Max Herzog

Can Mercantilist Development Restructure Global Hierarchy?

A Case Study of the Interplay of Geopolitics and Economic Development in South Korea

Introduction

Power differences between nations construct hierarchical relationships which

structure and regulate state political-economic behavior. While state power has,

historically, been gauged in terms of military clout, national identity, or political

coherence, the rise of the global capitalism has elevated capital accumulation as a central

measure of stature. Discourse about economic “growth” or “development” have often

replaced conversations about geopolitical power (at least, as this concept was deployed

during the age of World Wars). It is not uncommon to refer to a “hegemonic power” (i.e.

a force that defines the shape of the world hierarchy) that exerts its influence through

almost solely economic means. Indeed, Immanuel Wallerstein goes so far as to claim that

modern states “have been located in a hierarchy of effective power which can be

measured neither by the size and coherence of their bureaucracies and armies, nor by

their ideological formations about themselves but by their effective capacities of

accumulated capital within their borders as against those rival states” (Wallerstein 1983).

He posits this hierarchy as the World-Capitalist System.

While the concept of world capitalism has been an increasingly popular one

amongst social scientists of all fields, models of this system’s internal dynamics are hotly

debated. World-systems theorists, interdisciplinary social thinkers who follow the

tradition of Wallenstein, often posit the global capitalist hierarchy as a self-reinforcing

and thus static system. Neoliberals, thinkers who endorse a market-based model of

development widely deployed by the world-capitalist hegemony, posit the system as

fluid, allowing for nations to rise and fall in status based on the competitiveness of their

economies.

South Korea provides a fascinating case study for the role that capital

accumulation plays in the global hierarchy dynamics. More specifically, its meteoric rise

in economic stature raises questions about what conditions prompt explosive

development and whether even this level of accumulation is sufficient for a nation to

develop its power relative to the hegemony. Heterodox economist and Korean native Ha-

Joon Chang presents an intriguing take on these questions, as well as his broader

understanding of the world capitalist system, in his 2008 publication Bad Samaritans.

In Chang’s view, South Korea’s history presents a model of development that

resists the coercive and exploitative structural imperatives that are an inherent part of the

neoliberal approach. For him, neoliberalism ensures that less powerful states develop

very little, if at all, compared to more powerful hegemonic entities. By insulating itself

from the effects of these neoliberal imperatives with mercantilist political-economic

policies, Chang claims that Korea freed itself from them, managing to develop not just its

economy, but its power relative to other states.

While this account may fill us with hope for the future of a more equitably

structured, or at least less static, world-capitalist system, it is, unfortunately, undermined

by an expansion of the scope of inquiry beyond South Korea’s borders. By examining

both the regional historical (Japanese Imperialism) and contemporary geopolitical (U.S.

containment policy) context through a world-systemic lens, the analysis presented here

shows that Chang ignores important world-systemic factors which reveal that Korea’s

rise was, in fact, both rooted in empire and directly engineered by hegemonic forces and

could never undermine or replace the current world-capitalist hierarchy.

Neoliberalism

Before we can understand Chang’s argument, we must have some discussion of

the popular theoretical framework which he critiques. Much of his version of Korea’s

development is focused on the nation’s opposition to Neoliberalism. This term has

become increasingly popular in recent years, bandied about by politicians and analysts,

activists and observers across the political spectrum. Indeed, this concept is essential to

any understanding of social and environmental issues in the globalizing world. However,

different thinkers and actors often define neoliberalism in different ways, sometimes so

different that its deployment can be limiting and obfuscating. I believe that this concept,

as used by Chang, can be divided into two distinct, but mutually supporting phenomena:

“ideological” (which he rejects as false) and “practical” (which he wants to resist

politically) neoliberalism. Though I draw on a few other authors in my attempt to flesh

out these concepts, I believe I stay true to Chang’s understanding of them.

