The Impact of Economic Development on South Korea’s

Transition to Democracy
Hakan Köni
Bilkent University Department of Political Science
[email protected]

Abstract
Economic development is regarded as an important condition for democratic transitions. It
introduces new classes, changes the balance of power among existing classes, and alters the
nature of the state and state-society relations all of which create a particular course of events
leading to democratic transition. South Korean transition to democracy was largely the product
of its capitalist development. Long-standing US economic and military support to South Korea,
increasing ratio and power of the labor and the middle classes in the society, the resultant
weakening of authoritarian blocs, collapse of the landlord class were all the result of capitalist
development in South Korea leading to transition to democracy.
Key words
Democratic Transition, Capitalist Development, South Korea

Recenzoval(a): Hootan Shambayati

INTRODUCTION
Democratic transition is linked with a certain level of economic development. Though
there is not a direct cause-effect relationship between democracy and economic development,
surveys and research conducted to day indicate that they are very highly correlated. Economic
development remains as the most accurate single factor that could be used to predict democratic
transitions. 1 Focusing on the different aspect of the relationship between democratic transition,
consolidation and economic development a number of arguments are put forward to explain the
relationship. Firstly, it is argued that economic growth weakens the power base of authoritarian
forces and expands the density of the civil society as well as its capacity to control authoritarian
governments. 2 Secondly, a big middle class created by the capitalist development is an effective
force for participation, contestation and competition in the political process. 3 Thirdly, economic
development brings about an educated, attentive and expectant public that demands inclusion
into and accountability of the political processes which are offered by democracy but denied by
authoritarian forces. Fourthly, developed economies both facilitate and require a democratic
compromise between the working and the bourgeoisie classes which unites them against the
authoritarian blocs. 4

In this paper, among a variety of theories developed to explain democratic transitions

with regard to economic development, I will employ the theory offered by Evelyne Huber,
Dietrich Rueschemeyer, and John D. Stephens in their book Capitalist Development and
Democracy to explain the South Korean transition to democracy. More specifically, in line with
their argument, I will try to explain how the balance of class power, the nature of the state and
state-society relations, and transnational structures of power helped democracy emerge or not to
emerge in South Korea. In their theory, the authors cited above selects a wide range of cases
including the currently democratized states in Western Europe, South America, and Central
America thereby examining most of the democracies now in the world. Here, by focusing on
South Korea, which was not included in the analysis of the authors, I would like to add more to
their case studies and also test the viability of their assumptions for other cases of
democratization. With this purpose, I will elaborate on the introduction of capitalist economy in
South Korea, resultant emergence of new classes, changes in relative powers of different classes

1
According to a research conducted, the correlation between a certain level of economic development and
democratic transition is 0,77 (%77) in Adam Przeworski, Michael E. Alvarez, Jose Antonio Cheibub, and Fernando
Limongi Democracy and Development, 2000, 78-137.
2
Evelyne Huber, Dietrich Rueschemeyer, and John D. Stephens, Capitalist Development and Democracy,
Cambridge. Politcy Press, and Chicago: Chicago University Press, 1992. Pp. 53-7. .
3
S Martin Lipset, “The Social Requisites of Democracy Revisited,” American Sociological Review, 1994.
4
Valerie Bunce, “Comparative Democratization: Big and Bounded Generalizations,” Comparative Political Studies,
2000| also see Ruesch. et al.
as well as their willingness for alignment for democracy, and international events and external
powers with their role on the process.
To state in brief what I have found as a result of my research on Korean democracy is
that during the 20th century South Korea experienced a gradually intensifying capitalist
development, which resulted with the emergence of a strong labor class and a middle class who
soon started to wage a civil struggle against the authoritarian power clusters in the country, i.e.,
landowners and the state elites, and have been successful in that by overthrowing the military
rule on behalf of a democratically elected party rule. On this process, the Korean War, the
resulting consolidation of the authoritarian regime and economic and military aids provided by
the USA have been the major obstacles to be removed before democratization.
In the following sections of the paper, I will try to explain the details of this theory.
Firstly, I will briefly recapitulate the assumptions proposed in the Capitalist Development and
Democracy. Secondly, I will illustrate the phases of capitalist development in South Korea in the
20th century. Thirdly, I will try to show how labor and middle classes came to possess an
effective role in politics as a result of this capitalist development. And finally, I will try to
explicate how the state structure and state-society relations were formed according to domestic
and international developments, more precisely, the Korean War, economic reforms adapted by
the government, foreign economic and military assistance and dependence.

