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Abstract
This dissertation joins a growing pool of scholarly works that question the theoretical and policy validity of neoliberal conceptions of economic governance. I argue that a political economy framework that privileges state-business strategic interaction continues to be relevant in understanding why certain countries are successful in governing the economy, while others fail.
Neoliberal arguments about corruption and rent-seeking, exemplified in the term “crony capitalism,” cannot explain how Korea managed to grow despite a widely acknowledged close state-business relationship. Statist theories that predict the decline of state power with the rise of market and social forces cannot explain why the state's capacity to govern private behavior fluctuated, instead of the so-called retreat of the state. In fact, state-business dynamics since 1980 exhibited at times collaboration and at other times conflict, defying both the neoliberal and early statist predictions. Now, after a remarkable loss of state capacity during the early 1990s, a re-composition of state power is in process, evidenced in the post-1997 economic reforms.
I argue that the fluctuations of the state's ability to govern private behavior can be traced to the shifting institutional and material resources available to state and business actors, which spawn different incentives for strategic action. A detailed examination of these resources can help predict when state-business relations become collaborative, conflicting or collusive, with consequences for success or failure in the economic tasks set out by the state. My arguments are examined through a qualitative analysis of major episodes of industrial and market adjustments since 1980 to the present in the realm of finance, the most important site of state-created rents.
An important contribution of this study is the theoretical rediscovery of state capacity, the analysis of which must include not only the politico-economic realities of state-society relations, but also the shifting institutional configurations within the state. Conceptualizing state capacity this way challenges governance theories that tend to impute market and structural forces with irresistible power and predict the irrelevance of the state. Korea's experience shows that state capacity continues to matter even in an age of market orthodoxy; what is happening is a state in transformation adapting to the new market imperatives. Central to this process is the politics of statecraft, which is ultimately driven by regime politics.