Ideological Neoliberalism: The Lie of Development

At its root, ideological neoliberalism is (as might be assumed with a Marxist

interpretation of its name) a worldview that is deployed by hegemonic forces to justify,

through a system of conscious and unconscious valuations and ideals, the hierarchical

political-economic status quo (Chang 2008). The base ontology of neoliberal theory,

descending from the Lockean liberal tradition, views humanity as an idealized collection

of isolated rational actors with strong fundamental rights (often termed Homus

economicus) (Chang 2008, Gilpin 2001). These actors make decisions based purely on a

monistic (i.e. all things valued in the same way or on the same scale), utilitarian self-

interest exogenous of all social, historical, and environmental influences (Goudy and

Erickson 2005). As all atomized humans are rational and self-determining in this way, the

aggregate of their individual choices, in the absence of some distorting force that

compromises their rights, always naturally reach equilibria that produce optimal (i.e.

most efficient) outcomes for their existence as a collective on any scale of analysis

(Gilpin 2001).

This social extrapolation of the Homus economicus ontology, when deployed as a

normative discourse, often justifies “liberal” or “free market” economics: a system of

interlocking markets where prices are determined purely by supply and demand,

independent of government control or unfair monopoly (Chang 2008). Domestically,

endorsement of a market economy necessitates a political agenda that consists of radical

privatization, industry deregulation, and reduction in government spending. In a

globalized world, this theory calls for the death of state-centric economics (the

elimination of state support for domestic industries and the dissolution of economic

boundaries between states) as a necessary requirement for the ideal world order.

David Loy observes that the discourse of markets has become so successful that it

is hardly ever questioned anymore. “Rational action” and “free trade” are widely viewed

as natural law rather than social construct, despite the long, prestigious tradition of social

scientific study to the contrary (Weber, Polanyi, etc.)(Loy 2015). Ideological

neoliberalism has effectively defined the shape of the global political-economy,

legitimizing the claim that economics should determine politics.

Chang sees the incredible degree of this discursive success embodied in a (largely

false and wholly idealized) historical narrative of last three centuries, used widely

throughout the course of globalization to justify the preservation and expansion of the

political-economic status quo, despite the abundance of evidence that undermines its

validity. It tells of the emergence of liberalism in 18th

century Britain. The policies of

free-trade and competition enacted during this period were so successful that other

nations allegedly began to imitate them of their own accord. Liberalism eventually

became so popular that a new world-order was essentially perfected, under the control of

British hegemony, by 1870. The result was a period of unprecedented global prosperity

and happiness that probably would have lasted forever if it hadn’t been interrupted by

two world wars. Post WWII, the neoliberal system emerged, spearheaded by American

hegemony, to fight for the resurrection of this edenic liberal era. The collapse of

communism and the spread of free-market economics to the “third-world” were

undeniable signs that success is nigh, all that the world needs to do is keep liberalizing.

(Chang 2008)

Practical Neoliberalism: The Hard Truth of Growing Inequality

Chang has dramatically different account of recent history, what he thinks a much

more realistic one. His story is full of coercion and suffering, exploitation and uneven

playing fields. He sees ideological neoliberalism as anything but a natural law. Rather, it

is a discursive weapon, a justifying force for a model of development that reinforces the

status quo of the world-capitalist hierarchy. He is more concerned with the politics of this

model, what I call “practical neoliberalism,” than its more abstract counterpart.

Practical neoliberalism can be thought of as having two parts: political and

structural. Political neoliberalism is the political-economic agenda (and, Marxists like

David Harvey would say, the class project) of power accumulation advanced by a global

elite that Chang calls the “Financial-Intellectual Complex.” Structural neoliberalism is

the mobilization and institutionalization of that power across the global hierarchy for the

purpose of assurance of future accumulation. For all intents and purposes, these two

concepts can be conflated: one is the elite’s will to greater power and the other is the

method of its satisfaction. While it is difficult to point to members of this elite, Chang

definitely centers it on the hegemonic power at the nexus of business and government in

the United States. It is the direction that this hegemonic coalition of geopolitically

powerful state governments, international corporations, multilateral financial institutions,

and “academic ideologues” takes world capitalism that Chang considers responsible for

many of the ailments of the developing world. (Chang 2008, Gilpin 2001)

While market deregulation is a large part of the practical neoliberal agenda,

Chang recognizes this deregulation as fundamentally predatory rather than equalizing or

“free.” Instead of a universal deregulation where all states and groups trade with each

other on equal footing as autonomous individuals, practical neoliberalism always wants

to pair the deregulation of vulnerable developing nations with powerful market protection

for powerful developed ones, creating fundamentally unequal trade relationships. These

unfortunate arrangements are pushed by the global elite through a combination of

coercive foreign aid and finance packages, distorted market mechanisms, unfair trade

agreements, and cultural warfare. For Chang, and many others, a simplified version of the

process often plays out like this:

1. Developed governments and/or international finance organizations offer

developing countries desperately needed funds and resources, either framed as

altruistic aid or simple investment. This offer is qualified with one-sided

requirements to reduce or eliminate taxes on imported foreign goods, limits on

exports, limits on foreign ownership of domestic firms, subsidies for domestic

industries and all other barriers to foreign capital flow and supports for

domestic industry.

