Re: Amsden on Korea
Date: Sat, 13 Dec 1997 11:02:05 +0800 (SST) The two books one by Amsden (1989) and Woo (1991) are interesting books. FYI: Steve Smith did a report for EPI a couple of years ago on the Asian industrial policy model. MBS == Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] Suite 1200 202-775-8810 (voice) 1660 L Street, NW 202-775-0819 (fax) Washington, DC 20036 ===
Re: Amsden on Korea
The two books one by Amsden (1989) and Woo (1991) are interesting books. Both discuss the role of the state (in Amsden the state as a latecomer and borrower of technology and I should add institutions) and Woo the state as a financier of economic transformation. Amsden is less critical of the Korean state because her main target is the neoclassical orthodoxy. Korea is a classic example of state-led development. Woo is more critical of the Korean state (even though she acknowledges the leading role the state has played in transforming Korean society) because of the repressive nature of the state until recently. Both positions are appropriate on their own terms. Marty Hart-Landsberg will come closer to Woo in the understanding of Korean development. xx Anthony P. D'Costa (Upto December 12, 1997) Associate Professor Senior Fellow Comparative International Development Department of Economics University of WashingtonNational University of Singapore 1900 Commerce Street10 Kent Ridge Crescent Tacoma, WA 98402-3100 USA Singapore 119260 Ph: (253) 692-4462 FAX: (65) 775-2646 Fax: (253) 692-5612 Ph: (65) 874-6009 E-Mail: [EMAIL PROTECTED] E-mail:[EMAIL PROTECTED] xx On Fri, 12 Dec 1997, Rakesh Bhandari wrote: Perhaps someone could download the WSJ editorial from a few days ago by Professor Meredith Cumings Woo of Northwestern University? Her analysis seems to differ from Amsden's in important ways; for example, she seems to be quite a bit more critical of the kind of state monopoly capitalism that South Korea had practiced. For example, Woo expressed criticism of the way certain enterprises, in which bureaucrats had an important stake, had been subsidized simply on the basis of their size at the expense of more profitable smaller firms. Perhaps there are limits to how long more powerful firms can monopolize credit or set their prices in such a way as to stave off the fall in the average rate of profit at the the expense of smaller capitals? rb
Re: Amsden on Korea
Perhaps someone could download the WSJ editorial from a few days ago by Professor Meredith Cumings Woo of Northwestern University? Her analysis seems to differ from Amsden's in important ways; for example, she seems to be quite a bit more critical of the kind of state monopoly capitalism that South Korea had practiced. For example, Woo expressed criticism of the way certain enterprises, in which bureaucrats had an important stake, had been subsidized simply on the basis of their size at the expense of more profitable smaller firms. Perhaps there are limits to how long more powerful firms can monopolize credit or set their prices in such a way as to stave off the fall in the average rate of profit at the the expense of smaller capitals? rb
Re: Amsden on Korea
Rakesh Bhandari wrote: Perhaps someone could download the WSJ editorial from a few days ago by Professor Meredith Cumings Woo of Northwestern University? Her analysis seems to differ from Amsden's in important ways; for example, she seems to be quite a bit more critical of the kind of state monopoly capitalism that South Korea had practiced. For example, Woo expressed criticism of the way certain enterprises, in which bureaucrats had an important stake, had been subsidized simply on the basis of their size at the expense of more profitable smaller firms. Perhaps there are limits to how long more powerful firms can monopolize credit or set their prices in such a way as to stave off the fall in the average rate of profit at the the expense of smaller capitals? Ask and you shall receive. Amsden says it makes perfect sense for the state to get out of mature industries like cars (though lifting import restrictions could deal a sharp blow to the Korean auto industry), Korea can only upgrade into high-tech with continued government industrial policy. Doug The Wall Street Journal Interactive Edition -- December 8, 1997 Resources: Edit Page Features How Industrial Policy Caused South Korea's Collapse By MEREDITH WOO-CUMINGS Last week South Korea and the International Monetary Fund signed a bailout package worth at least $55 billion, the biggest in history. How did an industrial juggernaut like South Korea, the world's 11th-largest economy, end up in the lap of the IMF? And what does this portend for Korea The short answer is that the IMF has bitten off a lot more than it can chew, let alone digest. For decades, South Korea's politics masked its intrinsic economic instability. Korea emerged from a half-century and war utterly destitute. During the Cold War it occupied a prominent location between the U.S. and the Soviet Union, however, and from 1961 to 1987, South Korea parlayed its geopolitical position into economic advantage. Successive authoritarian leaders amassed huge amounts of foreign aid in the 1950s and then later, foreign loans, allocating them to coddled export industries. Economic planners did this by fiat at first, setting low financial prices (even negative real interest rates, which prevailed throughout the 1970s) and allocating credit through state banks. The banks in Korea became policy instruments of what has been called "late industrialization," emphasizing exports and development of heavy industries related to security needs. This was a strategy indulged by Washington for many years, because it both promoted South Korea's security and turned that country into a model of export-led government industrial policy. Over three decades the state created an impressive constellation of mammoth industrial firms, known as chaebol, a group of oligopolies heavily reliant on