1. Capitalist Development and Democracy

Professors Evelyne Huber, Dietrich Rueschemeyer, and John D. Stephens argue that
capitalist development is associated with transition to democracy for two reasons. Firstly, “it
strengthens the working class as well as other subordinate classes and (secondly) it weakens
large landowners.” 5 In other words, it shifts the balance of power relations in the class structure.
In their view, aristocratic classes, especially the landowners, authoritarian state elites,
bureaucrats and the military, tend to resist transition to democracy because they are already
superior to the working and middle classes in terms of rights and property relations, and any
change in the type of the regime can result with a relative decline in their superior status with
regard to the inferior classes. In other words, democracy is by all means more favorable for other
classes, especially the working class, because it provides them with the opportunity to participate
in government, to create more suitable working and life conditions, to prevent any measure that
can mean an unjust decline in their political, economic and social status while the landowners
stand at their opposite side.
5
Evelyne Huber, Dietrich Rueschemeyer, and John D. Stephens, Capitalist Development and Democracy,
Cambridge. Politcy Press, and Chicago: Chicago University Press, 1992, p. 58.
 The products of the capitalist development, such as urbanization, factory production, and
new forms of communication and transportation, earn the labor and the middle classes an
unprecedented capacity for self-organization and association. The authors argue that this
capacity which is ensured by the dynamics of the capitalist system will culminate in shifts in
power relations in the society in favor of lower classes.
In the book, they argue that democracy is closely related with power politics. If the rights
are not supported with might, they can never materialize. They therefore give emphasis to three
clusters of power thought to be relevant for democracy to emerge: First is the balance of class
power as the most significant factor affecting the prospects of social transitions in a society;
second is the nature of the state and state-society relations which we refer to understand the
balance of power between the state and civil society; and the third cluster of power is the
transnational structures of power, understood as the international economic system or the system
of states, which as well as shaping the first two balances also constrict the political decision
making process.

1.1 The balance of class power

For a society to become democratic, the balance of power relations in the society must
change in favor of civil society associations. The authors understand civil society as the public
sphere differentiated from the state, the economy and kinship relations. Civil society includes all
social groups, associations and institutions which are not merely related with production, the
government and the family. Because they usually insert power by organizing collectively, their
possibilities to come together in associations, unions and parties is critically important. 6
What takes the attention of the authors primarily is the position of the dominant and
subordinate classes, which refers to landlords and peasants in the agricultural societies and to
capital owners (bourgeoisie) and working class in industrial societies. The middle class, on the
other hand, is positioned between these two classes and it usually includes small and medium
farmers, merchants, craftsmen, and white-color employees. It is argued that democratic
participation in political decision-making will develop and be sustained only if the economic and
cultural power of the dominant groups is counterbalanced in civil society by organizational
power of the subordinate classes. 7

1.2 The Structure of the State and State-Society Relations

6
Capitalist Development and Democracy, pp. 53.57.
7
Evelyne Huber, Dietrich Rueschemeyer, and John D. Stephens, “The Impact of Economic Development on
Democracy,” Journal of Economic Perspectives, 1993.
 The importance of this factor in terms of the chances of democracy comes from the need
for a sufficiently strong and autonomous state to maintain the rule of law and to save the state
from being drifted by the interests of dominant groups. “If the state is simply a tool of the
dominant classes, democracy is either impossible or a mere form.” 8 The authority of the state to
rule binding decisions in a given territory and the monopoly of the state on coercion must be
established. But at the same time, the power of the state must be checked by the strength of the
organized civil society for the democracy to become possible. The state ought not to be too
powerful and autonomous from social forces to outdo civil society and rule without
accountability. Therefore, a central state control on the economy and the existence of a large
military and militia are not beneficial considering the balance of power between the state and
civil society. 9

1.3 Transnational Structures of Power

This cluster is related with transnational power structures and their impact on the internal
system of rule. “Countries – their states and their political economies – do not exist in isolation
from each other.” 10 A war condition, for example, generates a need for unopposed support to the
authorities as the war continues and in cases of defeat it causes to the weakening of the of the
ruling classes in terms of power. If the subordinate classes are in a position to organize and exert
power, they can make advances towards democracy. But the wars can also lead to more
authoritarianism, especially if the military is able to retain its decisive position that it acquired
after the war in later periods. Secondly, in peace times, economic and geopolitical dependence of
a state can impinge upon political processes in a country in many ways negatively or positively.
Its effect may change according to the interest relations of the core and the dependent states, the
specific classes that have interest in this relationship, their relative power share, the contribution
of the process to capitalist development and so on and so forth. 11
In view of the authors, these three clusters of power interplay with each other on the way
to democratization. For instance, economic dependency can influence the class structure for
extensive periods; war and geopolitical calculations can increase the role of the military; and the
power share of the civil society organizations substantially changes depending on their access to
the state mechanism.
To recapitulate the main argument of the authors in their words, “Capitalist development
is related to democracy because it shifts the balance of class power, because it weakens the

8
Capitalist Development and Democracy, p. 64.
9
Ibıd., pp. 63-9.
10
Ibid, p. 69.
11
Ibid, pp. 69-75.
power of the landlord class and strengthens subordinate classes. The working and the middle
classes gain an unprecedented capacity for self-organization due to such developments as
urbanization, factory production, and new forms of communication and transportation.” 12