OR

Developed governments force the previously stated changes on developing

countries using more explicit economic or military coercion.

2. Developing governments accept the proposed terms either out of desperate

need for resources, fear of sanction, or inculcated cultural fascination with the

promises of ideological neoliberalism.

3. Developing countries find themselves totally unable to compete with the more

advanced and protected industries of developed countries. They find their

industries bought up by foreign capital. With their own economies out of their

control, developing countries find themselves stuck on the lowest rungs of the

product cycle while developed countries profit. They are relegated to basic

production functions at extremely low wages with only the slowest and most

painful of escape options open to them.

(Chang 2008, Gilpin 2001, Stiglitz 2002)

By pushing the practical neoliberal agenda, the groups that wield the most

geopolitical power continue to accumulate more as they weaken their victims. Even when

developing nations develop higher standards of living and bolstered economies by

playing along with the rules of the global elite, their gains are always paltry compared to

those at the top. Thus, contrary to the ideological neoliberal claims that liberalization

“raises all boats” (i.e. that markets create the optimal outcomes for everyone), the reality

is a zero-sum game that developing countries always lose. Even as a country “advances,”

its global power is diminished. Not only do the global elite always, in the end, become

more powerful, the very process of power accumulation reinforces the institutional

structures (i.e. legitimacy of international financial institutions, structure of global trade

agreements, etc.) that enable them to constrain the outer limits of international

economics, politics, and security relationships, further streamlining the process.

Such self-perpetuating domination is the definition of hegemonic hierarchy, not

the condition for equality. Peter Evans sums up this situation by claiming that “we don’t

live in a neoliberal world at all. We live in a pseudo liberal world where powerful nation

states in general, and the United States in particular, pursue mercantilist and imperialist

policies at the expense of both economic rationality and equitable world order.” It was

this trap of a false and unfair neoliberal hegemony that Chang claims South Korea sought

to resist. (Chang 2008, Gilpin 2001, Evans 2008)

The Perfect Mercantilist State

Chang’s Account: How Korea Escaped Neoliberalism

Growing up, Chang watched as two successive military governments pushed the

South Korean people, kicking and screaming in some cases, through an extremely

demanding pattern of industrialization and modernization. In 1961, two years before

Chang’s birth, South Korea emerged from the Korean War with an average yearly

income of $82 per individual and 50% its industries and 75% of its railways destroyed. In

2008, at the time of his writing, its purchasing power had multiplied 14 times over. It had

run through the product-cycle from producing almost solely agricultural products to

being a hub of information technology innovation, achieving levels of development that

took Britain and the U.S. centuries in just 40 years. (Chang 2008)

Chang asserts that this “economic miracle was the result of a clever and pragmatic

mixture of market incentives and state direction” which recognized and adapted to the

terrible dangers of neoliberalism and the world market. Through mercantilism, an

approach to national economics that focuses on state self-sufficiency through strong

government regulation, Korea managed to create an export-based economy on its own

terms. Using tariffs, excise taxes, and embargos to prevent all unsanctioned influxes of

foreign currency, the Korean government shielded its developing industries from the

economic leeching of neoliberalism and simultaneously nurtured them with targeted

subsidies. (Chang 2008)

Only two significant channels of foreign exchange were left open. The first was

government-financed purchases of the means of production (i.e. high-tech machinery,

specialized computer technology, etc.) aimed at building national industrial capacity

while protecting against the toxic effects of qualified foreign investment. The second was

ruthless pirating of foreign intellectual property, breaking down biased intellectual

property laws that privileged the global elite. In this way, Korea managed to develop its

political-economy at a rate far greater than that of more powerful nations. The end result

was a significant leap in geopolitical status, an elevation of position within the world

capitalist hierarchy. (Chang 2008)

Consequences: Mobility within the Capitalist Hierarchy

Essentially, Chang claims that Korea’s great advance in geopolitical status can be

attributed to its use of the anti-liberal, mercantilist policy recipes historically deployed by

the U.S., Britain, and all the other successful proponents of neoliberalism. He by no

means tries to hide the social costs of this endeavor. He describes how high economic

pressures on average households forced many children, especially girls, to seek

employment in factories with poor conditions reminiscent of an industrializing U.S.

