Park Chung Hee Era

by Byung-kook Kim

Fifth, if Park did not follow technocratic rationality in formulating goals and strategies, South Korea’s hypergrowth during his highly personalized and yet bureaucratized rule becomes an even greater historical and theoretic puzzle. Many of our authors identify the South Korean developmental state’s political and organizational capabilities to swiftly change gears to correct ideologically driven economic strategies rather than its possession of a technocratic ethos. “Experts,” Park once recollected, “only try to discourage me by identifying risks and obstacles. Had I listened to their advice, I would have ended up doing nothing.” When his aides called for scaling back investment projects to a more feasible level, Park answered:

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  “We should even be prepared to replace our original investor with a new one if the original investor fails” (see Chapter 5). Consequently, macroeconomic policy ended up zigzagging between hypergrowth policy and shock therapy as banks amassed nonperforming loans and chaebol groups suffered from surplus capacity (Chapter 7). The ownership of automakers changed (Chapter 10), while South Korea’s larger chaebol community saw a continuous change in its membership under the pressures of surplus capacity (Chapter 9).

  To understand South Korea’s ability to generate hypergrowth, it is necessary to move our focus of analysis from any one particular policy, which is likely to be technocratically “irrational,” toward relationships between separate sets of policies. It was only because Park corrected technocratically “irrational” hypergrowth measures with similarly unorthodox shock measures and replaced failing chaebol producers with new rising stars that South Korea was able to continue its hypergrowth in spite of its cycle of boom and bust. Individually, many of Park’s policy decisions looked technocratically “irrational.” Collectively, through periodic policy swings and chaebol restructuring, his decisions acquired a distinctive rationality of their own in that they enabled South Korea to expand, adjust, and expand again—all at a hyper pace, albeit with great costs. And those swings were possible because Park could swiftly redirect state ministries—and, by extension, their social clients—toward hypergrowth or shock therapy, depending on economic conditions.

  External Political-Security Influences

  Dependency theory13 would predict that South Korea would be kept in poor peripheral condition by the world’s dominant capitalist powers, and yet the opposite occurred. Instead of being a classic case of third world underdevelopment, with widespread poverty, chronic fiscal and trade deficits, inflationary pressures, and severe political instability, South Korea surprised everyone, including its own people, with an explosive show of energy for modernization after May 1961. Its economy took off with the help of global markets, flying in the face of dependency theorists. The way South Korea harnessed world markets for its goal of modernization, however, also diverged from patterns of dependent development.14 Instead of a triple alliance anchored in multinational companies, there emerged a duo, with the chaebol growing into national champions through diversification and conglomeration under massive state support. The reliance on the chaebol rather than on the multinationals made South Korea choose com-

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  mercial bank loans and technology licensing over direct foreign investment as its primary instrument of industrialization, with profound implications for its larger political economy.

  The rise of a state- chaebol partnership does not imply that external factors mattered little for South Korea’s modernization. On the contrary, many of its sources of growth came from abroad. The economy, which was initially too small and too poor in factor endowment, was capable of breaking supply-and-demand bottlenecks only with foreign support.

  The way the external factors mattered, however, diverged from explana-tions posited in dependency or dependent development theories—and, for that matter, developmental state theories, which focus on global economic forces. External economic contributors to South Korea’s hypergrowth include an increasingly liberalized world trade regime, inexorable forces of product life cycle, Japan’s integration of late-late developers into a “flying geese”–like transnational production network, and the growth of international lenders and investors. By contrast, many of our authors argue that military security figured more directly and pervasively in South Korea’s modernization.