2. Capitalist Development in South Korea

South Korea is one of the most spectacular examples of successful development stories of
the post-World War II era. In forty years of a time, it is transformed from a war-torn, agrarian
economy to a modern industrialized one. On this process the most important role was attributed
to the economic management policies of the government between 1953 and 1973. However, the
legacies of Confucianism, the Japanese occupation, and the Korean War also had important
contributions on this process. 13
Korea has been a stable and centralized society in retrospect. Its political existence as a
unified, independent state started in the 7th century A.D. and it remained so until when the
Japanese occupied and colonized the peninsula in 1910. Japanese occupation lasted until 1945
when the Japan lost the World War II, and from then until the end of the Korean War, it stayed
as a focus of imperial rivalries of the major powers.
The Japanese occupation of Korea in fact had an important contribution to the capitalist
development of the country in so far as the Japan had built infrastructure such as railroads, had
established a modern monetary system, and structured an agricultural extension service. Japan
had also built manufacturing sites in Korea to meet the economic needs of the colonial power. 14

However, when the Japan lost the World War II, Korea entered a period of political
instability in the hands of the winning powers of the war. In a similar way to the Hitler’s
Germany after the war, it was divided into areas of influence by Soviet Union, China, the USA
and Britain. The 38th parallel was agreed to be the border of area of influence, as Communists in
the North and the Capitalists in the South, but the two sides could not agree on a unification
scheme and Korea fell into a devastating war that lasted between 1948 and 1953 and cost to
approximately one million human casualties..
After the end of the Korean War, the South Korean economy was in a devastating
condition. The economy’s infrastructure was terribly damaged. Inflation rate was very high, and
the mostly agrarian economy was under the constriction of a complicated system of exchange
controls and multiple exchange rates. The primary sector – agriculture, mining, and natural

12
“The Impact of Economic Development on Democracy,” 74-5.
13
US Congrational Budget Office, “The Role of the Foreign Aid in Developing South Korea and the Philiphines,”
September 1997 http://www.cbo.gov/ftpdocs/43xx/doc4306/1997doc10-Entire.pdf
14
Ibid.
resources – represented 50 percent of GNP, and manufacturing accounted for a bit more than 5
percent. Investment was 12 percent of GNP, and domestic saving rate was less than 7 percent.
Foreign savings, mostly foreign aid, accounted for about 5 percent of the GNP. 15 During the
1950s, U.S. economic aid accounted for 69 percent of imports and 77 percent of all saving in
South Korea. Food aid was especially instrumental in sustaining the Rhee government. One
study estimated that without all that assistance, Korea’s living standards would have been 10
percent to 15 percent lower. 16
It is argued that the most important contribution of the economic aids to Korea’s future
economic growth was the provision of infrastructure investment and technical assistance.
Foreign aids supplied by the U.S. also helped Korea to remedy the war and renovate the country
as quickly as possible. The huge amount of infrastructure buildups – power systems, railroads,
and port capacity – for which the United States was the main financer facilitated economic
growth in future years, which could not have been possible otherwise. Moreover, Krueger and
Ruttan have stated that “the experience gained in infrastructure construction in the 1950s and
1960s enabled Korea to become a major exporter of construction services to the Middle East in
the 1970s and early 1980s.” 17
After the war, the Rhee government gave priority to economic reconstruction with the
help of foreign assistance. 18 It maintained a low level of interest rate to attract international
investment thinking that domestic saving was not very responsive to it. The government had also
adapted an import-substitution strategy with an inward-looking industrial policy. In order to
protect the infant domestic industry, it had ruled high tariffs and low quotas for external goods.
The priority was not to promote exports and in 1954 the exports corresponded to less than 1
percent of the GNP. The major concern of the government was reconstruction and price
stabilization. Mostly because of the reconstruction programs, the economy had started to grow.
Towards the end of the 1950s, the Rhee government came to recognize that the United
States would not continue providing high levels of foreign assistance for an indefinite period.
They therefore began thinking that the country must develop its own economy and must stay on

