by the statists began to be read widely but in a very specific way. For those who remembered the suffering from the military regimes that had ruled Korea for more than 30 years, statist admiration toward the authoritarian-developmental regimes that pursued a development-first human rights-later policy could not be easily accepted. However, instead of recognising the political nature of the statist argument, which was inherently anti-labour, the statist admiration for the bureaucratic body of the state was read as suggesting an ideal form of the government that could lead to an alternative development. So the immediate task was to organise the ideal government. It was in this process that the state, which had been described as the public enemy, suddenly became a vehicle to deliver reforms.

Demystifying the practice and theories of the developmental state theories

This book began to be written at the beginning of the process in which developmental state theory was becoming an alternative understanding of as well as a model for the development of Korean society. Having experienced the extreme anti-labour policies in the period of the so-called state-led capitalist development, the statist argument, which dominated the field of Asian studies and exposition of Korean economic development, sounded absurd to me. Therefore, this book began firstly as an empirical critique of a serious misreading of history, from which all the facts about labour and 100 years of the struggle of the working class were disregarded and removed. As time went on, however, it became clear that the problem of the statist argument lay deeper in the theoretical framework of the statist argument, the result of which created the absurd theory of the developmental autonomy of the state, in which the state appears to be detached from society, although it serves capital accumulation by exercising its force directly against the working class. By this time, the statist approach was becoming more and more influential not only as an understanding of the form of the Korean state but also as an alternative theory that would offer a theoretical basis for a political alliance among the civil and political movements against market-based reforms in Korea. Indeed, a proper theoretical critique of the statist theory seemed to be an urgent task for critical academics in Korea. However, rather than developing a critical understanding of the statist theory, radical academics in Korea began to rely more and more on the possibility of state-led reforms. This led me to engage not only with the historical misreading by the statist theories but also with its theoretical problems that produce a serious mystification in understanding of the real nature of the capitalist state. Once I began to develop a theoretical critique of the developmental state theories, it also became clear that the statist theory was not only a product of mystified history or theoretical shortcoming but also a political project that contributed to mystifying the nature of capitalist social relations and the form of the capitalist state. Indeed, having seen the growing political aspiration on the basis of a great expectation toward the state-led reforms in Korea, it seemed that the statist mystification of the form of the capitalist state was finally being realised in a concrete form as a political project in Korea.

The late-blooming of statism in Korea reflected a growing political alliance between a privileged section of the working class and liberal-statist reformist, on the basis of a nationalist–statist agenda which aimed to combine the rule of the market with social justice. When this alliance opened the reform process to traditionally militant unions, calling for a firmer and wider social consensus, there was a possibility that the social alliance between statists and the working class could be widened and the organised sector of the working class was going to be a partner of the state’s reconstruction policies by showing a great degree of cooperation with the statist reformism. This may have pushed the marginalised working class to challenge both the authority of existing trade unionism and the state’s reformist agendas. However, this scenario, perhaps fortunately, has not materialised. Rather, the political alliance between the working class and statists soon weakened. It was at that time that the statist–reformists completely gave up their ambition regarding the social safety-net and consensus-building with the working class and became truly neo-liberalist as they were destined to be from the very beginning. The political experiment of the statists in the era of neo-liberal globalisation ended in utter failure and left the emerging popularity of conservative political parties, on which the vast majority of Korean workers now rely for further economic growth. However, as upcoming market-driven reforms cannot guarantee better living standards for the majority of people in Korea, there will soon be another political alliance emerging on the basis of statist reformism.

My book aims to challenge the political project of the statist theorisation of the state and capitalist development by demystifying the practice and theories of the so-called developmental state. This book will do so by offering a two-fold critique of the developmental state. I will develop a critique of ‘developmental autonomy’ as a pillar of developmental state theories, on the one hand, and provide an alternative reading of the history of the formation of the Korean state, on the other. The first part, from chapters two to five, will be devoted to developing a Marxist critique of the theories of the developmental state. Thus, I will define the most serious theoretical shortcomings of the statist approach as its understanding of the state as a set of institutions and of capital as a set of businessmen. I will argue that it is on the basis of this benign understanding of the relations between the state and capital that the statists finally conceptualised the state in East Asia as a state ‘autonomous’ from capital by deriving the form of the state from the nature of the seriously narrowed-down state–society relations, as relations between state officials and a group of businessmen. Understanding capital not as a set of businessmen but as a social form through which capital relations are inverted into technical and economic relations between things and different sources of revenue; and the state not as a set of state officials but as a social form through which unequal capital relations are inverted into class-neutral relations between citizens, I will refute the argument that state leadership against individual capitals in Korean capitalist development can be translated into the existence of the autonomous state. Accordingly, I will argue that the developmental autonomy of the state should be an object of critique, rather than a yardstick of state analysis. However, this does not mean that my book will be devoted simply to proving the class characteristics of the Korean state. Rather, the historical exposition that follows the theoretical critique will be focused on tracing the mystification process through which the state appeared in reality as detached from the interests of capital, i.e. the socio-historical basis of the mystification.

