The Korean crisis and the end of 'late' development

New Left Review

Volumn , Issue 231, 1998, Pages 43-72

  Cumings, Bruce ^a  

^a NONE

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EID: 0032221730     PISSN: 00286060     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (84)

1. David Hale, 'Developing Country Financial Crises During the 1990s', Zurich Group, June 1998, p. 1. I am indebted to Mr. Hale for sending me this paper.
2. Henry Kissinger, 'How the US Can End up as the Good Guy', Los Angeles Times, 8 February 1998; The Wall Street Journal lead editorial, 21 November 1997.
3. Pierre Bourdieu wrote that the fetishism of productive forces is found not in old Marxist texts but 'in the prophets of neoliberalism and the high priests of the Deutschmark and monetary stability - it is becoming a sort of universal belief, a new ecumenical gospel', Bourdieu, 'A Reasoned Utopia and Economic Fatalism', NLR 227, January-February 1998, p. 126.
4. Robert Wade and Frank Veneroso, 'The Asian Crisis: The High Debt Model Versus the Wall Street-Treasury-IMF Complex', NLR 228, March-April 1998, pp. 3-22.
5. Chinese banks dominate the financial system, accounting for 90 per cent of all financial transactions; their incentives for under-pricing loans are many, and huge state-owned firms, like South Korea's conglomerates, get preferential lending at low rates. Excess credit availability has led to surplus capacity in Chinese industry. See Nicholas R. Lardy, 'China and the Asian Contagion', Foreign Affairs, vol. 77, no. 4, July-August 1998, pp. 78-88.
6. For a detailed discussion see Cumings, The Origins of the Korean War, vol. 2, Princeton 1991, pp. 171-75.
7. For details see Cumings, Parallax Visions: American-East Asian Relations at the End of the Century, Durham, NC 1999.
8. James Fallows Looking at the Sun: The Rise of the New East Asian Economic and Political System, New York 1994, p. 179.
9. E.H. Norman, Origins of the Modern Japanese State, edited by John Dower, New York 1975, p. 451.
10. Karl Marx, 'Bastiat and Carey', in Grundrisse: Foundations for the Critique of Political Economy, trans. Martin Nicolaus, New York 1973, p. 887.
11. Ibid., p. 886.
12. Karl Polanyi, The Great Transformation, New York 1957.
13. Immanuel Wallerstein, Historical Capitalism, Verso, London 1983, pp. 56-57.
14. Lucio Colletti, Introduction, in Karl Marx: Early Writings, trans. Rodney Livingstone and Gregor Benton, New York 1975, p. 33.
15. Colletti, in Marx, Early Writings, pp. 30-31.
16. J. Victor Koschmann, Revolution and Subjectivity in Postwar Japan, Ithaca 1996.
17. An important nationwide poll of American attitudes on foreign affairs found in 1995 that while the mass of Americans (62 per cent) continued to worry about economic competition from Japan, far fewer among the American elite (21 per cent) still did so. Five years earlier the figures for both groups were 60 per cent for the public, 63 per cent for the 'leaders'. See John E. Reilly, ed., American Public Opinion and US foreign Policy 1995, Chicago 1995, p. 25.
18. Japanese credit agencies continued to give Korea their highest rating through mid-1997; according to the Bank of International Settlements bank lending to East Asia rose to a record peak of $14.1 billion in the third quarter of 1997 (Hale, 'Developing Country Financial Crises', pp. 5-7).
19. See for example the column by David Warsh of The Boston Globe, reprinted in The Chicago Tribune, 14 December 1997; also Sebastian Mallaby, 'In Asia's Mirror: From Commodore Perry to the IMF', The National Interest, no. 52, Summer 1998, p. 14; also Richard W. Stevenson and Jeff Gerth, who wrote that 'The United States is the fund's largest shareholder, at 18 percent, and effectively wields a veto over major programs and policies', and also said that the IMF 'is pushing far more deeply than even before into the day-to-day operations on a foreign economy - the Korean one.' The New York Time, 8 December 1997.
20. See for example the column by David Warsh of The Boston Globe, reprinted in The Chicago Tribune, 14 December 1997; also Sebastian Mallaby, 'In Asia's Mirror: From Commodore Perry to the IMF', The National Interest, no. 52, Summer 1998, p. 14; also Richard W. Stevenson and Jeff Gerth, who wrote that 'The United States is the fund's largest shareholder, at 18 percent, and effectively wields a veto over major programs and policies', and also said that the IMF 'is pushing far more deeply than even before into the day-to-day operations on a foreign economy - the Korean one.' The New York Time, 8 December 1997.