15
Ibıd.
16
Edward S. Mason and others, The Economic and Social Modernization of the Republic of Korea,
Cambridge: Harvard University Press, 1980, p. 459 in ibid.
17
Anne O. Krueger and Vernon W. Ruttan, "Assistance to Korea," in Anne O. Krueger, Constantine
Michalopoulos, and Vernon W. Ruttan, eds., Aid and Development, Baltimore: Johns Hopkins
University Press, 1989, p. 235 in ibid.
18
Susan M. Collins and Won-Am Park, “External Debt and Macroeconomic Performance in South
Korea,” in Jeffrey D. Sachs and Susan M. Collins, Developing Country Debt and Economic
Performance, vol. 3, Country Studies—Indonesia, Korea, Philippines, Turkey (Chicago: University
of Chicago Press, 1989), p. 166 in ibid.
its own feet. They introduced some reform programs to reduce inflation and succeeded in that by
reducing it to %3.7 between 1957 and 1960 which was over %30 before this date. 19
In 1960, the Rhee government was replaced by the Park government as a result of
intensive student protests. 20 The priority of the new government was to assure economic growth.
However, the Park government changed strategy of the import substitution oriented economy
into an export-led growth economy. It adapted many policies to develop the export capacity of
the economy such as subsidies, access to subsidized credit, and rights to import goods duty-free.
It also reformed the national currency, the budget, and tax collections. In 1962, the Park
government introduced a First Five-Year Economic Development Plan to be completed in 1966
with an ambitious growth rate of %7.1 annually. This of course meant an increase in the ratio of
the labor force in the society, the effects of which will be handled in the next section.
Soon after the first five year plan, a second was introduced in 1967, and a third and forth
followed in 1972 and 1977 successfully. The common point of all these plans was to promote
economic development through export-led growth. Thanks to these programs, the South Korean
economy was transformed between 1962 and 1982. By the 1970s, South Korea was already
creditworthy enough to borrow capital from the international markets. 21 The primary sector of
the economy declined to 19 percent of the GNP from 45 percent. The share of the manufacturing
sector, however, increased from 9 percent of GNP to 34 percent.22 Economic growth was going
parallel with growth of manufacturing. Between 1963 and 1980s, the annual increase rate in
GNP was 10.3 percent. GNP per capita had also showed a steep increase in the same period (See
Figure 1). And annual increase in GNI in the same period was 7.2 percent. The increase in the
number of the countries that South Korea was exporting showed an astonishing. In 1954, this
number was 5. But when it came to 1976, the number had increased to 175. 23

19
US Congrational Budget Office.
20
For the chronology of political events in Korean history, see Appandix.
21
Mason and others, Economic and Social Modernization of Korea, p. 459.
22
Kim and Park, Sources of Economic Growth in Korea, p. 9, in ibid.
23
US Congrational Budget Office.
Figure 1: Increase in GDP per Capita in South Korea

Source: Congressional Budget Office Based on Data from the World Bank and the
University of Pennslyvania

Finally, we can say that South Korea experienced a gradually increasing capitalist
development owing to the huge economic assistance that the USA provided and also because of
the economic reform policies that the governments adapted. The development was able to
emerge a strong labor class and a middle class, both of which played important roles in Korea’s
democratic transition.

3.1 Balances and Shifts in the Class Structure of South Korea

Class power configurations have in fact been very influential in the South Korean
transition to democracy as the authors of Capitalist Development and Democracy explains. But
contrary to their general expectation, the leading class in this process was not the labor class,
which was in fact very instrumental, but the university students from the middle class. The
authors have in fact proved right in saying that the labor class has been mostly democratic, which
was the case for the South Korean case, and they were right again in attributing an ambiguous
role to the middle class as far as some segments of the middle class had supported
democratization while the others resisted it. As the authors proposed, the major opponents of
democratization was the landowners, and the bureaucratic military regime while the position of
the bourgeoisie, the chaebols, changed from time to time. In this part, I will try to analyze the
process ending with democratization by investigating the collapse of the landowning class, the
emergence of a politically effective middle class and labor class, and the changing role of the
bourgeoisie and the weakening of the bureaucratic state elites.

3.2 The Landowning Class and Its Early Collapse

When Japan occupied Korea in 1910, it established a landlord class of immigrant
Japanese. The purposes of this policy was to strengthen Japanese hegemony, subdue the local
population and provide the core economy with its needs in a cheap way. The landowners were
therefore naturally against democratization because “any class that is dominant both
economically and politically will not be eager to dilute its political power by democratization.” 24
In addition to the Japanese landlords, there were also some local Korean landlords who
undertook to cooperate with the colonial regime.
The collapse of this class came as a result of an international development, in the words
of the authors, as a result of the interplay of three clusters of power, i.e., the demise of the
landowning class in Korea occurred as a result of the defeat of Japan in the World War II.
Between 1945 and 1953, the U.S. military government applied a major land reform ended up
with the redistribution of land that the Japanese landlords held. Lands owned by leaving
Japanese as well as large estates were broken up and distributed among small tenant farmers.
In 1949, the newly appointed Korean government introduced another land reform, but
this time concerning the Korean landlords, which is described as a kind of expropriation by
some, for this time it was the autocratic state that received the fruit, not the people. In 1945, 48
percent of families owned land. After land reform was completed, that figure rose to above 90
percent. 25 This meant the destruction of a major force against democracy many years before
democratic transition. The landlords had therefore ceased to become a major obstacle for
democratization in the later stages of the process.

