Social Ramifications of South Koreas Economic Fall: Neo-Liberal Antidote to Compressed Capitalist Industrialization?

Abstract

South Koreas economic collapse of 1997 was no less dramatic than her earlier economic success for three and a half decades. Obviously, South Koreans overstretched their economic ambitions in the 1990s, so that suicidal investment in heavy industries using short-term foreign loans was destined to cause a major balance-of-payment crisis. The recent economic- and, for that matter, social- crisis, however, seems rooted in many more ills of the South Korean model of development. Particularly menacing are social problems emanating from the psychological bubble concerning material betterment, the welfare-suppressive accumulation strategy, and the authoritarian treatment of labor. These practices and habits were often considered instrumental to achieving rapid industrialization and economic growth, but their social costs remained unpaid. Incidentally, various risky social conditions which had been built up under the South Korean development strategy began to hurt South Koreans at the grassroots level, with the IMF programs working as a crucial catalyst. In this sense, the IMF could (and should) have been much more careful about the local social contexts in which its economic restructuring programs would take effects (and side-effects). Despite its immediate success in debt renewal and economic stabilization, the current South Korean government has failed to alleviate these risky social conditions effectively.