(Chang 2008). These pressures also resulted in significant domestic income inequality

and the creation of urban slums or “moon villages” which were (and continue to be)

appropriated by government development banks, torn down, and redeveloped into high-

rises, pushing the poor residents further and further from city cores (Chang 2008).

However, he sees these costs as trivial compared to the hardships imposed by

neoliberalism. Beyond that, Chang believes that mercantilism allowed Korea to achieve

something structurally impossible within the confines of neoliberalism; it became rich,

not just absolutely, but relative to every other nation.

The thrust of Chang’s argument is indeed potent; its ramifications grab the

attention. South Korea made itself a geopolitical power by through strategic insertion into

the world market. A nation can, in fact, increase its standing relative to the other nations.

Should it prove true, there are two potential consequences, both revolutionary for our

understanding of the future of the global political order. The first is that the hegemony of

the current global elite is not necessarily as stable as it may have appeared in the past.

Other nations can challenge the powerful nations of Europe, even supersede the U.S. as

the top of the hierarchy, given that they strategize carefully enough. Such a conclusion

confirms rumblings that the rise of China may spell the end of U.S. dominance. The

second, perhaps less likely, consequence is that the world-capitalist system holds the

potential for all nations to rise to equal (or, at least, more equal) status. Korea’s assent, as

defined by Chang, was a positive-sum game at the international scale; no other state was

limited or hurt. Should this approach to development translate to other nations, it would

seem that all nations could become significantly more powerful in the international

sphere. Much as many wish it were true that Chang’s work could actually demonstrate

these outcomes, there are powerful critiques of his argument that must be considered.

The World-Systemic Context

An important criticism of Chang’s account of South Korean development arises

from its limited geopolitical scope. By focusing on the ways in which Korea was isolated

from the rest of the world during its four decades of incredible development, Chang falls

Comment [SC1]: At least he elides that question. He acknowledges the power competition inherent in both the duplicity of the neoliberal proponents, and in the mercantile model. But then he says that Mozambique could do what S. Korea has done.

into a tradition of analysis that East Asian Historian and World-Systems Analyst Bruce

Cummings calls “ahistorical disaggregation.” (Cummings 1984). This method, reinforced

by the dominant school of U.S. modernization theory, overlooks the many ways in which

development is often rooted, both historically and contemporarily, in the machinations of

actors beyond state borders. For Cummings, the mistake of ahistorical disaggregation is

especially dangerous when brought to bear in any consideration of development in East

Asian countries like Taiwan, Japan, and Korea. For him, “such an approach misses the

fundamental unity and integrity of the regional effort in this century” (Cummings 1984).

Cumming’s wider lens of analysis sees Korean “rapid upward mobility in the world

economy” as occurring “within the context of two hegemonic systems: the Japanese

Imperium to 1945 and… American hegemony since the late 1940s” (Cummings 1984).

Consequently, in order to gain a broader understanding of Korean development from the

1960s to the 2000s, we must look back further, to the age of Japanese Imperialism.

Prologue: Prewar Imperialism

Japanese imperialism was significantly different than U.S. imperialism in that it

arose in the global context of a British hegemony and the historical context of the

American forced Meiji Restoration in 1870 (Cummings 1984). Japan’s elite, a coalition

of government bureaucrats, state-managed banks, and Zaibatsu (private plutocratic

families), felt that their geopolitical position was extremely vulnerable and sought to

build its defense capacity against further foreign encroachment (Alexander 2007). This

imperative allowed military voices to dominate the construction of the post-restoration

policy agenda of the early 1900s, instilling a logic of economic mobilization and political

expansionism into the government structure (Alexander 2007).