3.3 The Leading Class in the Process: The Students of the Middle Class
Contrary to general expectations of the authors of the Capitalist Development and
Democracy, Democracy in South Korea has not come about as a result of the labor class
activism. It was the students from the middle class that assumed this duty. This is not an
aberration from the general theoretical framework that the authors offer because they argued that
the middle class can also take the lead in democratization. We can understand this from what
they say as: “The urban and rural middle classes also can take the lead in the struggle for

24
Capitalist Development and Democracy, p. 60.
25
US Congrational Budget Office.
democracy, with an often still small working class in a secondary role.” 26 This was mostly what
happened in South Korea. There was a sizable working class in fact, but neither it nor the middle
class was sufficiently powerful to force the government for democratic reforms if they had not
formed a tacit alliance. In this alliance, the students took the lead and the labor class supported
them.
Though it was the students who led the process, we should recall that the emergence of a
powerful university student segment in the society was also a product of the capitalist
development to a great extent. It is true that Confucianism was also putting great emphasis on
education, but the state and other social institutions were not able to provide necessary
investment for comprehensive educational campaigns. 27 And when we consider university
education, it was many times more difficult for the government to finance and for the people to
afford a higher education for their children.
For instance, in 1945 only 13.5 percent of the population was literate. But thanks to
foreign economic assistance, the government started to invest in school building and introduced
a six year period of compulsory education. To show the impact of transnational impact of power
structures on democratization, we can look at the economic assistance that the USA gave to
South Korea for the construction of 23,000 classrooms between 1952 and 1966. 28 The politically
active university students of 1970s and 1980s must have come from these schools. In addition, in
the 1950s and 1960s, Agency for International Development sent nearly 3,000 Koreans to the
United States for training. 29
The impact of capitalist development on the increase in the number of university students
can also be observed in the rising demand for university education by the young population in
order to meet the human resources need that the capitalist economy demands. The enrolment rate
in universities was rising because people were desiring better employment, life standards, health
etc. for which the universities were serving as an important vehicle.
After this background information on the relationship between the capitalist development
and increasing number of middle class members, we can now analyze the leading role of this
class in democratic transition:
The university students were representing an effective political force even before the
democratic elections of 1987. For example, when Syngman Rhee was serving as the
authoritarian president of the Republic of Korea, it was the university students who forced him to
resign in April 1960. A short period of democracy had followed after him, but the regime was
26
Ibid., p. 60.
27
For the role of tradition on education in Korea see Edward S. Mason and others, The Economic and Social
Modernization of the Republic of Korea, p. 446.
28
Krueger and Ruttan, “Assistance to Korea,” p. 246.
29
Mason and others, Economic and Social Modernization of Korea, pp. 358-359.
not saved from falling into the hands of another military dictator, namely, General Park Chung
Hee. While here we observe the political activism of the middle class, it is not difficult to see
that it was not powerful enough for democratic consolidation.
While the Park government was not meeting the general criteria of democratic
government, it had a contribution for its future emergence by introducing rapid industrial
development programs. This contributed to future democracy because the programs led to an
increase in the ratio of the middle class and the labor class. The power of the democratic alliance
was therefore strengthened by his reforms. (Look at the Tables 1 and 2).

TABLE 1: Changes in the Composition of the Working Population in Three Main Industrial
Sectors of South Korea

Year Primary Sector Secondary Sector Tertiary Sector

1960 66.2 9.4 24.4
1965 58.5 13.3 28.3
1970 50.4 17.2 32.4
1975 45.7 23.5 30.9
1980 34.0 28.7 37.3
1985 24.9 30.5 44.5
1990 17.9 35.0 47.1

Source: The Korean Middle Class

TABLE II: Changes in the Size of Classes in South Korea

(%)

Year Middle Working Urban Lower Farming

Class Class Class Class
1960 20.5 8.9 6.6 64
1970 30.3 16.9 8.0 34.7
1980 40.3 22.6 5.9 31.3
1990 47.6 31.3 4.2 17.9
Source: Hong, Kim and Jo (1999. p. 141)

If we look at the tables, we can evidently see how the middle and labor classes had been
in a rising trend from 1960s to 1990s. This shows the balance of power relations between the
classes more clearly.
The President Park was, however, assassinated in 1979, probably by civilian forces, and
Chun Doo Hwan, another military general, replaced him. But this time the increasingly
strengthened middle class leadership was allied with the labor class activism did not allow the
authoritarian tradition to continue. Mass demonstrations led by university students began to
spread in the spring of 1980 until the government declared martial law, banning all
demonstrations, and arresting many political leaders and dissidents. Special forces units in the
big cities dealt with demonstrators and residents very harshly, starting a series of events that
ended in the death of 200 civilians. This was a very critical event in contemporary South Korean
political history. Such incidents went on until 1986 with increasing demands for democratic
reforms.
Finally, the President appeared to concede to reform demands in April 1986 by ruling a
constitutional amendment allowing for the direct election of his successor. But in June 1987, he
banned all debates concerning the application of constitutional revision, and his successor was
directly elected by the ruling Democratic Justice Party (DJP) on behalf of Roh Tae Woo. In
return for this, students led a huge demonstration for the application amendment with the
participation of general public. The Roh Tae Woo government had no choice but to announce the
implementation of democratic reforms in June 29 1987. The constitution was reshaped in
October 1987 for direct presidential elections and for a strengthened National Assembly
consisting of 299 members. The opposing forces against Roh Tae Woo soon divided into two
parties as Peace and Democracy Party (PPD) led by Kim Dae-jung and Reunification
Democratic Party (RDP) led by Kim Young Sam. Roh Tae Woo’s party, by benefiting from this
division, won the December 1987 presidential elections with 37% of the votes. 30