  First, structurally, South Korea’s security vulnerabilities encouraged its construction of an extremely centralized state, with its head making up an imperial presidency. As reported by Chung-in Moon and Byung-joon Jun in Chapter 4, its armed forces transformed into a defender of national security, a guardian of regime stability, and a modernizer of society, as it organizationally absorbed “technocratic” U.S. security ideas on top of its historically inherited Japanese “militarist” ethos, after Washington militarily intervened in the Korean War (1950–1953). The armed forces were South Korea’s “most modernized, educated, and administratively experienced elite group” into much of the 1960s, to quote Yong-Sup Han. As a result, power decisively tilted toward Park and remained solidly in his hands when he weeded out rivals from his military junta through a series of purges (Chapters 1 and 3), placed military units under tight surveillance (Chapter 6), and divided and conquered his guardians of power by building a multi-layered and multi-centered security network, with KCIA agents, PSS guards, and Army Security Command soldiers looking over one another’s surveillance work (Chapter 5). From this position of dominance, Park could take risky political, economic, and foreign policy options for his vision of puguk kangbyông. The armed forces were his political safety net, defending him in the event of political, economic, and foreign policy failure.

  Second, ideationally, military security also shaped South Korea’s trajectory of modernization through its impact on Park’s political priorities.

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  Upon seizing power in 1961, he publicly declared anticommunism to be South Korea’s kuksi (national essence), thus aligning his junta irreversibly with postwar conservatism and, by extension, foreclosing “leftist” options in modernization (Chapter 1). To militarily, economically, and politically catch up with Pyôngyang, Park dispatched combat troops to South Vietnam and normalized diplomatic relations with Japan in 1965, with an eye toward constructing a regional security network (Chapters 14 and 15); put heavy and chemical industrialization high on South Korea’s list of priorities to develop a modern defense industry, despite dire consequences for distributive equality and market stability (Chapter 7); and remolded his

  “soft” authoritarian regime into a “garrison state” (yushin) in 1972 as a measure to counter Kim Il Sung of North Korea’s monolithic yuil regime (Chapter 8). More important, Park saw himself in the image of Meiji Japan’s modernizers (1868–1912), who, a century earlier, embarked on economic modernization to contain and defeat security threats. Park’s slogan of pukuk kangbyông echoed Meiji Japan’s fukoku kyohei (Chapter 4) and his yushin regime the Meiji name of ishin (Chapter 8).

  Third, military security also mattered in South Korea’s modernization by providing policy instruments and leverage. With top U.S. policymakers as brokers, interested in bringing South Korea and Japan into a triple alliance with America, Park pursued diplomatic normalization without an explicit Japanese apology for colonial exploitation, in return for Japan’s provision of reparation funds. These funds became seed money for an integrated steel mill judged too risky by commercial lenders (Chapter 11). The Vietnam War occasioned another asymmetric deal, with Park dispatching combat troops to support U.S. war operations in return for his superpower ally’s pledge of greater military and economic assistance (Chapter 14). The milwôl (honeymoon) Park enjoyed with Lyndon B. Johnson as a result of these foreign policy decisions, moreover, had the effect of strengthening Park’s negotiating position on unrelated policy issues. Sharply departing from its traditional emphasis on stabilization, the United States did not stop Chang Ki-yông from setting deposit interest rates above loan rates in 196
5 (Chapter 7). The reversal of deposit and loan rates enabled Park to put chaebol groups on a hypergrowth path. Nonperforming loans increased, but investment also climbed, chaebol groups grew into national champions, and production capacity expanded. Park even transformed Richard M. Nixon’s 1969 Guam Doctrine of U.S. military disengagement and the U.S. 1968 failure to retaliate against North Korean military provocations into an opportunity to launch a force modernization program (Chapter 14).

  That military security mattered in South Korea’s modernization by

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  shaping its power structures, ideas, and tool kit of policy instruments is clear. What is more uncertain is how these external pressures interacted with its domestic political actors, structures, and processes, and whether there existed any distinctive patterns in those interactions. In the case of external factors influencing South Korea’s path of modernization, this book distinguishes impacts originating from its two most critical patrons: the United States and Japan. At the level of political regime, Taehyun Kim and Chang Jae Baik report in Chapter 2, U.S. policymakers preempted

  “socialist options” when they vetoed Park Chung Hee’s heretical idea of freezing large bank deposits and forcing their depositors to buy the stock of a newly established state company with those funds in June 1962. The funds were to be spent on highly risky HCI projects. Moreover, by requiring Park’s promise to transfer power to a civilian leadership through elections as a condition for the United States’ acceptance of his military coup as a fait accompli in May 1961 (Chapter 1), and by delaying aid delivery, issuing diplomatic protests, pressuring for a purge of right-hand man Kim Chong-p’il’s radical hard-liners, as well as supporting civilian opposition leaders including Yun Po-sôn, in the middle of a political crisis to get Park to deliver on his earlier promise of holding presidential elections in October 1963 (Chapter 2), U.S. policymakers also vetoed his continual extension of military rule.