Beginning in the 1930s with the Sino-Japanese War, this project resulted in the

acquisition of colonies and centralization of their institutions under the umbrella of

Japanese administrative structures (Alexander 2007). The fact that Japan’s colonies were

spatially adjacent allowed it to pursue a doctrine of “tight knit integration,” a sort of

lateral political expansion that focused on consolidation of the empire into a single,

cohesive mercantilist unit that could advance through the product-cycle using internal

power dynamics but deal with the outside world as an individual. This method involved a

high level of direct central control , exercised throughout the empire, to protect nascent

industries and adopt of foreign technologies in an attempt to protect the imperium from

foreign competition and speed it through the product cycle (Cummings 1984). The

passage of the 1943 munitions law represents the pinnacle of this technique, eliminating

all corporate responsibility to shareholders and replacing it with direct control by the

Japanese government (Alexander 2007).

Transitions between product cycle phases involved strategic import-substitution,

shifting national balances between imports and domestic production (i.e. outsourcing old-

phase industries to colonies in order to develop new phase industries in Japan). This

process required Japanese access to space, labor, and natural resources in its colonies. In

Korea, the Japanese elite initially used the domestic aristocracy as a locus for exerting its

imperial control; by slowly eroding traditional limits on nobles’ landholdings, Japan

mobilized the assets it required. Though this process generated substantial social

upheaval, precipitating several full-scale peasant rebellions as well as continual guerilla

resistance, the imperium did not let up. Seoul was one of the largest centers of this type

of industrial displacement. (Cummings 1984)

Interested as it was in creating a cohesive power bloc (rather than simply

increasing its own stature) the Japanese elite invested heavily in industrial, political, and

municipal infrastructure for some of its colonial labor sources as it “moved fluidly

through a classic production-cycle industrialization pattern” (Cummings 1984). For this

reason, instead of extracting every last bit of capital from Korea and Taiwan, Japanese

Imperialism jump-started their product-cycle development. By 1935 the beginning

Korea’s transition from agrarianism to industrialism was already apparent and by the time

World War II had fully erupted, Korea could reasonably considered a semi-peripheral

nation, importing a good deal of its basic foodstuffs and raw materials from the more

peripheral Manchurian colony (Cummings 1984).

Post-World War II: Onset of U.S. Hegemony

With the end of the war in 1945, the political-economic situation of the globe

changed dramatically. Economically bolstered while every other prominent nation was

shattered, the U.S. replaced Britain as the great power in the West. Operating on a scale

that Britain hadn’t possessed since the peak of its empire, American hegemonic status

became truly unquestionable. A virtual monopoly on security and aid resources were

leveraged to facilitate dependence relationships with most of the developed world

(Cummings 1984). In this way, the U.S. redefined and expanded the boundaries of the

world-capitalist system, making it much more relevant to politics in East Asia. However,

this hegemony faced two serious threats, one internal and one external.

Internally, the structure of the world-capitalist system had been remade. While the

parameters for success (capital accumulation) remained the same, hierarchical dynamics

became much more fluid. No longer grounded in explicit colonialism, the system had no

built-in mechanisms to prevent nations from growing in power (Cummings 1984).

Externally, U.S. hegemony was threatened by the Soviet Union. Emerging from the war

battered, bruised, but ultimately victorious, the power hierarchy of the Eastern Bloc

provided a legitimate ideological and practical (i.e. political-economic) alternative to

global capitalism (Cummings 1999).

Though Washington’s ultimate goal was to organize the practical neoliberal trade

structures that would allow total access to the resources of developing nations and quash

their capacity for domestic power-building, rivalry with the USSR forced it to make

compromises (Cummings 1999). In order to combat the USSR, ideologically and

militarily, the U.S. had to present itself as a desirable hegemon, one that rewarded those

who chose its world hierarchy over that of the Soviets. Consequently the U.S. defaulted

to goals of more appealing “general industrialization” rather than its preferred neoliberal

focus on exploiting “comparative advantage” (Cummings 1999). This mixture of

economic and security concerns facing the U.S. resulted in the launch of a project of

“dual containment;” a two-pronged approach aimed at stopping the advance of

Communism while simultaneously limiting the power of other capitalist nations

(Cummings 1999).

First Containment: Constraining Communism

The first mode of containment focused on molding a few nations into “paragons

of noncommunist development;” powerhouses of capital accumulation that could entice

the broader global community to buy into the world capitalist system (Cummings 1999).