3.4. The Labor Class in South Korea

In South Korea’s democratization, labor class played a very crucially instrumental role
though it was not the leading force behind the process, although some academicians called this a
“Great Labor Struggle” after seeing in the workers the image of a revolutionary movement. 31

30
U.S. Department of State, Bureau of East Asian and Pacific Affairs, June 2000,
http://history1900s.about.com/gi/dynamic/offsite.htm?site=http://www.state.gov/www/background%5Fnotes/southk
orea%5F0006%5Fbgn.html
31
Korea in Global Wave of Democratization, p. 205.
Middle class played the leading role in the process, but without the support of the labor class it
was very unlikely to succeed in the final cause. In other words, an alliance of middle class led by
university students and labor class was the main instigator of democratic reforms, which was
being resisted by the state elites and the military. In the last section, we have analyzed the middle
class, and now I will focus on the development of the working class, its associational powers, its
increasingly active participation in politics.
The development of a viable labor class in Korea traces back to the Japanese occupation
of the peninsula in 1910. In order to meet the needs of the core, the Japanese imperial rule had
established the foundations of the Korean economy by constructing an industrial infrastructure
and marketing scheme. Though the expertise and technology was brought from Japan for this
process, for the labor force mostly native Koreans were used. However, the authoritarianism of
the Japanese rule was not recognizing any organizational rights for the labor class.
When Japan lost the World War II, it had to leave the area to the major powers of the
post-war era, i.e, Soviet Union, China, USA, and Britain. Nevertheless, these powers could not
agree on a unification and a war broke out between the Communist North and Capitalist South,
each of which being supported by ideologically corresponding major powers. The war lasted 5
years between 1948 and 1953, with the result of two different states as North Korea and South
Korea. And it was the post-Korean War policies that caused a change in the position of the South
Korean labor class.
After the war, South Korea received extensive economic and military assistance from the
USA and some other countries and IGOs. This was not contributing to the cause of the labor
class because the state in South Korea was vindicated to develop a domestic economy and
industry along with a huge working population. However, when the Park government came to
recognize that the foreign aids will not continue indefinitely, they had to introduce domestic
economic development programs.
Park Chung Hee and the successor technocrats had thus adapted an unbalanced growth
model and had established large-scale industrial sites for an export-led-growth strategy. As we
can see in figure one, GNP per capita showed a steep increase from below $1000 in 1960s to
over $7000 in 1980s. The annual growth rate, on the other hand, was generally over 7% in the
same period. This was in fact nothing less than the result of an industrial development in the
country. In Tables 1, we see that the sectoral ratio of economy changed in favor of the secondary
and tertiary sector at the expense of the primary sector. And in Table 2 we observe that the ratio
of the labor class in the composition of the social classes increased from below 10% to over
25%.
 This result of this policy had been a rapid increase in the number of workers as well as a
rise in concentration and geographical proximity of the labor class. The workers were now able
to build a strong labor coalition and spread their demands more easily. A strike in a distant area
could send shock waves to every corner of the economy and disturb the vital export strategy. In
short, the balance of power had substantially shifted in favor of the labor class, and the
authoritarian state and anti-revisionist bourgeoisie had been unable to deny their demands. The
presence of the labor class as a civilian force in the society is also illustrated in Table 3 below.

Table 3. Growth of Unions

Industrial
Year Local unions No. Of members
unions

1963 16 2150 224420

1965 16 2634 301522

1970 17 3482 473259

1971 17 3507 497221

1972 17 3391 515,292

1973 17 3268 548054

1974 17 3784 655785

1975 17 4073 750235

1976 17 4371 845630

1977 17 4580 954727

1978 17 4857 1054608

1979 17 4947 1088061

1980 16 2618 948134

1981 16 2141 966738

1982 16 2194 984136

1983 16 2238 1009881

 1984 16 2365 1010522

1985 16 2534 1004398

1986 16 2658 1035890

1987 (June) 16 2742 1050201

1987 (Dec) 16 4103 1267457

1988 21 6164 1707456

Source: Korea Labor Institute: KLI Labor Statistics (Seoul, Korea Labor Institute, annual).

