The South Korean and the Chilean states exhibit a series of institutional similarities which undoubtedly have shaped the nature of government– society relations in general, and government–business relations in particular. To begin with, both South Korea and Chile have been characterized by the relative strength of their state institutions, the efficiency of their bureau- cracies, and the cohesiveness of their armies. In my view, these factors constituted an important precondition for the authoritarian governments of Generals Park and Pinochet to formulate and to apply a certain type of economic policy, independently of the immediate response of business interests. The high degree of institutional cohesion of both armies permitted their leaders to count on the firm support of the armed forces in their plans to profoundly transform both economy and society. In this respect, both Park and Pinochet were allowed to play an almost omnipotent role within the military regimes. They indeed deployed strong personal leadership and in the end showed their ability to radically transform the economic and institutional structures of their countries. This resulted in both cases in a process of rapid economic growth and strong societal modernization, within a quite repressive political environment.
Both Park and Pinochet decided to constitute a powerful and extremely insulated economic technocracy on which they conferred their resolute personal backing. They in fact utilized the economic technocracy as an interface in order to maintain for themselves a prudent distance from
big business and other powerful civil actors whom they almost instinctively distrusted.
The South Korean and Chilean cases show the existence of an ‘‘elected affinity’’ between military men and civilian technocrats, as both actors shared similar ‘‘world visions’’ as well as coinciding societal goals. Together with their common sense of mission, both actors also shared an almost innate rejection of party politics and the belief in technical and ‘‘apolitical’’ solutions for the country’s problems. While the military detested the alleged lack of patriotism shown by most politicians and members of the economic elites, civil technocrats often rejected political leaders because of their lack of responsibility and the immense ignorance displayed in the decision-making process. They had personally witnessed the structural inability of the previous regimes to solve the national problems and to prepare the country for the economic challenges ahead. In addition, both actors shared a clear meritocratic vision of personal efforts and rewards and a profound distrust toward democracy and mass participation in the national political process. The military has traditionally regarded democracy as an auspicious arena for corruption, demagogy, anarchy, and eventually communism. On their part, technocrats often questioned the ability of democracy to impose and to maintain the application of rational developmental policies despite their potentially high electoral costs. The military–technocratic coalition worked relatively well under authoritarian rule as both Park and Pinochet provided unprecedented room for maneuver and relative autonomy to the technocrats in charge of economic policy and reform of the state. A kind of ‘‘division of labor’’ among the military and the civilian technocrats was established, in which the former provided ‘‘order’’ (repression), and the latter applied policies directed at ‘‘rationalizing’’ and modernizing the state apparatus and the country’s economy. So by separating the strictly military spheres from the administrative and economic ‘‘fronts’’ conferred to civilian techno- crats, many potential conflicts within the armed forces were avoided. Communication between the army and the technocratic team took place at the highest level. So while Park communicated directly with the Director of the Economic Planning Board, Pinochet primarily discussed matters related to the performance of the economic team with the Chicago boys’ uncontested leader, the Minister of Finance Sergio de Castro.
The cases of South Korea and Chile have also shown that the relative power of technocratic economic teams depends almost completely on the room for maneuver the president is inclined to confer on them, and particularly on his continuous support. Sudden changes in economic and political realities convinced Park and Pinochet that the time had come to replace their economic teams by another group of technocrats.
So results are crucial for the permanence of a particular economic team, but also for the acceptability of technocratic insulation among important sectors of the population. What Park and Pinochet have in common is that their economic policies have been generally acknowledged as having been
remarkably successful until their very end. So in both countries authoritarian regimes came to an end amidst a period of strong economic growth. This important factor generated a factual ‘‘alliance for continuity’’ among a variety of sectors (army, civil bureaucracy, business, middle classes, etc.) who finally accepted the inevitability of the restoration of democracy, but explicitly or tacitly supported the continuation of the previous economic policies. For this purpose, the maintenance of technocratic insulation of the economic policy-makers during the transition process became one of the main mechanisms of defense against societal pressures for changes in the prevailing economic policies.