To affect this end, the U.S. spent the late 1940s stripping all Axis nations of conventional

geopolitical power by decimating their military capacities but, much to the dismay of

Europe (especially the previously hegemonic Britain), reformed, rather than destroyed,

Axis economies (Cummings 1984).

In East Asia, this process involved the elimination of most centralized forms of

Japanese power. The empire was eradicated as all official political bonds between Japan

and its previous colonies were dissolved, leaving Taiwan and Korea under the control of

weak military governments (Cummings 1984). Japan’s central economic drivers were

fragmented as the assets of the Zaibatsu were broken up and the formation of unions and

leftist parties was fomented to create a countervailing force against future consolidation

(Cummings 1984). This move, totally anathema to the elite-centric model of practical

neoliberalism, made evident U.S. desperation to gain control of the region.

While such extreme reform put an end to Japanese Imperialism as such, Japanese

compliance opened the door to a dramatic explosion of American-led development. This

development began to occur in Japan during the Korean War, but it wasn’t until the early

1960s that U.S. reshaping of regional geopolitics set off the region-wide meteoric growth

that Chang refers to as a “miracle.”

Though many of the political-economic assets accrued in East Asia over the

course of Japanese Imperialism (especially military and plutocratic resources) were

destroyed by the new U.S. hegemon, two important structures remained; bank-centric

finance and semi-mercantilist legal structure (Cummings 1999). With these resources at

hand, it became clear that the most effective way of developing the region was by the

same mercantilist capitalism that first brought the empire to power. Putting its neoliberal

aspirations aside, the U.S. hegemony set to work on this project.

Bloated and blatantly coercive, the military governments of Taiwan and Korea

relied heavily on U.S. aid to fuel the economic growth that kept them in existence

(Cummings 1999). By leveraging this dependence and the leftover imperial bureaucratic

and financial infrastructure, U.S. interests in East Asia spent the 1950s reconstructing the

imperial mercantilist bloc (under very different auspices of course) with the more than

willing Japan at its head (Cummings 1984). This bloc also functioned on a centrally-

managed schedule of import-substitution and protection of nascent industry, but it had the

benefit of direct U.S. financial support (Cummings 1984).

Second Containment: Constraining Capitalism

Even more than with the Japanese Imperium after which it was modeled, the new,

American-charged East Asian mercantilist engine began rapidly accumulating capital and

speeding through the product cycle. The Korean economy, with a 10% growth rate

throughout the 1960s, was a strong indicator for the success of the project (Cummings

1984). However, there were still U.S. concerns about internal threats to its hegemony.

Under the new world-system the U.S. was unable to protect any economy, including its

own, from competition. While the first mode of containment necessitated that the U.S.

intentionally exert its power to make other capitalist nations more competitive, this move

made the hegemon vulnerable in a new way. In order to counteract this potential threat to

its power, the U.S. deployed the second mode of containment: a mixture of economic and

military constraints on the very nations which it nurtured through the first mode.

Economically, the U.S. fostered a series of dependence relationships in its East

Asian targets. Direct foreign aid and financing were significant loci of hegemonic control

in addition to being huge economic drivers. Closely administered by the federal

government, caveats ranging from policy requirements to diplomatic concessions were

attached to packages sent to Japan, Korea, and Taiwan to make sure East Asia stayed in

line with U.S. interests (Cummings 1999). Dependence on American food and oil

production was also used as leverage to support these interests (Cummings 1984).

In addition to these somewhat more subtle modes of control, the U.S. also

enmeshed East Asia in a network of military control. While the internal disciplinary

function of the Japanese military evaporated as the institution was gutted, it was replaced

by a reliance on the U.S.-funded Taiwanese and Korean dictatorships to keep production

up to par (Cummings 1999). Furthermore, the U.S. deployed many of its own troops, on

land and at sea, throughout the region, as much to keep Japan under control as to patrol

Soviet borders (Cummings 1999).