Here, we see that though the number of industrial unions did not change so much, the
number of local unions did increase from 2150 in1963 to 6164 in 1988. and moreover, number
of union member workers changed from 224.420 in 1963 to 1.707.456 in1988. This exemplifies
an unprecedented increase in the organizational powers of the labor class.
But what was the problem of the labor class with the regime and why was it demanding
democratic reforms. The problem of the labor class was basically the long harsh years that its
members had suffered under authoritarian regime. By unremittingly applying a growth-first-
strategy, the mercantilism of the South Korea had sewed the seeds of a full-scale labor
mobilization. The state had ruptured structural tensions and contradictions which were taking
place within the delicate capitalism of the country. It did not endeavor to mitigate the tensions
and remove contradictions by ruling necessary welfare measures. Consequently, an emotion of
social and political alienation started to spread all over the lower classes, the result of which had
been to demand democracy in order to shun the state authoritarianism. 32
In addition, the state in the South Korea had invariably been in alliance with the
capitalists in its confrontation with the workers. With its advanced means of coercion, it was
successfully suppressing unplanned and weak expressions of class interests. In the name of
assuring social peace and political stability, it had limited participation to a great extent and had
established oppressive control mechanisms. This oppression was mainly directed to those groups
who were thought to pose a possible threat to the political and economic system relying on their
ideological and organizational potential. The oppression had started before the Korean war,
when the country was under US military occupation (1945-1948). At that time, the leftist unions

32
Doh Chull Chin, Myeong-Han Zoh, and Myung Chey, Korea in Global Wave of Democratization, Seoul National
University Press, 1994, pp. 205-6.
were repressed and a nationwide rightist umbrella union was established to keep the labor
mobilization and participation under control. 33
However, the struggle of the state to control the union activities encountered many
difficulties in the pre-war era because it was not able to break the influence of the left-oriented
labor unions that were dominating the ideological and political tendencies of the masses. The
right-oriented labor unions proved unable to become an umbrella because the leading figures in
the movement were politically censured owing to their cooperation with Japan in the colonial
era. In addition, socialists ideals had a great appeal in a society where the percentage of the poor
was so high. Consequently, the state-sponsored labor union initiative failed its mission in favor
of the leftist unions, which was also pressing for the issues.
However, the ideological influence of the leftist unions against the authoritarian state did
not survive after the Korean War. On the one hand, the left fell into disintegration and on the
other the image of socialism had changed substantially in the eyes of the people due to the war
given against Communists. The positive expectations of the people were now replaced by
general mistrust and hostility towards the socialist notions. The ideological tendencies of the
people had thus changed fundamentally in a very short time like a decade from one extreme to
the other. The Korean War had simply jeopardized the image of socialism as a drive for more
democracy, justice and peace. Moreover, the war legitimized the further development of the
state’s coercive mechanisms by increasing the military’s level of insecurity to very high levels as
well as becoming the major motivator of the establishment of a US aid based economy (Krueger,
1979). The aids provided by the USA reinforced state autonomy and capacity by providing
material sources that were not relied upon and controlled by the domestic forces. In addition, the
feelings of betrayal that the people carried against the leftists led by the working unions were
now exploited by the state to suppress every kind of reformist movements. Not only the state
elites but also the people were with the idea that movements concerning political competition
and participation should be postponed to a later time in order to guard the country in that very
dynamic and fragile time. A second war with the North Korea and China was still highly
possible.
The authoritarian state had established a high degree of autonomy thanks to the extensive
military and economic assistance provided by the United States since the Korean War. The
influence of the large landowning class was destroyed quite before the Korean War and the
alliance formed by the working and the middle class represented some level of challenge to the
authoritarianism of the state. Nevertheless, for more than three decades after the war, the
balances were mostly in favor of the state and less facilitating for the emergence of democracy.

33
Ibid., pp. 207 - 8
Due to the continuous fear of North Korean or Chinese invasion, authoritarian state found the
legitimate grand for maintaining its authoritarianism together with the military apparatus.
However, in last decade the conditions have changed in very favorable ways for democracy.
First of all, the fear of invasion is no more so effective as it was in the past. Secondly, powerful
business firms, the chaebols, have started to put limits on the powers of the state. And last but
not least, working class and their organizations have displayed an increasing role in politics. All
these developments have increased the chances of democracy in South Korea.
Government control of the financial system has created substantial inequalities between
the favored chaebol, which at least until the late 1980s had access to credit at low rates, and
capital-starved smaller businesses that had to rely on nonbank sources of credit. Official support
of the chaebol as the engines of South Korean economic growth and industrialization was clearly
reflected in the differences between salaries and working conditions of employees in large and
small enterprises. Also, the Park and Chun regimes’ hostile policies toward labor unions kept
workers’ wages low – and internationally competitive. Activists who tried to organize
independent unions were harassed, arrested, imprisoned, and frequently tortured by the
authorities.

