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SOCIAL AND SOLIDARITY ECONOMY FOR THE SDGS: SPOTLIGHT ON THE SOCIAL ECONOMY IN SEOUL (CHAPTER III) Social Economy in the National Context: Origins and Development in the Republic of Korea RACTICES and relations conceptualized as so­ social values and goals but which do not specifically cial and solidarity economy (SSE) existed long aim to meet the criteria needed to gain one of the before the modern capitalist market system specific types of legal recognition associated with emerged in the Republic of Korea. Since the SE. Assuming different legal forms, ranging from Pcolonial period, when an exploitative market system was commercial corporations to cooperatives, SE organi­ widespread, various forms of SSE organizations and zations and enterprises have emerged in many enterprises, albeit weak and small in terms of impact industrial sectors with support from government and scale, have continuously developed. schemes for new economic entities creating jobs. They have also started to form networks. SE in the The concept of social economy (SE), as the SSE Republic of Korea is understood broadly to in clude concept is known in Korean, started to be used in the all these organizations, their relations and activities. 1990s to refer to a variety of organizations and activities addressing social issues such as unemployment and This chapter explains the origins, development and poverty. Various stakeholders, particularly both cen­ the current state of SE in the Republic of Korea. tral and local governments and civil society actors, The next section describes the historical origins have contributed to the development of SE as a and development of SE in the Republic of Korea concept and as a practice by establishing supporting from the colonial period to the present. The chapter institutions and organizations. In particular, a series then presents the current structure of SE in the of laws which give a special legal status to organi­ national context, describing the principal types of zations and enterprises prioritizing social and often SE organizations and enterprises (SEOEs), with a environmental objectives over profits has played a focus on their key characteristics, main challenges significant role in growing the SE sector. There have and opportunities, which in part also characterize also been new forms of enterprises which prioritize SE in Seoul. 48 SOCIAL ECONOMY IN THE NATIONAL CONTEXT Historical origins of social economy Social economy during the colonial period in the Republic of Korea Two early forms of SE in the Korean capitalist market system were finance cooperatives, called Geum-yung As is the case for all countries, the Republic of Korea Johap, the first of which was established in 1907, has a long tradition of informal SE organizations. and agricultural cooperatives called Nong-hoe, first Mutual aid organizations among villagers in the established in 1926.1 These, and other cooperatives in predominantly agricultural societies of the past, a variety of industrial sectors, were established by the such as dure and gye, are excellent examples. As the Japanese colonial authority in a top­down manner. institutions of the state and market evolved, various Although they had the organizational structure of forms of economic or ganizations and enterprises, cooperatives and were indeed called cooperatives, which belong to neither the state nor the market, have the Japanese colonial authority de facto controlled developed. them and utilized them as a vehicle for exploitative colonial policies (Jang, 2000). For instance, Nong-hoe The developmental trajectory of SE in the Republic was an extended arm of administrative units in rural of Korea is a combination of a bottom­up movement villages used to implement forced production and by civil society and a top­down approach by the export specific agricultural produce, while Geum-yung state. It is different from the typical development Johap mobilized financial resources in the form of pattern of SE in several European countries where savings which were used for the war economy. civil society actors initiated or developed SEOEs (Defourny and Develtere 1999, Salamon and In the first half of the colonial period, however, Anheier 1998, Birchall 1997). cooperatives that were organized by grassroots volun­ tarism also emerged. Led by intellectuals, religious and Two major factors, in particular, have contributed community leaders, and labour movement activists, to shaping the state­driven trajectory of the social many of these cooperatives were associated with the economy in the Republic of Korea: centralized resistance movement against Japanese colonialism. colonial rule by Japan between 1910 and 1945; and The sectors in which these cooperatives operated the subsequent authoritarian governments with were diverse. They included agriculture, fishery, and centralized power and control over the economy, the purchase and sale of goods and services. Leaders polity and society. The top­down and strong central of these cooperative movements aimed not only to planning for economic growth by authoritarian increase members’ benefits; they had a political mission governments between 1962 and 1986 played a as well, such as taking economic power back from significant role in shaping the state­driven trajectory. Japanese businesses. Except for the period between 1945 and 1962 which was fraught with political and economic instabilities, The Japanese colonial authority oppressed this grass­ including the Korean War, the Republic of Korea roots cooperative movement, becoming particularly was dominated by the strong central governments severe from the early 1930s when Japan entered a war of authoritarian regimes for almost eight decades. with China (Kim et al. 2012, Jang 2013). To tighten A bottom­up approach to organizing SEOEs as a security on the Korean peninsula, the authorities counter­movement to political and social oppression harshly oppressed and dissolved all the voluntarily was, however, also present during the periods of organized cooperatives, including farmer cooperatives. Japanese colonialism and authoritarian regimes. While suppressing the grassroots cooperatives The transition from authoritarianism to democracy movement, the Japanese colonial authority also in the late 1980s and the Asian financial crisis in the launched a top­down Rural Development Movement late 1990s provided a new structural context for the (Yeom 2010). One of the main components of this growth of the SE sector in the Republic of Korea. movement was to organize people in all villages into A variety of government institutions, particularly women’s clubs, youth clubs and rural development specific laws to grant legal status to SEOEs, as well as committees, and to establish plans to store grains, strong civil society organizations, played a significant improve cash flow and reduce debts. The movement role in the rapid growth of SE during this period. also emphasized the principles of self­help and 49 SOCIAL AND SOLIDARITY ECONOMY FOR THE SDGS: SPOTLIGHT ON THE SOCIAL ECONOMY IN SEOUL mutual support. However, these principles were Social economy under prop agated by the ideology that poverty was caused the authoritarian regimes by people’s laziness rather than structural problems. Two authoritarian governments between 1961 and The authorities used the principles of self­help 1988 tightened their control over cooperatives and and mutual support to entrench the existing even actively employed various types of cooperatives unjust structures rather than to contribute to their as a tool to mobilize resources to develop the transformation (Kim 2009b). economy. President Park’s authoritarian government (1961­1979), with strong central economic plan­ The emergence of cooperatives ning, sought to control virtually all economic after independence organizations and enterprises, both big and small After independence, many cooperatives were again (Amsden 2014). The Park government used established from the bottom­up but were significantly legislation and top­down policies to organize and divided along political lines, resulting in left­leaning control cooperatives in its early phase. They include: and right­leaning cooperatives (Lee 2013). For Small and Medium Enterprise Cooperatives Act its part, the newly established government of the (1961); Forestry Act (1961) which included a clause Republic of Korea adopted a top­down state­led on forestry cooperatives (which became the Forestry strategy for cooperatives. In response to this state­led Cooperatives Act [1980]); Fisheries Cooperatives strategy, a grassroots voluntary movement to organize Act (1962); Tobacco Production Cooperatives Act cooperatives emerged, albeit small in scale and power. (1963); and Credit Unions Act (1972). The laws stipulated that each sectoral cooperative should be de Political contestation over the nature and forms facto administered and monitored by the respective of agricultural cooperatives was particularly fierce government ministry for its sector, effectively in the predominantly agricultural economy of the giving the individual ministries control over the newly independent Republic of Korea, intensified cooperatives. Based on these Acts, government could by the instability of the rural economy and society also encourage cooperatives to establish national caused by various factors. These included: land­ federations. These national federations tended to to­the­tiller reform, which generated many small prioritize meeting the needs of the government in land­owning

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