  In spite of such crucial instances of U.S. intervention on the side of democratization, however, the patron state’s role was too complex and sometimes even contradictory to say that it was unambiguously a promoter of democratization. Through the United States’ structural role as a military guarantor of South Korea’s security and a patron of its national interests in global marketplaces, the United States de facto ended up supporting Park’s authoritarian rule when it kept silent in the face of violations of civil rights and political liberty. And it was mostly silent until Park compromised the principle of electoral competition by launching his yushin regime in 1972

  (Chapter 13). Even then, it was only after the United States completed its troop withdrawal from South Vietnam in 1972 and Jimmy Carter won the U.S. presidential election in 1976 that U.S. policymakers began publicly demanding that Park lift his emergency powers. Trying to keep up the pressure on Hanoi to speed up the Paris peace negotiations, Nixon asked Park to postpone his plan for troop withdrawal from Saigon, which had the effect of discouraging Nixon from openly opposing Park’s yushin in 1972 (Chapters 8 and 14). By contrast, having campaigned for withdrawing U.S. ground troops from South Korea in 1976, and making this pledge a reality by 1977, Yong-Jick Kim argues in Chapter 16, Carter thought

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  he was less constrained by military interests in pressuring Park to democratize.

  To complicate the story even more, the United States’ military strategy was frequently as decisive as, if not more critical than, its conscious efforts at democratization in shaping South Korea’s choice of political institutions. At one level, political stability was anchored in the United States’ presence as a regional stabilizer in East Asia and as a deterrent of North Korean military threats. Any questioning of this role triggered severe South Korean domestic instability, with sometimes serious impacts on South Korea’s political regime. To make South Korean politics even more volatile and uncertain, most of the changes in the U.S. security role were driven by U.S. domestic political forces outside South Korea’s control, including Nixon’s unilaterally declared Guam Doctrine of 1969, political rapprochement with China in 1972, the U.S. House investigation into Pak Tong-sôn’s Korea lobby after 1974, and Carter’s policy to withdraw U.S.

  ground troops from South Korea in 1977. These security shocks drove Park into declaring his yushin regime in 1972 and further strengthening his emergency powers after 1974. Carter fought back, preempting the worst forms of human rights violations and in some instances forcing a release of political prisoners. More generally, however, in this game of regime change and survival, Carter’s activist human rights policy failed to bring about a political opening (Chapter 16). Rather, it triggered a regime crisis in 1979 by emboldening both pro-Park and anti-Park forces to take intransigent positions against each other on the issue of political regime (Chapters 5, 6, and 13).

  The portrait of the United States drawn in this volume is far from that of a hegemon. From the days of Park’s military junta to his yushin regime, and across the issue-areas of political regime, military modernization, human rights, and U.S. troop withdrawal, the United States was as much an object of manipulation as a driver of South Korean domestic politics, providing Park with a rationale for lifelong rule during his yushin era.

  Moreover, in many of its instances of intervention against authoritarian rule, the United States saw outcomes diverging sharply from its intentions.

  Also, the United States affected its client state’s domestic politics more directly and pervasively through its change of regional security policy than through its adoption of activist human rights policy. The United States’

  role as a promoter of democracy was constrained by the centrality of military security in its national interests, which enabled Park to present his coup as a fait accompli in 1961, restrain U.S. criticisms of his soft authoritarianism through a dispatch of combat troops to South Vietnam in 1965–

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  1972, and resist Carter’s human rights policy during much of the yushin years. The United States, in fact, was never a unitary actor with one voice.

