Issue 235 of SOCIALIST REVIEW Published November 1999 Copyright © Socialist Review
South Korea has experienced a dizzying rollercoaster ride these past two years. Last year the economy suffered a severe crunch--what Koreans call 'the IMF crisis'--after the market 'reforms' imposed on Seoul by the US Treasury and the IMF in December 1997. Gross domestic product (GDP) fell by 5.8 percent in 1998.
Economic recovery has been equally abrupt. Goldman Sachs forecasts that GDP will rise by 7 percent this year, fed by a stock-market boom. When I visited Seoul in September, it displayed all the signs of a vast, bustling, modern metropolis of over 12 million people.
Understandably, the economic turnaround has led to some euphoria in ruling circles. A newspaper advert by the main governing party, the National Congress for New Politics, hailed President Kim Dae-jung, 'world renowned human rights advocate, promoter of prosperity and freedom for all people based on democracy, market economy and productive welfare', the man who 'led Korea out of the IMF crisis in just one year and a half'.
Kim Dae-jung was indeed a famous dissident under the military regimes that ruled South Korea between 1960 and 1992. But these credentials are wearing thin. He opposed the IMF programme when campaigning for the presidency in December 1997, but signed up to it as soon as he had won. Kim retained the ultra-repressive National Security Law and formed a coalition with the right wing political leader Kim Jong-pil, ex-head of the Korea CIA which tried to assassinate him during his days as a dissident. In the light of this record it is perhaps not surprising that Kim Dae-jung claims to be a follower of the Third Way.
Despite the celebrations, the economy is by no means out of the woods. During the summer Daewoo, the second biggest of the chaebol--the huge family run conglomerates that dominate the South Korean economy--effectively went bust. Of more immediate concern, the financial markets face a potential crash on 11 November. On that date holders of Daewoo bonds bought through investment trust companies will be able to cash in 80 percent of the value of their bonds. Fearful that the rush to redeem these bonds may unleash another panic like that in autumn 1997, the government has set aside 20 trillion won (£10 billion) to keep the markets afloat.
Kim Dae-jung is also under pressure from the IMF and the Clinton administration to press ahead with 'reforms' that will make it easier for western companies to invest in South Korea. Both neo-liberal supporters of the government and, more surprisingly, many on the South Korean left also want to see the chaebol dismantled to allow a more 'progressive' capitalism to emerge. This utopian demand is facing resistance both from the big corporate bosses and also from the state bureaucracy. These interests are well represented not merely in the ruling coalition, but also in the opposition Grand National Party (GNP), led by Lee Hoi-chang. Very much the party of the old regime, the GNP is expected to do well in next April's parliamentary elections.
Aside from these divisions within the ruling class, Kim Dae-jung must also confront an organised working class that showed its mettle in the great mass strikes of January 1997. The Korean Confederation of Trade Unions (KCTU) is the more militant of the country's two trade union groups. The resistance it led during the IMF crisis did not prevent chaebol like Hyundai forcing through major job cuts. Workers paid the price. Unemployment leapt from 2.7 percent in 1997 to 6.8 percent in 1998. Household income in the third quarter of 1998 was a fifth lower than it had been a year earlier.
But workers fought hard enough to compel management to make many concessions to buy shopfloor peace. These concessions, and the impact of the economic revival on overtime, help to explain the fact that by July 1999 real earnings were up 8 percent on last year. The most militant workers have, however, been embittered by their experience of the Kim Dae-jung administration. Most of them voted for him in 1997 only to see him embrace free market economics. It is significant, therefore, that a number of KCTU officials and left wing intellectuals have been taking the first steps to form a Democratic Labour Party (DLP).
Undoubtedly it would be a step forward if South Korean workers were to have their own party. But the 1997 strikes and the IMF crisis saw the KCTU leadership emerge very clearly as a trade union bureaucracy that sought to hold back the workers' struggles while seeking compromise with the bosses. The DLP's founders are plainly modelling themselves on western European reformism (and not just the big battalions--imagine my surprise when some DLP professors expressed a strong interest in the Scottish Socialist Party!).
The moves to set up the DLP are nevertheless significant. They show how reformism can develop even where political and trade union militants continue to face severe state repression. South Korea's dramatic experience in the past few years has acted as a stimulus for many workers and students to seek their own political movement. This is reflected in the thirst for Marxist ideas, despite the shadow that the National Security Law throws over the left. I was able to give public lectures on Marxism at several universities to large audiences. Our comrades in the International Socialists are battling heroically against state persecution to reach this audience. The next few years will be crucial for socialist politics in South Korea.