The outcome of this mode of containment was that “the central experience of

Northeast Asia in the post war period, in short, has not been a realm of independence in

which equality and autonomy reign, but an alternative form of political economy [(i.e.

mercantilism)] enmeshed in a hegemonic web” (Cummings 1999). This is not Chang’s

self-driven Korea, but a Korea, a Taiwan, and a Japan that are merged and developed for

the gain of the hegemon. The truth of this can be seen in the rapid slowdown these

economies experienced after the end of the Cold War.

Afterward: Post-Cold War

The collapse of the Soviet Union did not drastically alter the structures built up by

the U.S. during the course of the Cold War, rather it removed the last countervailing force

to total American hegemony. The 1990s saw a rapid shift from direct enmeshment of the

East in military and dependence relationships to the deployment of trade and financial

enmeshment more in the vein of practical neoliberalism. The “Clinton Doctrine” of 1993

was perhaps the most explicit example of this policy shift. In addition to generally

expanding the concept of what constitutes a “national concern” for the U.S. (effectively

expanding the legitimate scope of U.S. hegemony) it aimed to break down barriers to

foreign trade and finance as well as support systems for domestic industries in targeted

economies across the globe (Cummings 1999).

The success of this agenda in Eastern Asia can be seen in the playing out of global

responses to the 1997 Asian liquidity crisis. As regional debt began skyrocketing, Japan

scrambled to create an “Asian fund,” a financial institution independent of the U.S.

controlled Bretton Woods institutions. This move, in addition to helping ameliorate the

effects of the crisis, could have potentially been leveraged to close financial loops within

the region, reducing dependence on hegemonic forces and making it more autonomous.

Instead, the U.S., by positing the crisis as a “threat to American security,” circumscribed

this option, forcing East Asia to turn to the World Bank and its own federal government

for assistance. (Cummings 1999)

Conclusions

It is clear from even a cursory examination of the analysis presented here that

Chang’s account of Korea as the perfect mercantilist state is misleading. While

mercantilism certainly played a critical role in Korea’s development, and indeed the

development of the whole region, this strategy never operated on the level of a single

nation and was anything but self-driven. Since its emergence under Japanese

Imperialism, mercantilism in East Asia has been a regional project, a strategy to make all

of East Asia stronger, not a specifically Korean plan to bolster itself. While Cummings’

account may play down Korean agency in the project too much, it is clear that the nation

was never the primary driver and its interests were never the primary concern.

Contemporary Korean development has always been catalyzed and perpetuated

by an outside force. First it was Imperial Japan, motivated by the need to protect itself

from foreign intervention in the wake of restoration and the shadow of British hegemony.

Then it was the U.S., a more active hegemon motivated by the need to protect its desired

global hierarchy from the opposing world system of the USSR. The processes of

development brought on by both of these drivers have hierarchy built into them; they

don’t allow for the kind of mobility that Chang’s account suggests is possible, at least not

within their boundaries. Additionally, both of these processes occurred before the

explosion of fully-formed neoliberalism onto the scene after the end of the Cold War.

The logical next question for anyone who found hope in the consequences of

Chang’s account is whether or not the Japanese Empire could be substituted in for South

Korea in his model. Could it be that a power bloc as substantial as this could be what is

required for perfect mercantilist development within the world capitalist system? While

nothing in this analysis automatically disproves this possibility, the historical context it

provides makes it seem very unlikely. Certainly, Japan advanced the relative power of

itself and its colonies within the world-capitalist system (albeit at the cost of extreme

coercion and social devastation), but the hierarchy of that system is markedly different

than the one we see today.

This first wave of Korean development, the only wave that was regionally based

and limited to a relatively small geopolitical sphere, occurred in the absence of a strong

global hegemonic presence. While Britain was considered the western hegemon at the

time, it exerted far less influence in East Asia than we see with the U.S. post World War

II. Under Britain, Japan had essentially free reign to build its own regional hegemony.

This changed dramatically with the onset of the strong hegemony of the U.S., but the

onus of struggle with the USSR necessitated that the East Asian bloc be resurrected and

even empowered to some extent. Today, with global communism dead and global

neoliberalism at its peak, the picture has changed completely. International politics

finally resembles Chang’s account of it; world capitalism is vastly more pervasive and

the U.S. is far more powerful and ruthless in the service of its own agenda. The

likelihood of another rise within the world capitalist hierarchy like that of Imperial

Japan’s seems negligible in the absence of another massive external pressure on that

system like that exerted by the threat of world communism.

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