21. See for example the column by David Warsh of The Boston Globe, reprinted in The Chicago Tribune, 14 December 1997; also Sebastian Mallaby, 'In Asia's Mirror: From Commodore Perry to the IMF', The National Interest, no. 52, Summer 1998, p. 14; also Richard W. Stevenson and Jeff Gerth, who wrote that 'The United States is the fund's largest shareholder, at 18 percent, and effectively wields a veto over major programs and policies', and also said that the IMF 'is pushing far more deeply than even before into the day-to-day operations on a foreign economy - the Korean one.' The New York Time, 8 December 1997.
22. Andrew Pollack in The New York Times, 10 December 1997. Even the $6 billion in usable reserves left on 2 December was in jeopardy because of $6.2 billion in committed forward contracts to sell dollars at a set price at a future date, The Wall Street Journal, 10 December 1997.
23. The New York Times, The Wall Street Journal, 20 November 1997; The Washington Post, 21 November 1997: The Korea Herald, 22 and 26 November 1997; The Wall Street Journal, 8 December 1997 - where Alan Murray quoted a German analyst on Summers-as-MacArthur.
24. The New York Times, The Wall Street Journal, 20 November 1997; The Washington Post, 21 November 1997: The Korea Herald, 22 and 26 November 1997; The Wall Street Journal, 8 December 1997 - where Alan Murray quoted a German analyst on Summers-as-MacArthur.
25. The New York Times, The Wall Street Journal, 20 November 1997; The Washington Post, 21 November 1997: The Korea Herald, 22 and 26 November 1997; The Wall Street Journal, 8 December 1997 - where Alan Murray quoted a German analyst on Summers-as-MacArthur.
26. The New York Times, The Wall Street Journal, 20 November 1997; The Washington Post, 21 November 1997: The Korea Herald, 22 and 26 November 1997; The Wall Street Journal, 8 December 1997 - where Alan Murray quoted a German analyst on Summers-as-MacArthur.
27. Quoted by Timothy O'Brien. The New York Times, 28 January 1998. See also the study by the Institute of International Finance, reported in The New York Times, 30 January 1998.
28. Quoted by Timothy O'Brien. The New York Times, 28 January 1998. See also the study by the Institute of International Finance, reported in The New York Times, 30 January 1998.
29. Editorial by Joseph Kahn and Michael Schuman, The Wall Street Journal, 24 November 1997; Fischer quoted in The Wall Street Journal, 8 December 1997; Yardeni's 'zombie' remark was broadcast widely on CNN News; see the full quotation in The Washington Post, 11 December 1997.
30. Editorial by Joseph Kahn and Michael Schuman, The Wall Street Journal, 24 November 1997; Fischer quoted in The Wall Street Journal, 8 December 1997; Yardeni's 'zombie' remark was broadcast widely on CNN News; see the full quotation in The Washington Post, 11 December 1997.
31. Editorial by Joseph Kahn and Michael Schuman, The Wall Street Journal, 24 November 1997; Fischer quoted in The Wall Street Journal, 8 December 1997; Yardeni's 'zombie' remark was broadcast widely on CNN News; see the full quotation in The Washington Post, 11 December 1997.
32. Editorial by Joseph Kahn and Michael Schuman, The Wall Street Journal, 24 November 1997; Fischer quoted in The Wall Street Journal, 8 December 1997; Yardeni's 'zombie' remark was broadcast widely on CNN News; see the full quotation in The Washington Post, 11 December 1997.
33. World Development Indicators, 1997; Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries, 1996 (GNP figures assume purchase-power parity or PPP; 1995 and 1996 figures are multiplied by 1996 and 1997 growth rates); 1998 figures from LG Economic Research Institute, reported in The Korea Herald, 21 February 1998.
34. World Development Indicators, 1997; Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries, 1996 (GNP figures assume purchase-power parity or PPP; 1995 and 1996 figures are multiplied by 1996 and 1997 growth rates); 1998 figures from LG Economic Research Institute, reported in The Korea Herald, 21 February 1998.
35. The Choson ilbo got hold of the full, classified text of the bailout package and put it on its Internet website on 4 December 1997; see also a Dong-A Ilbo editorial of 3 December, Chun Sung-woo writing in The Korea Herald on 4 December 1997 , and the FKI spokesman quoted in The Korea Herald, 5 December 1997 . Rubin's personal role in holding up the agreement was reported by Stevenson and Gerth, The New York Times, 8 December 1997.
36. The Choson ilbo got hold of the full, classified text of the bailout package and put it on its Internet website on 4 December 1997; see also a Dong-A Ilbo editorial of 3 December, Chun Sung-woo writing in The Korea Herald on 4 December 1997 , and the FKI spokesman quoted in The Korea Herald, 5 December 1997 . Rubin's personal role in holding up the agreement was reported by Stevenson and Gerth, The New York Times, 8 December 1997.
