The information in this file was recently published in FREEDOM - the fortnightly anarchist journal published by FREEDOM PRESS: FREEDOM PRESS (IN ANGEL ALLEY) 84B WHITECHAPEL HIGH STREET, LONDON E1 7QX GREAT BRITAIN Do write for a sample copy or for a copy of our booklist of publications. We will be putting more of this information out so watch this spot... FOCUS ON... SOUTH KOREA South Korea has often been held up as a successful example of what can be achieved by the New World Economy. With this issue we turn our FOCUS... on South Korea to look at some of the issues raised... As South Korea contemplates a future of integration into the New World Economy the population is sparing some time to take at glance over its shoulder at its past. Its lessons do not always make the South Koreans keen to follow their President, Kim Young Sam, who is described in the west as a comfortable winner in the last elections. He got 42% of the vote which was actually cast - somewhat similar to a Mrs Thatcher - and like her he has never enjoyed widespread popular support but rather the support of sectional interests which, in the Korean context, means from the emmerging urban middle classes. The rest are not so keen on Kim Young Sam's flirtations with global capitalism. Indeed one recent survey found that almost half of all South Koreans oppose direct foreign investment in the country, while two thirds were against the lowering of trade barriers. A recent report by Political & Economic Risk Consultancy suggested that South Korea ... was the most nationalistic country in Asia was the most bureaucratic after China and Indonesia had an economy dominated by cartels and state-owned companies discriminated more than any other nation against foreign investment was the most protectionist nation in Asia had the highest potential for labour unrest had greater potential for social unrest even than China This, as we say, reflects a certain historical awareness of the people. Korea has never fully escaped the legacy it inherited when it went into almost self-imposed exile nearly 400 years ago after repeated invasions by Manchus and the Japanese. This earnt it the nickname of the Hermit Kingdom and it was one of the last countries to establish contact with the west. All this can of course be seen still in North Korea where the paranoid regime of Pyongyang has successfully perverted the traditional Korean principle of juche or self-reliance. South Korea, meanwhile, has suffered another Japanese invasion but of a slightly different kind. Over 90% of South Korean exports of electronic equipment, for example, are produced by affiliates of Japanese countries. Here we should remember that the most important industries involved in the globalisation of economic activity and the new International Division of Labour - the hallmark of capitalism this end of the twentieth century - are often in the electronics sector, (also we should mention textiles and clothing in this category, important industries in other countries in the region). These are industries where profits are hard to maintain through increases in technological inputs but relatively easy to increase by substituting low wage for high-way labour - heard it before? Is Korea so special? Not at all. This means that the 'manufacturing' undertaken in peripheral settings by transnational corporations is more often than not merely assembly, with the manufacture of components that require higher levels of skill and/or technology - particularly in the area of research and development -being undertaken in core nations - albeit in settings that are often outside traditional manufacturing regions - silicon chip valleys and the like. As we say there nothing new in all this. The story we saw of the maquiladoras in Mexico (see Freedom Vol 55 No.3) is thus seen to be repeated here. South Korea's development miracle is in large part the same old story of a country becoming a glorified factory of foreign TNCs. But also, as we so often find when development is so strongly lopsided towards one industrial sector, uneven development is the outcome (again check out how happy the peasants in Mexico are at the moment). Because the basis of economic growth has been in the manufacturing sector, the larger industrial cities and the highly urbanised provinces have experienced relatively high levels of economic performance. Rural incomes in South Korea have been supported through price- support subsidies - not a very endearing notion for those 'free' market apologists - but rural incomes and per capita consumption remain at less than half those of towns and cities. It is in the largest cities and their metropolitan regions, however, where living standerds are, in many respects, highest. It is here that both public and private investment have been most noticeable. The result is that the cities of Saoul, Incheon, and Anyang and the surrounding province of Gyeonggi, in the Northwestern corner of the country, constitute a clear 'core' of prosperity with a 'fragmented periphery' that corresponds to the highland regions of the south and northeast. Highlighting these factors somewhat are some statistics we can find reported in a new book by Robert E. Bedeski - an Australian based academic. We give the following extract as a taste of some of the statistics: Demographic change has also been tranforming Korean society. In the period since establishment of the Republic, there has been a major migration to the cities in the search for employment and higher living standards. During 1988, for example, rural populations decreased by 6.4%. The flow to the cities has made farms an increasingly male domain, as women and young persons go to jobs in the urban areas. According to the 1985 census... South Korea had a population of 40,448,486 and was the world's fourth most densely populated country, with 408 persons per square kilometre. Nearly a quarter of the population resided in the greater Seoul area... As South Korea modernises, the population structure changes, and living standards have improved. Two major results of change have been the expansion of the urbanised population, and the growth of an urban middle class. In 1990, the rural population was 25.6 % of the total, compared with 72% in 1960. Because of the mountanous terrain, only 21.7% of the total land area is under cultivation, and the amount available for farming becomes less every year as more urbanised and industrial sites are created... Such movements towards the urban centres have the usual predictable consequences: With 40% of the nation's population in the greater Seoul area, the housing crunch was becoming serious. At the end of 1991, there were 10,580,000 family units in 7,870,000 housing units, indicating that over a quarter of Korean families were sharing their units with another family. Crowding was almost entirely an urban phenomenon. South Korea has been presented as The Jewel in the Crown of NICs (New Industrial Countries) and is pointed to as a shining example of successful development - that it development in the mirror image of the core industrial countries. So much so that it hopes next year to become the first Asian member of the OECD. In this light Bedeski's book makes for an interesting read. All the more so as he is sympathetic, in many ways, to the apologists for South Korea. Certainly some of the economic statistics look impressive: GDP per capita in the late 60s was around $200. By 1992 this had risen to $7000. But as the author also makes clear in this academic and objective analysis the problem with such averaging of figures is not what they show but what they don't show. For example in the light of such statistics South Korea is often presented as having relatively equitable income distribution. However, the book calls this sharply into question: Nearly one-fifth of the population holds 42.2% of national income... the governments 1990 budget was seen by many as worsening the wealth distribution problem... At the lower end of society, it is estimated that over three million people live in poverty. The economic planning board reported that 7.7% of the entire population receive significant public assistance. Indeed one can begin to see why South Korea might hope to join the OECD next year in this light. Such damming figures would stand up well in comparison with almost any European member State: inequitable distribution of wealth; unacceptable levels of poverty (usually fuelled by high levels of unemployment) and the new beast: stagflation - impossible according to economic theory but there for all to see. Indeed stagflation turns out to be the only real miracle capitalism has to offer. Successful economies in capitalist terms require a radical redefinition of 'success'. Financial Times 23 June 94 The Transformation of South Korea by Robert E. Bedeski. Published by Routledge.