3.5. The Structure of Government and State-Society Relations

For the South Korea, when we talk about the state in the post-Korean War period until the
1987, we must concentrate on the government because the elections were not the main
determinant of politics, but rather it was the autocratic rulers, who were originating from the
military ranks, that determine the particular state policies. Therefore, a discussion on the state of
South Korea comprising the undemocratic years should start by the study of the government.
From the end of the Korean War until 1987, the government in South Korea was
generally stable but largely authoritarian. The state elites and most of the people in Korea often
understood the political conflict as a promoter of regime instability and as a dangerous opening
to inimical external penetration. Autonomous civil society associations were frequently
perceived as a hated mobilization strategy by which communism would try to seize power. The
anxiety about the possibility of a communist rule or a war thwarted many popular groups from
the idea of political activeness. This situation naturally postponed democratic reforms in addition
to weakening the groups which were in need of it.
In the 1950s, Syngman Rhee ruled South Korea as a veritable dictator. He was the sole
center of power flowing in and out. He was carrying the idea to reunify the peninsula and was
therefore trying to strengthen the military capabilities of the state, which was resulting in more
autocracy because of the desire to start a new war. However, unable to realize his ideas, he was
driven out of power in 1960 by a student-led revolution.
U.S. military assistance to Korea between 1953 and 1960 – approximately $8.7 billion in
1997 dollars – supported Korea’s development in several different ways. First, U.S. assistance
helped build up the strong military establishment that South Korea needed to ensure its defense
after the Korean War. By providing support for the defense budget, the United States allowed
South Korea to devote resources to other, more productive sectors. Second, thousands of Korean
military officers were trained in the United States. After they left military service, many of them
assumed important roles in the civilian government and economy. According to an AID study,
much of the early supply of skilled labor in the 1960s and 1970s, such as electricians and
mechanics, came from the military.
In fact, a fair amount of the social mobility in Korean society during the 1960s and 1970s
resulted from service in the military. Korea’s development experience was largely a hierarchical
and centralized process. The experience gained by many people in the command structure of the
Korean military may have contributed to the success of many Korean development projects.
Both President Park and President Chung were former army generals who pursued Korea’s
development from the top down. But no definitive analysis has been written – or perhaps can be
written – about that contribution.
After a short period of democracy following the fall of Syngman Ree, a military coup
was imposed by General Park Chung Hee in 1961. Though Park was not a democrat himself, the
economic and political reforms that he implemented made great contributions for the coming of
the future democracy. The coup was in fact welcomed by many segments of Korean society
because it finalized the disorder and civil strife that had prevailed in Korean politics since the
last days of the Rhee regime. The Park government was described as a technocratic government
whose primary focus was promoting economic and social development. 34 His government
adapted a new constitution in 1963 under which the executive was quite powerful while the
legislature was very weak. With regard to economic growth and development, however, the Park
government proved to be a successful administration. South Korea’s economy leaped forward
under his leadership.
The governmental structure which Park established gave him some advantages. Firstly,
the military was strongly in support of the government because government ministries and public
enterprises were filled by many former officers. Secondly, the government was capable of
making policy changes that they thought to be in the national interests of the country without

34
On Park government as a thecnocratic regime see, for example, Korea in the Global Wave of Democratization,
pp. 210-3.
almost any opposition. Thirdly, organized labor movements were kept ineffective, and strikes
were not very often allowed. Therefore, it was able to avoid the pressure of the organized labor
for better work conditions and democratic demands.
However, after 19 years of powerholding in the government, President Park was also
overthrown as a result of an assassination in 1979, but who was again replaced with another
general, Chung Doo Hwan. But Chung was not able to maintain an authoritarian regime as his
successors. That was because the South Korean economy had reached to high growth levels in
the 1980s and the Korean people were increasingly demanding more democracy. 35 Another army
officer Roh Tae Woo followed Chung in 1987 and recognizing the growing strength of the
democratic movement, he united his party organization with several others. Under this
organization, a person with civilian background, Kim Young Sam, was elected president in 1992.

Conclusion
To sum up, in this paper I tried to see the relationship between capitalist development and
democratic transition in South Korea by using the assumptions suggested in Capitalist
Development and Democracy. As a result of my study, I have seen, and tried to display, that
capitalist development in South Korea has prepared the favorable conditions for its
democratization by the defeat of major forces against democracy, such as the landowners,
autocratic military officials and bureaucrats in the government, and by the strengthening of
forces demanding democracy, i.e., middle class and the labor class. The economic development
increased the percentage and the power share of the latter two classes at the expense of the
former classes and rendered them an unprecedented power for democratization. The state in
South Korea was authoritarian until 1987 when free and fair elections were allowed to be held
with universal suffrage. However, the state made a major contribution to South Korean
democracy by imposing major industrial development schemes.

35
US Congrational Budget Office.
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