[Outlook]The crisis chain

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[Outlook]The crisis chain

The year 2008 is drawing to a close, even though there is still a month to go before the new year. It feels like it was only a little while ago that President Lee Myung-bak’s transition team was causing controversy after controversy. But that was last winter, and now winter is coming again.

There were three important events this year. In February, the Lee administration took office. In May, huge groups of people protesting against beef imports from the United States started candlelight vigils. In September, Lehman Brothers’ bankruptcy sparked a financial crisis in the United States, which also impacted our country.

The Lee administration’s launch was expected, as the president was elected in accordance with democratic procedures. But the candlelight vigils and financial crisis were shocking to many, even though there were probably some who expected such events would occur.

These two situations pose two fundamental questions about democracy and capitalism, the pillars upon which we have built our society. The anti-beef protests exposed the limitations of representative democracy, and the ongoing financial crisis vividly reveals flaws in the capitalist system that has been embraced by much of the world. In 2008, our society reached a turning point, both politically and economically.

It is of note that the three events were closely related to one another. The Lee administration’s negotiations to resume imports of American beef triggered the candlelight protests. As for the financial meltdown, which is infecting the real economy at this very moment, the Lee administration’s flimsy financial policy was one of the causes. The protests are also related to the financial crisis. We can say that it stemmed from the globalization of U.S.-style neoliberalism, and we can also posit that opposition to the privatization of public corporations, which was an undercurrent of the candlelight vigils, demonstrates resistance to neoliberalism.

This series of events indicates two things. First, our society is facing a double-edged crisis. We have to deal not only with an economic firestorm but also a political one. Politicians are supposed to steer society in the right direction. The primary responsibility for the political crisis lies with the government and the ruling party, but the opposition parties can’t be exempted from responsibility.

The two different problems are closely linked. The government, through its use of immature measures, failed to calm the economic panic. In turn, the lagging economy offers fewer options for the government. The government’s indiscreet and inconsistent financial policy is a good example of such failed moves, as it did not prevent the free fall of the value of the won. This has significantly reduced our foreign exchange reserves. Considering that many people have traumatic memories of the 1997 financial crisis, the government should have come up with wiser measures.

Second, when it comes to situations like this, it is vital that we have a government with the competence to deal with the problems that are thrown at us. The U.S.-sparked financial crisis delivered a grave warning about neoliberal economic policies, such as the pursuit of the smallest possible role for government. Neoliberalism promoted giving control to the market as an alternative for the supposed failure of government. Now, the market is crumbling.

The problem is that even though markets are failing, we can’t simply give the control back to the government.

Take the issue of employment, for example. As Andre Gorz, the late left-wing socialist from France, repeatedly emphasized, around the globe one-third of the labor force is in oversupply. During the golden era of Keynesian economics in the 1950s and 1960s, full employment was realized through government intervention. It is obvious, however, that this can no longer work in the era of information technology.

In a society that is no longer labor-oriented, where jobs and the quantity of work are being reduced while total production is increasing, the government must present a new policy to create employment, whether post-liberal or post-Keynesian.

In order to overcome this double-edged disaster, the government must play it smart. The dichotomy of large or small government is a 20th-century paradigm.

What’s more important is that the government take a wise approach, taking into consideration short-term strategies and long-term perspectives, and the nature of our country, our people and international society at the same time.


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

by Kim Ho-ki
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