In this chapter, however, some important differences between the South Korean and Chilean cases have also become evident. The economic strategy elaborated by Park’s technocrats was exceptionally ‘‘statist’’ and ‘‘dirigiste’’ in nature, leading to the strengthening of the role of the state in the economy and the expansion of the state bureaucracy. In contrast, Pinochet’s neoliberal technocrats formulated a strongly ‘‘antistate’’ economic policy, based on the almost total withdrawal of the state from the economic realm. So while Park was the architect of the Korean developmental state, Pinochet was actually the executioner of the Chilean developmental state that had been built up since the late 1930s. Thus in a sense state interventionism in South Korea was similar to that experienced by Chile from the late 1930s until the military coup of 1973. However, in the case of Korea, despite constant frictions between government and business, state policies were undoubtedly more pro-business than in Chile. During most of the period 1940–73, the Chilean democratic governments had to operate in a very difficult political landscape. In contrast to South Korea where the left was virtually exterminated following the Korean War and the landed interests destroyed as a result of the land reform in the 1950s, Chile possessed not only powerful big landowner organizations, but also a very strong parliamentary left and a highly organized and combative labor force. In this particular political setting, Chilean governments could not choose openly for the business sector. In this manner, the compromise of the Chilean state in deepening capitalism in the country was always ambiguous. Although there was broad support in the country for state-led capitalism, previous to the 1973 coup, support for a project based on capitalist development led by the private sector was almost entirely nonexistent.
With respect to consultations between economic policy-makers and business representatives, Pinochet’s Chicago boys, in contrast to the South Korean technocrats, were not disposed to create institutional mechanisms for periodic consultations with business. Because of their endless confidence and devotion to the ‘‘invisible hand’’ of the market and their intense aver- sion to corporatism and populism, they visualized the possible creation of consultation channels between government and business as being totally opposed to their goal of developing a genuine open market economy in the country. Hence, their degree of insulation reached far more extreme forms
than that enjoyed by the South Korean technocrats. Only when their policies failed in 1981–83, and Pinochet replaced the Chicago boys by a more heterodox technocratic team, did a new situation of close con- sultation between government and business emerge. However, even then this collaboration between government and business did not adopt a more formal structure, as Pinochet consciously avoided the constitution of neocorporatist forms of representation. In my opinion, this kind of ‘‘embedded autonomy’’ emerging in the early 1980s in Chile was mainly the result of the government’s pragmatism in dealing with the crisis, and definitively did not represent a deliberate beginning of a new type of government–business relationship.
On the other hand, there are some grounds for questioning the existence of the alleged high degree of ‘‘embedded autonomy’’ which should have characterized the South Korean case, according to many scholars. It is of course indisputable that since the early 1960s several communication links have been established between the Korean state and big business. However, the nature of this relationship has been extremely ‘‘top-down’’ and authoritarian. The South Korean government has often not searched for the achievement of consensus with business, but rather for the dominance of the latter. In this manner, the communication channels between government and business have not truly served to create a real interchange of ideas and positions, but rather were the government’s instrument for giving production directives to business, under threat of severe financial and legal penalties. This helps at least partly to explain the readiness shown by Korea’s big business during the transition process to get rid of most of the oppressive elements characterizing the government–business relations in the period 1961–87, but at the same time trying to maintain the financially supportive side of that link.
In contrast, ‘‘embedded autonomy’’ in the Chilean case has represented a more genuine form of government–business communication. As we have seen in this chapter, for the largest part of the Pinochet regime, extreme technocratic insulation, not embedded autonomy, characterized the (lack of ) contacts between government and business. When these contacts finally came into existence in the early 1980s, they were enthusiastically welcomed by the business community after so many years of ‘‘closed door’’ politics. In the end, the several business associations presented their policy proposals to the government on how to deal with the crisis and many of these were indeed implemented. The unusual feature of government–business relations in Chile, however, was the extreme degree of support and loyalty shown by the entire capitalist class to the Pinochet government. With or without consultations, business unilaterally offered its unconditional support to the coup, to the subsequent military government, and even today to the figure of the former General Pinochet. Their infinite gratitude to the armed forces for having deposed the socialist government of Salvador Allende, their firm commitment to free-market policies, and the prospect in the late 1980s
of the restoration of democracy, were crucial factors which made the Chilean business community a steady ally of the authoritarian regime.
It can be stated that the high degree of technocratic insulation in both cases has been related not only to the objective of achieving economic growth per se, but primarily to the political requirement of those authori- tarian governments to survive. By isolating economic decision-making, Park and Pinochet also attempted to eliminate the rent-seeking behavior of business. That type of pressure on the state could not only negatively affect the state’s capacity to formulate and apply coherent economic policies, but could also create some serious frictions within the main pillar of the govern- ment: the armed forces. By placing economic decision-making mainly in the hands of civilian technocrats, the armed forces, as an institution, were able to direct their attention to national security issues and internal intelligence activities (repression of labor and left-wing political forces).
