Global South Lecture 7: November 9, 2007 Corporate Power and the Developmental State

Large Corporations  What specific qualities of large corporations produce wealth?  Economies of scale  Recruiting and development of human capital  Networking  Research and development

But the key is…  Complementarity between ‘physical’ and ‘human’ capital  Between ‘tangible’ and ‘intangible’ capital  This is what brings about increasing returns to scale  Google’s growth 

Growth of Facebook FB Year 1 (Dec. 31, 2004) — 1 million FB Year 2 (Dec. 31, 2005) — 5 million FB Year 3 (Dec. 31, 2006) — 12 million FB Year 4 (Apr. 26, 2007) — 20 million FB Year 4 (Aug. 1, 2007) — 30 million

What does this lead to?  Monopolies and oligopolies  GM versus Toyota  i/guides/457000/457029/html/default.stm i/guides/457000/457029/html/default.stm

The big assumption here is…  Corporate profitability = national economic growth (and implicitly equal to development)

The South Korean chaebol  ol.htm#SAMSUNG  Samsung ($89.1 billion), Samsung  Hyundai Motor Company ($57.2 billion), Hyundai Motor Company  LG ($50.4 billion), LG  SK ($46.4 billion), SK  Hanjin ($16.2 billion), Hanjin  Hyundai Heavy Industries ($10.5 billion Hyundai Heavy Industries

How did this happen in Korea?  Two views:  “Free market”  State intervention

What did the Korean state do?  “get prices wrong”  Reciprocity  Cheap loans  Quotas  Rewards and punishments

Key features of Korean capitalist development  Sever the link between colonial and ‘national’ capital (recall Cardoso and Faletto)  Focus on growth and not profitability  Highly extractive (rise in incomes but low on political rights, leading to the labour movement

YearIndex of Industrial Production (1936=100) Index of Profitability (1936=100) Prices And Profits In India,

Total Manufacturing Avg Large Manufacturing Avg Small Manufacturing Avg Export Industries Avg Domestic Industries Avg Profitability of Korean Industry:

Developmental state A developmental state on the other hand actively shapes society, social relations and social goals. What distinguishes it from a predatory state? Simply put, a developmental state develops society; a predatory state extracts from society

Who gains? In a developmental state? In a predatory state?

The context of emergence of developmental state  Autonomy  Coordination  Authoritarian political structure  Weak social formations

Condition for its success?  Alliance with elite interests?  Authoritarianism?  What happens to it after “classes” develop and “elite interests” consolidate?

Nature of autonomy  Embedded – what exactly does this mean

India  Growth but not ‘development’  What does the author mean?  Did East Asia see development?  Main argument

Historical structures (Cox) Social forces Land relations? Industrial capitalism? Forms of state Democracy/dictatorship “developmentalism” World Orders Hegemonic/non-hegemonic