This article appeared in the Korea Times on May 25,1998

Democracy, Hypocrisy, and the IMF Crisis

What is the relationship between the contemporary democratization of Korea and the current IMF crisis? One fact is clear--The IMF is not a democratic institution. In many ways it represents the opposite of democracy. Democracy requires national sovereignty, that is that a people rule their own country. But when the IMF enters a country it takes over the economic policymaking in that country as if it were a colonial power. Today the IMF has a greater say than the Korean government in economic policy in Korea. What the interest rate should be, what the budget deficit should be, how the chaebol should be structured, how foreign investment should be treated, the IMF has more say about these matters than the elected government of Korea. This contradicts the fundamental principle of democracy--that a people should rule their own country.

Neither is the IMF run as a democracy internally. The international influence of the IMF might be tolerable if it were a popular expression of global democracy. But within the IMF the governing rule is one dollar, one vote. Voting power within the IMF is determined by the size of a nation's contribution to IMF funds. One could not imagine a more stark definition of plutocracy. Democracy is one person, one vote. One dollar, one vote is plutocracy--rule by the rich. The IMF is transparently based on the principle of rule by the transnational bankers and corporations, not the people.

Another principle of democracy is pluralism--many voices, many points of view, many ways of thinking competing in an open debate. But the IMF represents only one point of view--that of the West, particularly western bankers, businessmen, and economists. The United States and the European Union together have roughly half of the voting power, and in fact have total ideological and institutional control over the IMF. The IMF is the G-7's bill collector in the less developed world and newly industrializing world.

The anti-democratic nature of the IMF can be seen in the policies that it pursues. What does the IMF demand when it enters a country? Devalue your money so your people can buy less. Raise your interest rates so your people and your companies can borrow less. Throw a lot of your people out of work. End subsidies on basic human needs like food and shelter so some of your people will go hungry and homeless. Cut public spending so you do not have the resources to aid the unemployed, the hungry, and the homeless. Restructure your corporations so it is easier for Western banks and businesses to come in and take them over. What domestic political party could get elected running on a platform like that?

The IMF is clearly an anti-democratic institution. The United States likes to trumpet its support for democracy around the world. Yet the Clinton administration and most American policymakers and opinion leaders urge Korea to comply with the IMF's anti-democratic decrees. Why? Perhaps it is because in American foreign policy American economic interest has always come before any real concern with democracy. In any case, U.S. support for the IMF's policies in Korea and the rest of the world expose the hypocrisy of American proclamations about democratization.

But hypocrisy about the IMF is not limited to the U.S. Korea's political and economic leaders also hide behind the IMF to disguise their true motives. The chaebol can point the finger at the IMF for the lay-offs, salary reductions, and small business failures that are really the result of the mistakes and corruption of the chaebol. Political parties self-righteously blame the other parties for the IMF crisis and for kow-towing to the foreign pressure. The security forces which have been so discredited by the "North Wind" scandal now have a new justification for repressing their old enemies, the trade unions and the student movements, saying their activities will undermine the political stability demanded by the IMF, foreign bankers, and potential foreign investors. Authoritarian-minded politicians have already begun to blame the political turmoil that has begun to emerge and is sure to intensify on "excesses" of democracy and call for crackdowns on political opponents in a manner reminiscent of the old military regimes.

The policies of the IMF have made the impact of the economic crisis in Korea more painful on ordinary citizens than it had to be. But the IMF did not cause this crisis. The chaebol did. It was not the IMF but the chaebol who put Korea so in debt to foreign bankers that when an economic slowdown came Korea had little choice than to submit to the IMF dictatorship.

That is the current economic and political reality--that Korea needs the IMF and other international funds to rescue its failing economy. Korea must comply with IMF demands to some degree and it must restructure its economy if it is to have any hope of recovering from the current crisis. The fundamental questions are how to restructure the economy and whether Korean can develop its own relatively progressive economic policies within the boundaries set by the IMF.

The Kim Dae Jung government has some tough decisions to make. Clearly economic restructuring is necessary. Clearly Korea needs the help of the IMF and other international institutions to get it through its debt crisis. Clearly Korea will have to submit to many of the demands of the IMF if it hopes to get the funds it needs to keep its economy afloat.

Is it going to be serious about tripartite business, labor, and government guidance of economic restructuring or is it going to continue siding with the chaebol and suppressing the trade unions?

The problem is Korea today is not too much democracy. It is not too many demonstrations by people out of work or out of business. It is not too much political pressure by those who are having their living standards and life chances drastically reduced.

The problem is not enough democracy. The problem is the IMF plutocrats dictating to the Korean government how to run its own economy. The problem is the U.S. and other supposedly democratic governments hiding behind the IMF diktats in order to pursue their narrow commercial interests. The problem is the Korean government hiding behind the IMF to repress popular movements which want to make a restructured Korean economy more responsive to workers' and people's needs rather than the demands of transnational corporations and chaebols.