In contrast to the Korean case, the restoration of democratic rule in Chile did not weaken but clearly fortified the degree of embedded autonomy in the country. The democratic forces genuinely believed in the need to create a broad ‘‘concertation’’ in the country between the new elected government and the business community. They realized that, without reaching a firm consensus with the main business representatives about economic and social policies, both the maintenance of high levels of economic growth and the political stability in the country could be jeopardized. In the Chilean case the democratic governments have been more successful than in South Korea in maintaining control of civil society (including labor), due to the exceptional strength of the political parties and their close links with the social movements and labor organizations.
I think that the economic technocracy in both countries also played a very important moderating role during the processes of democratic transition. Technocratic insulation constituted a guarantee for both business and the military that the essence of the pattern of economic development was not going to be radically changed in the new political scenario. In both countries state technocracy seems to have functioned as a force of contention against the possible adoption of populist economic policies by the post-authoritarian governments, and against the generation of an uncontrollable wave of social and economic claims on the state from civil society. So indirectly, the technocratic nature of economic policy-making contributed to the relatively peaceful and stable nature of the democratic transitions in Chile and South Korea.
Notes
1 See, for instance, F. Deyo, Beneath the Miracle: Labor Subordination in the New Asian Industrialism, Berkeley: University of California Press, 1989; S. Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing
Countries, Ithaca: Cornell University Press, 1990; A. MacIntyre, ‘‘Business, government and development: Northeast and Southeast Asian comparisons,’’ in A. MacIntyre (ed.) Business and Government in Industrialising Asia, Ithaca: Cornell University Press, 1994, pp. 1–28; R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Princeton: Princeton University Press, 1990; S. Maxfield and B. R. Schneider (eds) Business and the State in Developing Countries, Ithaca: Cornell University Press, 1997.
2 K. Kim and D. M. Leipziger, The Lessons of East Asia: Korea, A Case of Government-led Development, Washington, DC: World Bank, 1993.
3 See, for instance, R. O. Jenkins, ‘‘Learning from the gang: are there lessons for Latin America from East Asia?’’ Bulletin of Latin American Research, 1991, vol. 10, pp. 37–54; A. Hosono and N. Saavedra-Rivano (eds) Development Strategies in East Asia and Latin America, London: Macmillan, 1998; G. Gereffi and D. L. Wyman (eds) Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia, Princeton: Princeton University Press, 1990. 4 M. Sznajder, ‘‘Dilemmas of economic and political modernization in Chile: a jaguar
that wants to be a puma,’’ Third World Quarterly, 1996, vol. 17, pp. 725–36. 5 World Bank, The East Asian Miracle: Economic Growth and Public Policy,
New York: Oxford University Press, 1993.
6 P. Evans, D. Rueschemeyer, and T. Skocpol (eds) Bringing the State Back In, Cambridge: Cambridge University Press, 1985.
7 D. Rueschemeyer and P. Evans, ‘‘The state and economic transformation: toward an analysis of the conditions underlying effective intervention,’’ in P. Evans, D. Rueschemeyer, and T. Skocpol (eds) Bringing the State Back In, Cambridge: Cambridge University Press, 1985, p. 68.
8 M. Grindle, Challenging the State: Crisis and Innovation in Latin America and Africa, Cambridge: Cambridge University Press, 1996, p. 4ff.
9 M. Shafer, ‘‘The political economy of sectors and sectoral change: Korea then and now,’’ in Maxfield and Schneider (eds) Business and the State in Developing Countries, p. 94: see note 1.
10 World Bank, The East Asian Miracle: Economic Growth and Public Policy, New York: Oxford University Press, 1993, p. 167. Soon after the publication of The East Asian Miracle, the World Bank released another study, entirely dedicated to the Korean case. This study concludes that ‘‘public policy was at the center of development, as stable governments, aided by technocratic bureaucracies and research institutes, prodded the private sector to attain national goals.. . . What Korea. . . had in abundance was excellent policymaking and policy implementa- tion, based on strong presidential leadership and political stability.’’ See Kim and Leipziger, The Lessons of East Asia, p. 40 (note 2).