Chapter 2 will attempt to grasp the core argument veiled behind the empirical analyses of the developmental state. By examining the development of statist theories, from case studies of the states in Asian NICs to the more serious statist attempt to ‘bring the state back in’, I will define the most important theoretical basis of developmental state theories as the developmental autonomy of the state. At the same time, I will show that developmental state theories are full of descriptions of what the state looks like from the outside, rather than offering an appropriate explanation of how and why the Korean state appeared in the particular form of the developmental state. Developing a critical inquiry about state autonomy, Chapter 3 will explore firstly traditional Marxist debates about the capitalist state by looking at both the essentialist argument and the autonomy-centred approach, which failed to offer a basis of a critique of the form of the capitalist state. I will argue that in both theories political domination appears separated from economic domination, because the essentialist approach ignores the question of separation itself and the autonomy-centred approach does not criticise but only describes the separation. To answer the question about the contradictory form of the capitalist state, I will move on to Marx’s critique of the general reproduction of capitalist social relations, by looking at Marx’s critique of the theory of value and commodity fetishism, in which he explains the particular way in which capitalist social relations are reproduced into technical relations through mystified social forms. In Chapter 4, I will develop an explanation of the form of the capitalist state as a ‘differentiated’ moment of the reproduction of capital relations by developing further the form-analysis once pioneered by the German derivation debate. Finally, defining the state and capital as differentiated-but-complementary forms through which capital relations are mystified into technical relations between purely economic classes and purely political citizens, I will refute state autonomy as a relevant basis of the analysis of the state. On this basis, chapter five will show, step-by-step, how the statist approach falls back into the mystification of the state that the particular form of the reproduction of capitalist social relations produced, on the one hand, and how the statist expositions of the state justify this theoretical shortcoming in making itself into a political project on the basis of an unrealised aspiration to the ideal state, on the other.

These theoretical chapters will also be a process of building up a critical method that will be applied to the critical analysis of the form of the Korean state. Throughout the theoretical critique of the developmental state, the uncritical nature of the theories will be defined as being based on a method that Marx called formal abstraction. With the method of formal abstraction, the nature of the conceptualised social categories is derived from the natural form itself and thereby the categories are presented and treated as a naturally given entities. The totality of social relations in this case appears to be a mere ‘sum’ of independent entities, rather than a ‘whole’, and the relations between those entities are external. In turn, the parts of the totality are explained as independent entities that form the totality by aggregating together through interacting with each other, forming the loosely patched fetishistic world of modern sociology that consists of the ‘economic’ classes and political state. On the contrary, as we will see in more detail, Marx’s critique of history on the basis of his critical method demonstrates social institutions, categories and strata as particular ‘social’ forms, in which the movement of the totality of social relations appears and exists, rather than beginning with recognising social categories as a naturally given entities. Contrary to the ‘sociological theory’ of the social institutions (including the state), therefore, a critique of the social institutions is to show how the institutions are formed in the movement of the totality of social relations and how the institutions are interrelated to others through taking part in the formation of the totality.

This understanding of Marx’s critique of social forms and naturalistic conceptualisation of the social categories in capitalist society has been developed through the studies of Marx’s labour theory of value, by a few writers. Rubin, in his extensive reading of Marx’s theory of value, integrated Marx’s theory of fetishism into Marx’s critique of the value-form and thereby attempted to understand Marx’s critique and analysis of the value-form as a critique of the social mechanism in which social realities are organised through fetishised social forms (Rubin 1978, 1990). The state derivation debate also followed Rubin’s understanding in that they understood state formation as a fetishist moment of the development of social reality based on the fetishism of money and the commodity (Holloway and Picciotto (eds) 1978; also Müller and Neusüss 1975). The argument was further developed in debates by a group of Marxists belonging to the Conference of Socialist Economists and by discussion under the name of Open Marxism. The understanding of Marx’s critique of value as offering a critical method to understand capitalist social relations and the state will rely largely on this tradition (Bonefeld 1992; Clarke 1977, 1978, 1988, 1991a, 1991b, 1991c; Elson 1979; Holloway 1991, 1992, 1995; Holloway and Picciotto 1978). In fact, an attempt to develop this methodology to a further extent is to go back to Marx’s principle to investigate the development of society.

This conception of history thus relies on expounding the real process of production—starting from the material production of life itself—and comprehending the forms of intercourse connected with and created by this mode of production, i.e. civil society in its various stages, as the basis of all history; describing it in its action as the state, and also explaining how all the different theoretical products and forms of consciousness, religion, philosophy, morality, etc., etc., arise from it, and tracing the process of their formation from that basis; thus the whole thing can, of course, be depicted in its totality (and therefore, too, the reciprocal action of these various sides on one another).

(Marx 1976a: 53, my emphasis)

On the basis of this method of critique, the state will be analysed in terms of a particular form-formation in the movement of the totality of capital relations through class struggle in my empirical critique of the Korean state. To do so, a wide range of literature on the history of the formation of the Korean state, labour and capital, including those written in the statist tradition, will be brought into discussion. However, the historical ‘factors’ presented in those texts will not be understood as they are but decomposed in an attempt to recognise the relations between capital, labour and the state that articulate capital relations in a specific way. Furthermore, those forms of articulation of capital relations will not be presented as they are but will be recontextualised in a way in which they show the development of the state in the movement of the totality of capital relations.

The second part of this book will be devoted to an empirical critique of the particular mystification of the Korean state. Tracing the formation of the Korean state in the context of the development of capital relations in Korea from the colonial period to the 1970s, Chapters 6 and 7 will present the Korean developmental state as a mystified form taken by the highly politicised formation and reproduction of capital relations, in which the state’s complementary role to capitalist development was maximised in s...

Table of contents

• Cover Page
• Title page
• Copyright Page
• List of illustrations
• Acknowledgements
• List of abbreviations
• 1 Introduction
• 2 The mystified state: Explaining the state in the economic miracle
• 3 Marx’s theory of value and the critique of capitalist social relations
• 4 The reproduction of capital relations, the state and class struggle
• 5 Toward a critique of the Korean state
• 6 The early formation of capital relations and the state
• 7 The politicised development of capital relations and the Korean state
• 8 Class struggle and the unfolding crisis
• 9 Labour, capital and the state in transition
• 10 Conclusion
• Notes
• Bibliography