Search Salon

- - - - - - - - - - - -

Recently in Salon News

Shaheen draws a blank
After a year-long probe, the Justice Department's special counsel finds "insufficient" evidence of Whitewater witness-tampering.
By Joe Conason
[07/28/99]

Let the circus begin
Rudy Giuliani visits Little Rock to ridicule his carpetbagging New York Senate rival, Hillary Clinton.
By Suzi Parker
[07/28/99]

China's new spiritual uprising
Is the Falun Gong sect a real threat to the regime or simply a phantom menace?
By Orville Schell
[07/27/99]

Revenge is theirs
Kosovar Albanians step up Serbian killings as U.N. peacekeepers look on.
By Alex Todorovic
[07/27/99]

Keepers of the faith
Despite dwindling time and numbers, the anti-Clinton movement won't say die.
By Sarah Keech
[07/26/99]

Complete archives for News

- - - - - - - - - - - -

- - - - - - - - - - - -

Until last week, soaring share prices have seemed to signal the beginning of the end of the economic disaster that hit Korea in November 1997, as foreign capital fled and the International Monetary Fund imposed harsh conditions for aid. The fragility of that rosy scenario became evident on July 19, when Daewoo -- one of Korea's biggest conglomerates -- narrowly avoided bankruptcy by pledging $8.6 billion in assets to persuade lenders to roll over debts it could not pay. Daewoo's crisis spread to the financial sector, then led Korea's stock market to plunge by more than 10 percent in two days.

Yet even as pundits were cheering the earlier stock run-up and forecasts of as much as 7.5 percent growth for this year, strikes since late April at subways, hospitals, auto plants, television networks and many other workplaces tell a different story.

The strikers, like many Korean workers, fear that whatever recovery is under way will not benefit them soon enough, and that they may still face more job insecurity or layoffs as the government -- under pressure from the IMF and international money managers -- pushes Korea's big, diverse corporate conglomerates to reorganize and trim their payrolls. More fundamentally, many believe the system that lifted Korea from abject poverty into the club of rich nations in a few decades needs drastic change, and they want ordinary Koreans like themselves to have a voice in deciding the country's direction.

Virtually nobody in the country wants to preserve the old Korean model intact. Whatever its economic successes, it was also undemocratic, repressive and corrupt. But there are strikingly different ideas about reform in Korea. Some government officials are pushing modest changes toward a Japanese-style system that would preserve strategic relationships among the groups of companies known as chaebol and government. Big business, of course, favors greater deregulation of the conglomerates.

Among advocates of more thorough change, the debate is between the American model of free market fundamentalism (pushed by the IMF, Washington and global financiers) and a more democratic model drawing on experiences ranging from European social democracy to American employee stock ownership plans (favored by unions and most of the citizen democracy movement).

The choices Koreans make in the next few years will not only shape their country's future but could have a ripple effect throughout Asia, including China, since Korea's success has been a touchstone for government policies in many other countries.

It has been far too easy for many Americans to see the Asia crisis as proof that the "Asian model" of developmental capitalism has failed and that the only alternative is to become like America as fast as possible. Despite the ubiquitous Kentucky Fried Chicken and other American fast food signs in downtown Seoul, the average Korean does not want an American-style, individualistic, winner-take-all society. Korea has rushed to prosperity with a more collective strategy, and there is still a strong sense of both familial and social responsibility for others.

The Korean model was flawed, of course, mainly because it was so undemocratic. The country's great leap forward since the 1960s came as a result of the government, always under heavy military influence, holding down workers while channeling loans (often at negative interest rates) to the chaebol, big, family-controlled, cross-subsidizing conglomerates of disparate industries. The chaebol, like Hyundai, Daewoo, Samsung and Lucky-Goldstar (now LG), were expected to develop modern industries -- especially steel, auto, machine tools, chemicals, shipbuilding and electronics -- that could meet and beat Japanese, American and European firms in the world market. The new corporate oligarchies in turn pumped millions of dollars back to the bank accounts of political and military leaders. With the always tense relations with the North ready as a rationale, they suppressed human rights, democracy and workers, whose low wages gave Korean chaebol an edge.

New worker protests against harsh conditions swelled the democracy movement in the 1970s, then exploded in 1987 with a wave of strikes and organizing. As unions finally won a share of prosperity for workers, many light manufacturers -- like contractors for American sport shoe companies -- fled to lower-wage Indonesia, Vietnam and China. Korea was succeeding in its drive for world prominence in advanced, heavy manufacturing, but the chaebol were also running up huge debts.

Next page | The democracy movement gains strength