37. The Choson ilbo got hold of the full, classified text of the bailout package and put it on its Internet website on 4 December 1997; see also a Dong-A Ilbo editorial of 3 December, Chun Sung-woo writing in The Korea Herald on 4 December 1997 , and the FKI spokesman quoted in The Korea Herald, 5 December 1997 . Rubin's personal role in holding up the agreement was reported by Stevenson and Gerth, The New York Times, 8 December 1997.
38. Kanter was quoted in Devesh Kapur, 'The IMF: A Cure or a Curse?', Foreign Policy, no. 111, Summer 1998, p. 115. Kapur also wrote that according to fund sources, 'conditions such as the one asking Korea to speed up the opening of its automobile and financial sectors reflected pressures from major shareholders (Japan, and the United States)'.
39. Robert Edelstein and Jean-Michel Paul in The Wall Street Journal, 11 December 1997; Clay Chandler discussed Rubin's critical role - which included intensive consultations with leaders of the IMF and the Group of Seven - in The Washington Post, 13 December 1997, and quoted Bergston in the Post on 11 December 1997.
40. The New York Times, 10 December 1997, article by David Sanger - whose reporting on the Asian crisis has been by far the best in the American press - and article by Andrew Pollock.
41. The Wall Street Journal editors wrote that the IMF 'seems to be finding ways to socialize the world economy', 17 December 1997.
42. David Sanger had the best account of Rubin's Christmas Eve meeting, in The New York Times, 25 December, 1997. Information on Korea's bad loans comes from Hale, 'Developing Country Financial Crises During the 1990s', p. 13.
43. David Sanger had the best account of Rubin's Christmas Eve meeting, in The New York Times, 25 December, 1997. Information on Korea's bad loans comes from Hale, 'Developing Country Financial Crises During the 1990s', p. 13.
44. This firm, where Rubin was a partner for three decades, and Salomon Smith Barney, run by the former Treasury official who arranged the 1995 Mexican bailout, were working with failing Korean banks from late November onward
45. Alan Murray in The Wall Street Journal, 8 December 1997. Reporter Timothy O'Brien wrote that the two Wall Street firms came to Seoul in late November, led by Jeffrey Shafer (Smith Salomon Barney) and Robert Hormats (Goldman, Sachs), 'precisely to help the country design and implement a new financing plan for 1998', when it wasn't yet clear that international banks would be willing to renegotiate the bad loans; O'Brien said delicately that some have questioned whether 'the two investment banks have conflicts of interest in simultaneously advising the South Korean government in its negotiations with banks and being the first in line to lead any bond offerings', and that 'While Rubin's ties to Goldman, Sachs undoubtedly allow the firm to engage in occasional name-dropping, none of its competitors have suggested the firm's representation of South Korea is inappropriate because of Rubin's tenure there', The New York Times, 30 January 1998. Meanwhile Treasury's top international troubleshooter, David Lipton, is a former IMF official.
46. Alan Murray in The Wall Street Journal, 8 December 1997. Reporter Timothy O'Brien wrote that the two Wall Street firms came to Seoul in late November, led by Jeffrey Shafer (Smith Salomon Barney) and Robert Hormats (Goldman, Sachs), 'precisely to help the country design and implement a new financing plan for 1998', when it wasn't yet clear that international banks would be willing to renegotiate the bad loans; O'Brien said delicately that some have questioned whether 'the two investment banks have conflicts of interest in simultaneously advising the South Korean government in its negotiations with banks and being the first in line to lead any bond offerings', and that 'While Rubin's ties to Goldman, Sachs undoubtedly allow the firm to engage in occasional name-dropping, none of its competitors have suggested the firm's representation of South Korea is inappropriate because of Rubin's tenure there', The New York Times, 30 January 1998. Meanwhile Treasury's top international troubleshooter, David Lipton, is a former IMF official.
47. In other words, from the Cato Institute to Harvard theorist Michael Sandel, to Tikkun Magazine's Foundation for Ethics and Meaning, and to the host of intellectuals roped into various new forums hoping to reinvigorate civility and civil society. The Cato Institute advertised its publications in a 1996 brochure entitled 'How You Can Help Advanced Civil Society', with a bust of Thomas Jefferson on the cover. Sandel's new book is Democracy's Discontent: American in Search of a Public Philosophy, Cambridge MA 1996.
48. Friedrich Nietzsche, Untimely Meditations, trans. R.J. Hollingdale, Cambridge 1983, p. 128.
49. Park Won-soon, The National Security Law, Los Angeles, 1993, pp. 122-23.
50. Raymond Williams, The Country and The City, Oxford, 1975, p. 231.
51. Jürgen Habermas in Peter Dews, ed., Autonomy and Solidarity: Interviews with Jürgen Habermas, Verso, London, rev. ed. 1992, p. 234.