government protection and assistance. Firms like Hyundai and Samsung were always hugely leveraged, with very high debt-equity ratios. Because they usually had lower profit rates than small-sized firms, they always needed periodic infusions of new cash. These firms could survive largely because they provided floodtides of cash for the country's politicians. This was their best insurance against default on their debt, along with an additional insurance that came from their sheer size and therefore their importance to the domestic economy; analysts said they were in a "state of permanent receivership." After South Korea's long period of dictatorship ended in 1987, inquiries into the so-called slush fund scandals determined that one former president, Chun Doo Hwan, amassed more than $900 million in political kickbacks, and another, Roh Tae Woo, about $600 million. These enormous sums revealed to the Korean people the massive patronage required to keep Korea Inc. running. By the early 1980s, the system of chaebol support for the ruling parties had become a kind of mad extortionism. During the Cold War, the Korean financial system's insecure footing was ignored or winked at, and Washington always stood ready to help out in the event of trouble. During the economic debacle of 1979-1980, for instance, the U.S. acted swiftly to stabilize Korea, sending signals to the international financial community that in spite of the assassination of Park Chung Hee and the Kwangju rebellion, Korea remained a stable investment environment. U.S. leaders also pressured Japan to share the burden of bailing out a Korean regime that was grappling with economic troubles amid widespread popular disaffection. In 1983, Tokyo gave Seoul some $4 billion in loans--nearly 13% of Korea's net external debt, more than 5% of its GNP, and almost one-fifth of its total investment that year. Thus,
Re: Amsden on Korea
On Fri, 12 Dec 1997, Doug Henwood wrote: I interviewed Amsden on my radio show yesterday... [text cut] Tapes: $5/program (plus appropriate foreign postage), below. I'm sometimes a little slow in fulfilling orders, but they'll get out. Sounds cool. One thought: why not branch out to broadcast TV as well? Aren't there heaps of budding socialist videographers in the Big Apple, or is there any form of community/university TV you could hook up with? It couldn't be that expensive to do a basic talk-show kind of deal, and it would be a terrific forum to spread the word and fight the mass-media fire with fire. Hell, if it clicks you could even get funding from the saurian sloths and reptilian foundations over at PBS. You could call it "Wall Street Weekly" or something like that, and get ex-bond traders from Morgan Stanley on the air to publicly flay the rhetorical daylights out of Global Money. Or is it just too expensive to do this sort of thing? -- Dennis
Re: Amsden on Korea
Dennis R Redmond wrote: Sounds cool. One thought: why not branch out to broadcast TV as well? Aren't there heaps of budding socialist videographers in the Big Apple, or is there any form of community/university TV you could hook up with? It couldn't be that expensive to do a basic talk-show kind of deal, and it would be a terrific forum to spread the word and fight the mass-media fire with fire. Hell, if it clicks you could even get funding from the saurian sloths and reptilian foundations over at PBS. You could call it "Wall Street Weekly" or something like that, and get ex-bond traders from Morgan Stanley on the air to publicly flay the rhetorical daylights out of Global Money. Or is it just too expensive to do this sort of thing? TV is a much bigger deal. Radio is easy cheap. As Twyla Tharp said, TV is about two things, the rectangle the dollar. Doug
Re: Amsden on Korea
On Fri, 12 Dec 1997, Martin Hart-Landsberg wrote: We should take confidence from the South Korean experience that there are effective alternatives to the free market. But we should not be surprised to learn that state capitalist regulation of economic activity directed towards profit maximization, as in South Korea, produces contradictions and crisis. The debate has to be opened up. We need to be calling for radical restructuring of the South Korean political economy, for the creation of new forms of worker control and democratic social regulation of economic activity as part of a transition process which must include making the South Korean economy less export dependent, more domestically centered, etc. Reunification is a part of this. Let's not forget the important and significant precedent of the European Community and European Union here. Calls for new forms of worker control are cool, but what this means in practice is creating a genuine welfare state within Korea, as well as forcing rich countries like Japan to pay subsidies and EU-style structural funds to assist the development of the East Asian periphery. The Korea strategy worked for as long as there were rich American consumers able to buy all those exports; today, effective demand is being throttled everywhere, ergo the export model is in crisis. The EU has avoided a lot of these problems by its generally social democratic orientation towards investment (which emphasizes wages and education and prevents really severe property and finance bubbles from happening in the first place), by debt write-offs to Eastern Europe, and by Central European subsidies to Spain, Italy, Ireland and the like (you will note that the exchange rate crisis in Europe in 1993 was limited and relatively moderate, compared to the truly epic Asian meltdown). Most of all, Japan Inc. needs to get off its ass and start funding its semi-peripheries, just like America started to do in 1950 vis-a-vis Western Europe and Japan, via military Keynesianism. They have enough money to erase the bad debts of their banks and get the economy going again, it's just a question of political will. How about keiretsu Keynesianism for the new millenium? -- Dennis
