Recent economic crisis and its outcome

Recent economic crisis and its outcome
-The problem of aggravating income distribution


Kim, Jae-Hoon

It is said that the Korean economy is now overcoming its crisis relatively well. In spite of this fact, some problems remains to us. Here my purpose is to see the nature and its prospect of the recent economic crisis.

1. Recent development of the financial sector and 'the service economy'
During the outbreak of the currency crisis last year in 1997, everybody has noticed the outflow of foreign capital. These developments of non-banking saving institutions have come with the growth of other banking activities including diverse new financial instruments in the banking sector, through technological innovation in an area of telecommunication and computer as well as systematical innovation, so the globalising of world economy.
Including the financial sector as such, the service sector has become important more and more to us. Specifically, nowadays producer service - consisting of business service, professional service, financial service, insurance, property intermediary service- has become more important not only for itself but for the productivity of the economy in general.

2. The appearance of 'the New Mode of Development' and its meaning
Nowadays there are many opinions which analyse changing economic or social systems and predict society in the near future. Common point of all those views can be roughly said as the shift to information society or knowledge-based society. It may also be expressed as the vanishing of the merit of economies of scale through mass-production. Most of those viewpoints expect a rapid growth of production possibility. Neverthless, most important factor for a desirable society will be the sufficient possibility of all the members' welfare and participation.
Let's look at the reality. Present trends of becoming flexible and the service economy have certainly not only impelled an alternation between jobs, but also increased productivity and total demand, thus increasing the level of employment. In U.S.A., 8 million jobs have been newly created and 60% of them were professional or technical workers i

n the years of 1993-96. Notwithstanding, working condition, wage level, stability and predictability of jobs have evidently gotten worse. Also in England, 40% of total employment has been self-employment, part-time workers and transient employment. Contrarily, the countries of the EU(except England) and Japan are worse than the above case in the level of flexibility, while better in wage and the social welfare level. Consequently unemployment rate in that area is said to be higher than the above case.
Here is our dilemma. When we make efforts to decrease the unemployment rate, the state of employment is unstable. If we want the stability of employment, then the unemployment rate becomes higher. Lower experienced, low level, low educated, therefore low waged service jobs are rapidly increasing instead of higher service which operating information. They are all insecure and part-time. Therefore nowadays so many people have warned against the negative aspects of globalization

. Warnings against '2/3-1/3 society' were raised in the past, but warnings against '20 vs. 80 society' are being raised at present.So more serious especially the dilemma of the Korean economy highly deficient of 'social safety networks'.
And the economies are not made possible exclusively through production. There must be the circulation of re-production. Maybe such '20 vs. 80 society' should be always under the structural and relative over-production state because of the unbalance between the production and consumption. Here is the problem of neo-liberalism.