From the financial crisis to the next eleven: limits and contradictions in the Korean process of capital accumulation

Abstract

This paper examines the South Korean economic crisis of 1997–1998 and the subsequent recovery. For this, it first analyses the specific characteristics and long-term development of the process capital accumulation there. The paper claims that, as in the rest of East Asia, capital accumulation in Korea has, since the mid-1960s, revolved around the production of specific industrial goods for world markets using the relatively cheap and disciplined local workforce for simplified labour-processes as appendage of the machine or in manual assembly operations. This modality of accumulation resulted from changes in the forms of production of relative surplus-value on a global scale through the development of computerisation and robotisation, and the concomitant transformation in the productive attributes of the collective worker of large-scale industry. The 1997–1998 financial-cum-economic crisis, as well as the foundations and characteristics of the subsequent recovery, are understood as manifestations of the contradictory dynamics of this specific form of capitalist development.

Keywords:

• South Korea
• capital accumulation
• financial crisis
• recovery

JEL classifications:

• F63
• O1
• O2
• O53

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. See Figure 1 for the evolution of GDP and industrial value added.

2. O'Neill and Stupnytska (2009).

3. See Figure 2 for the movement of exchange rates around their purchasing power parity.

4. See Figure 3 for the evolution of industrial-sector wages and labour productivity.

5. This section is based on the works by Carrera (2008, 2014), Grinberg and Starosta (2009) and Grinberg (2013, 2014).

6. It should be noted that the points made here contrast with the World-Systems approach. Though some of the authors working within this framework recognise the ‘ontological’ primacy of the world-system over the nation-state (Chase-Dunn and Grimes 1995), hardly any of them sees capital, the reified general social relationship amongst commodity producers, as its concrete subject. Rather, they point at an abstract ‘international division of labour’ in the context of ‘capital accumulation’. As a result of this methodological weakness, World-Systems analysis of concrete national developmental processes invariably signals the political forms through which the uneven development of global capital accumulation comes about as the driving forces of the process.

7. This section summarises Grinberg (2014, 721–729).

8. See Figures 4 and 5 of the evolution of the production of surplus-value in Korea and of the rate of profit of industrial capital in Korea and the USA.

9. Effectively, since the early 1970s, the global economy has been undergoing a process of overproduction of capital, whose resolution in a general crisis that re-establishes the balance between social production and consumption has been postponed through the expansion of credit by nation-states sustaining global demand. This expansion, however, has not been constant. Rather, it has taken shape in the succession of periods when cheap-credit policies support global growth with periods when, as a result of relatively more stringent state actions addressing inflationary pressures, limited crises take place, eliminating a portion of the fictitious capital that develops in this process and thus slowing the growth of credit and aggregate demand. Each new cycle has reproduced on increasingly weaker and unsustainable bases; hence, the limited crises of overproduction taking place at the end of periods of relative prosperity have been increasingly extended (Brenner 2006; Carrera 2008, 181–233). See Figure 6 for the evolution of credit growth, GDP growth and interest rates in the USA.

10. In 1996, for instance, there were 2200 scientist and engineers working in R&D per million people in Korea while there were 5000 in Japan where total population was three times larger (OECD Research and Development Statistics).

Additional information

Notes on contributors

Nicolas Grinberg

Nicolas Grinberg is a research fellow for Argentina's National Scientific and Technical Research Council. He is based at the Institute for Advanced Social Studies of the National University of San Martin where he teaches development economics. He holds a PhD in economic history from the London School of Economics. His research interests are in the political economy of comparative development.