52. Quoted by David Sanger, The New York Times, 20 November 1997.
53. In English, see especially Kim Dae Jung, Mass Participatory Economy, Cambridge, MA 1985.
54. James M. West, 'South Korea's Entry into the International Labor Organization: Perspectives on Corporatist Labor Law During a Late Industrial Revolution', Stanford Journal of International Law, vol. 23, no. 2, 1987, pp. 494-95.
55. KCTU, 'Struggle for Labor Law Reforms Campaign News no. XXIV', 28 February 1997.
56. Namju Cho, The New York Times, 15 January 1998.
57. The rate increased dramatically from November through July, to 6.5 per cent, with nearly 1.5 million unemployed - according to many Korean newspaper accounts.
58. The Hanguk Ilbo, 28 July 1998.
59. Corazon Aquino, Oscar Arias, and Kim Dae Jung, Democracy in Asia: Its Problems and Prospects, Seoul 1995, p. 79.
60. Mary Jordan's interview with Kim Dae Jung, The Washington Post, 9 January 1998. See also the government white paper, 'The New Administration's Directions for State Management', Korean Overseas Culture and Information Service, February 1998, which called for financial transparency, good accounting, of capital adequacy, and no 'unrestricted diversification' by the chaebôls - but made no mention of breaking them up.
61. Minister of Finance and Economy Lee Kyu-sung said Kim's reform were not aimed at diminishing the power and size of the chaebôls, but rather aimed at using various incentives and tax reductions to encourage restructuring, The Korea Herald, 10 April 1998; recently President Kirn told reporters he had no intention of breaking up the chaebôls, but merely wanted them to 'run their firms in the black.', The Korea Herald, 2 June 1998.
62. Minister of Finance and Economy Lee Kyu-sung said Kim's reform were not aimed at diminishing the power and size of the chaebôls, but rather aimed at using various incentives and tax reductions to encourage restructuring, The Korea Herald, 10 April 1998; recently President Kirn told reporters he had no intention of breaking up the chaebôls, but merely wanted them to 'run their firms in the black.', The Korea Herald, 2 June 1998.
63. The Korea Herald, 11 July 1998.
64. See the backgrounds of new appointees in The Korea Herald, 3 November 1997, and in Shim Jae Hoon, 'Dream Team', Far Eastern Economic Review, 30 April 1998, p. 14.
65. See the backgrounds of new appointees in The Korea Herald, 3 November 1997, and in Shim Jae Hoon, 'Dream Team', Far Eastern Economic Review, 30 April 1998, p. 14.
66. The Korea Herald, 8 June 1998.
67. Andrew Pollack, The New York Times, 22 February 1997.
68. The Korea Herald, 19 March 1998.
69. Chicago Tribune, 17 September 1997.
70. Korean Buddhist Savior Movement, figures provided to me in September 1997.
71. Nicholas Kristof, 'A Ceremony in North Korea Breaks More than Ground', The New York Times, 20 August 1997.
72. Teresa Watanabe, 'In North Korea, Resilience in the Face of Famine', Los Angeles Times, 8 June 1997.
73. The Two Koreas, New York 1997.
74. Korean Central News Agency, 9 July 1998.
75. Korean Central News Agency, 14 July 1998.
76. Selig Harrison interviewed a North Korean general who told him that whereas the North may call publicly for the withdrawal of American troops, in reality the troops should stay - to help deal with a strong Japan, among other things. See Harrison, 'Promoting a Soft Landing in Korea', Foreign Policy, no. 106, Spring 1997.
77. The Korea Herald, 17 June 1998.
78. Hale, 'Developing Country Financial Crises', p. 13. External debt to GNP ratios exceed Latin America's in the 1980s: Indonesia, 114 per cent; Thailand, 97 per cent; the Philippines, 91 per cent; South Korea, 62 per cent.
79. In 1997, China replaced Korea in electronics sales; with nearly $50 billion in annual sales it ranked fourth after the US, Japan, and Germany; Korea is now fifth.
80. Chalmers Johnson, 'Cold War Economics Melt Asia', The Nation, 23 February 1998; on the race in electronics exports see The Korea Herald, 16 July 1998.
81. Chalmers Johnson, 'Cold War Economics Melt Asia', The Nation, 23 February 1998; on the race in electronics exports see The Korea Herald, 16 July 1998.
82. Nicholas Kristof, 'Asian-Style Capitalism Giving Way to the Free Market', The New York Times, 17 January 1998.
83. Quoted in Kristof, ibid.
84. Hale, 'Developing Country Financial Crises', p. 13.