[Viewpoint]Decoupling from neoliberalism

A financial tsunami from the United States is shaking the world. Wall Street investment banks, known as spearheads of globalization, are going bankrupt one after another, and the fallout is hitting the world’s economies, one after another. Korea is no exception. The nation’s stock and foreign exchange markets have been through a series of rises and falls. After the rumors of a September financial crisis subsided, another dark cloud has cast its shadow over Korea.

Assessments and recommendations for how to deal with the financial crisis are diverse. Paul Krugman, who has long been critical of the Bush administration’s economic policies, warned that the crisis could be the beginning of the end for the United States as an empire. Joseph Stiglitz gave some specific recommendations including the establishment of a committee that would assess the safety of financial products.

The U.K.-based Financial Times claimed “the return of the state” is needed instead of U.S.-style privatization, liberalization and deregulation, while Kenichi Ohmae proposed the establishment of an international organization to solve the liquidity crisis.

Experts have predicted this crisis. As globalization accelerated, capital has become “Prometheus Unbound.” The risks associated with globalizing financial capital were well-known, but we have become drunk by attractive bubbles. The Bush administration injected massive public funds to calm the market, but the root of the problem has not been completely removed.

A financial crisis depresses the real economy, and there is still a possibility that a rupture could come from an unexpected part of the global financial network.

There are two views about the financial crisis. One is that the U.S-style financial system has shown its limits. The other is that the end of U.S.-led neoliberalism has begun.

There is hardly any objection to the first argument. Both right- and left-wingers agree that regulation of financial capital must be strengthened. Even the Republican presidential candidate, John McCain, supports this idea.

Opinions, however, are split over the second argument. While some say it is too early to talk about the collapse of neoliberalism, others say that its end has been clearly demonstrated.

The problem for Korea’s economy is that the Lee Myung-bak administration’s financial system is modeled after the United States. At a time when transparency and regulation should be reinforced, the government’s plans are largely based on deregulation.

Of course, strengthening regulations will not have a magical effect. In order to improve the financial system’s health, old regulations must be lifted, while necessary ones should be added. What is worrisome is that the wild goose, which was flying in front, is now falling, but the other geese failed to notice and continue their flight along the same course.

Korean society must separate globalization and neoliberalism. There is no way to avoid globalization, but neoliberalism is not necessarily the only way to achieve it.

What controls Koreans’ thinking are the dictum that “globalization equals neoliberalism” and globalization versus anti-globalization dichotomy. Conservatives are caught by the first trap while liberals are ensnared by the second.

We should examine other countries, such as Finland, the Netherlands, Ireland and the European Union, which have sought sustainable globalization. Such models have globalized without blindly following U.S. neoliberalism.

While heightening competitiveness in the global market, they have tried to achieve social balance domestically. In other words, they took their unique qualities into account when addressing the pressures of globalization.

The core of the problem is that Korea practices either unsophisticated imitation or denial.

While the conservatives are preoccupied with the politics of imitation, believing they must follow any U.S. model, the liberals practice the politics of denial, believing they must reject globalization of any kind.

After the 1997 financial crisis, the Kim Dae-jung administration implemented restructuring based on neoliberalism. After the ambiguous “leftist neoliberalism” of the Roh Moo-hyun administration, Korean society now faces the Lee Myung-bak administration’s market fundamentalist neoliberalism.

This is a critical time. Korea must use its imagination, vision and policy alternatives to globalize outside the boundaries of neoliberalism.

*The writer is a professor of sociology at the Yonsei University. Translation by the JoongAng Daily staff.

by Kim Ho-ki