11 B. R. Schneider, ‘‘The material bases of technocracy: investor confidence and neoliberalism in Latin America,’’ in M. A. Centeno and P. Silva (eds) The Politics of Expertise in Latin America, Basingstoke: Macmillan, 1998, pp. 77–95. 12 M. Grindle and J. W. Thomas, Public Choices and Policy Change: The Political
Economy of Reform in Developing Countries, Baltimore: Johns Hopkins University Press, 1991; Haggard, Pathways from the Periphery: see note 1; S. Haggard and R. R. Kaufman (eds) The Politics of Economic Adjustment, Princeton: Princeton University Press, 1992; S. Haggard and R. R. Kaufman, The Political Economy of Democratic Transition, Princeton: Princeton University Press, 1995; S. Haggard and S. B. Webb (eds) Democracy, Political Liberalization and Economic Adjustment, Washington, DC: World Bank, 1994; Wade, Governing the Market: see note 1; J. Williamson, Latin American Adjustment: How Much Has Happened? Washington, DC: Institute of International Economics, 1990.
13 Haggard and Kaufman, The Political Economy of Democratic Transition, p. 79: see note 12.
14 Haggard and Kaufman, The Political Economy of Democratic Transition, p. 43: see note 12.
15 Haggard and Kaufman, The Political Economy of Democratic Transition, pp. 59–60: see note 12.
16 P. Evans, ‘‘The state as problem and solution: predation, embedded autonomy, and structural change,’’ in Haggard and Kaufman (eds) The Politics of Economic Adjustment, pp. 139–81: see note 12.
17 P. Evans, Embedded Autonomy: States and Industrial Transformation, Princeton: Princeton University Press, 1995, p. 12.
18 J. Meynaud, Technocracy, London: Faber & Faber, 1968, pp. 130–2.
19 As Yeom points out, ‘‘capital formation by chaebols in Korea, in the phase of import-substitution, suffered from serious problems of political corruption during the process of discretionary national wealth distribution. This legitimized the purge of big business after the 1961 coup, and provided the Park regime with a free hand to structure the economy in line with export promotion strategies.’’ See J. Yeom, ‘‘Economic reform and government-business relations in Korea: towards an institutional approach,’’ in Hosono and Saavedra-Rivano (eds) Development Strategies in East Asia and Latin America, London: Macmillan, 1998, p. 148. 20 Indeed, technocratization of economic decision-making requires societal bases
of support. As Haggard and Webb indicate, ‘‘insulating reformers within the bureaucracy is important for initiating adjustment, but success in sustaining and consolidating reform requires building bases of support. In the absence of such bases of support, insulated technocratic agencies become politically isolated and programs become vulnerable to reversal.’’ See Haggard and Webb (eds), Democracy, Political Liberalization and Economic Adjustment, Washington, DC: World Bank, 1994 p. 15.
21 C. I. Moon and R. Prasad, ‘‘Beyond the developmental state: networks, politics, and institutions,’’ Governance, 1994, vol. 7, p. 360.
22 B. Cumings, Korea’s Place in the Sun: A Modern History, New York: W. W. Norton, 1997, pp. 36, 153; S. J. Han, ‘‘South Korea: politics in transition,’’ in L. Diamond, J. J. Linz, and S. M. Lipset (eds) Politics in Developing Countries: Comparing Experiences with Democracy, Boulder, CO: Lynne Rienner, 1990, p. 342.
23 C. J. Eckert et al., Korea, Old and New: A History, Seoul: Ilchokak Publishers, 1990, p. 397; Haggard, Pathways from the Periphery, pp. 52–61: see note 1. 24 S. Haggard and C. I. Moon, ‘‘The state, politics, and economic development in
postwar South Korea,’’ in H. Koo (ed.) State and Society in Contemporary Korea, Ithaca: Cornell University Press, 1983, p. 58.
25 T. J. Cheng, S. Haggard, and D. Kang, ‘‘Institutions and growth in Korea and Taiwan: the bureaucracy,’’ Journal of Development Studies, 1998, vol. 34, p. 105. As Evans indicates: ‘‘in the 1950s under Rhee Syngman, the civil service exam was largely bypassed, with only about 4 percent of those filling higher entry level positions entering via the civil service exam.. . . [H]igher ranks were filled primarily on the basis of politically-driven ‘special appointments.’ ’’ See P. Evans, ‘‘The state as problem and solution,’’ p. 155 (note 16).
26 D. S. Suh and C. J. Lee (eds) Political Leadership in Korea, Seattle: University of Washington Press, 1976; B. N. Song, The Rise of the Korean Economy, 2nd edn., New York: Oxford University Press, 1997, p. 142.
27 S. Haggard and C. I. Moon, ‘‘Institutions and economic policy: theory and Korean case study,’’ World Politics, 1990, vol. 42, p. 211.
28 K. Fields, ‘‘Strong states and business organization in Korea and Taiwan,’’ in Maxfield and Schneider (eds) Business and the State in Developing Countries,