  The U.S. military establishment put deterrence before and above democracy, enabling Park to minimize the political damage from his resistance to U.S. pressure (Chapters 1, 8, 14, and 16). The only instance of “clear U.S.

  victory” occurred in 1971, when South Korea embarked on developing nuclear weapons to make up for the United States’ declining military presence. As Sung Gul Hong writes in Chapter 17, with U.S. policymakers threatening a “dramatic change of the entire political, economic, and security relationship, Park gave up his reprocessing program” in 1975.

  Despite crucial American and Japanese inputs in South Korea’s economic growth, then, U.S.–South Korean political relations were anything but stable, friendly, and respectful of one another’s interests during most of Park’s rule. Most developmental state theories and network analysts lose sight of these conflicts in their efforts at generalization, thus making South Korea’s task of modernization look easier than it actually was. South Korea and the United States had to work hard to prevent political conflicts from disrupting their economic relations.

  External Economic-Ideational Influences

  After a series of economic policy blunders shook his military junta’s grip on the political order in 1962, Park realized the powers of the market and began searching for new ideas to harness those powers as an engine of growth. And with rival generals purged and his political leadership legitimized by an electoral victory in 1963, Park began heeding—however selectively and partially—U.S. advice for market liberalization, without worrying too much about his political capability to steer South Korea through that risky and dangerous economic sea. The United States’ role in restraining Park’s dirigiste instincts, however, should not be overemphasized. Park after 1962 was an only partly reformed economic thinker, with his obsession for bureaucratic control and his “can do” spirit somewhat tamed by major policy failur
es, but nevertheless still very much alive. The fixation on HCI (Chapter 7), rural mobilization (Chapter 12), and administrative democracy (Chapters 4 and 8) resurfaced in 1972 after years of preparation.15 At the same time, as events in 1979 showed, he remained ready to swiftly make a U-turn in the direction of market-friendly shock therapy, lest the excesses of his dirigiste policies irreparably damage South Korea’s comparative advantage in the international marketplace.

  The economic takeoff in 1965 is particularly illustrative of Park’s hy-

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  bridization of foreign ideas. First, he transformed his U.S. ally’s orthodox proposal for stabilization into an unorthodox program of hypergrowth by setting deposit interest rates above loan rates. Second, normalizing relations with Japan with the help of a garrison decree, he also began building a developmental state after the model of Meiji Japan. Such a diffusion of liberal U.S. ideas and dirigiste Japanese developmental state paradigms resulted in a set of seemingly incongruous institutions, with planning bureaucrats projecting a liberal stance Korean-style and industry bureaucrats emulating Japanese industrial policy in un-Japanese ways. Where and how these two ideational and organizational forces would come into balance was to decisively shape South Korea’s direction of economic development (Chapter 7).

  However, whether South Korea heeded U.S. advice on macro policy guidelines or used Japan as its benchmark in its design of micro industrial policy, foreign ideas were adopted only partially and selectively through syncretic learning processes. State bureaucrats constantly innovated and adapted in order to make foreign practices congruent with their own political master’s priorities; to fit in with their ministries’ organizational ethos, mission, and abilities; and to accommodate business interests. Adaptation became a way of life under Park, giving his initially foreign-originating ideas and practices a distinctively “South Korean” style. As Chung-in Moon and Byung-joon Jun show in Chapter 4, bureaucrats drew up industry laws by copying Japanese laws verbatim. They also thought and spoke in Japan’s language of industrial policy, shaping chaebol behavior through haengjông chido (administrative guidance) and managing surplus capacity issues by sanôp haprihwa (industrial rationalization measures). The way they formulated and implemented industrial policy, however, diverged critically from Japan’s consensual and gradualist style. Given South Korea’s imperial presidency, rational but patrimonial state bureaucracy, and infant chaebol community, big issues like entry into strategic industries were decided by Park and chaebol conglomerates (Chapter 9), policy coordination was orchestrated top-down by a pilot agency through a systematic chain of command (Chapter 7), and industrial rationalization was typically pursued as part of sudden and brief shock therapy (Chapters 7, 9, and 10).