The Asian financial crisis in 1997 brought about a momentum that essentially altered the patterns and rhythms of the Korean people’s daily financial activities. Specifically, many individuals and households began to invest their surplus income in fi...
The Asian financial crisis in 1997 brought about a momentum that essentially altered the patterns and rhythms of the Korean people’s daily financial activities. Specifically, many individuals and households began to invest their surplus income in financial products such as stocks, funds, retirement annuities, and life insurance rather than depositing money in banks. In addition, many consumers switched to credit cards for their daily transactions instead of cash. Lifestyles have also changed considerably in the sense that social reproduction activities such as house purchases and college tuition payments are now dependent on loans rather than savings in most cases. As a result, the extent of households’ financial assets and household debts has increased dramatically since the 2000s. Moreover, from an economic status perspective, the profile of individuals has undergone a transformation from saver to investor and from laborer to debtor. In effect, the economic fate of individuals and households is now, to a large extent, dependent on the dynamics of global financial markets.
This examines the social context of Korean society, particularly the interlocking of global capital markets and individuals’ daily life practices, and investigates the cultural and political implications of this phenomenon. In general, there is universal agreement with the notion that the “financialization” phenomenon, which was instigated and led by the advanced Western countries after the 1970s, provided the backdrop for the majority of subsequent socioeconomic changes. However, most political-economic debates classify financialization as an abstract flow and dynamic of capital that acts at a macroeconomic level. Such debates pay little attention to the qualitative changes or daily transformations in social relationships that result from financialization. In contrast, the cultural studies/cultural economy approach understands financialization as a cultural transformation and focuses on the subjectivation effects brought about by the mediation of disparate discourses and tools. However, even these approaches tend to return to the dominance of financial rationality and neo-liberal rulings rather than attempting to facilitate a dialectic understanding of financialization within the dynamics of capital accumulation.
This argues that financialization is not only a dominant framework according to which capitalism is currently organized and operated, but also a power scheme that provides a reproduction and a re-interpretation of the capitalistic reality based on which it rules the individuals. The regulative factor that best characterizes financialization is the goal of future profit, which has led to an expansion in the range and intensity of financial securities, otherwise known as “interest-bearing fictitious capital.” These financial securities control the production and flow of surplus value, and possess it exclusively according to the principle of profitability. Today, financial capital guarantees profit by mobilizing the savings of individuals and households and investing them in financial markets. Moreover, it allows interest and commission to be charged directly through the facilitation of loans to workers. Thus, financial capital is free from the production process. In a neo-liberal system of “growth without employment,” workers who face unemployment and income decline perform essential reproduction activity through credit loans. Their debts are then transformed to financial securities that bear profit through the securitization process and are sold to investors worldwide. While it is true that investors have a form of financial security in their salaries, the risk of securities is passed to them when debtors cannot repay their loans. In this sense, financialization is an important mechanism that shifts the risk of financial markets to individuals and households while simultaneously reinforcing the exploitation of workers.
Unlike ordinary products, the price of financial security is determined based on risk evaluation before the production process begins. To be specific, any potential events that could affect future surplus are predicted as a risk and evaluated. What is described as a risk and how it is evaluated are defined by the social power relationship; in other words, financial security is based on particular representations and interpretations of capitalistic reality. It is also a technology of power, which reinforce capital accumulation and organize capitalist power relations. Thus, financial security is not merely an ownership certificate with fictitious value. Rather, it is the modern world’s most fetishistic form of capital, which, in effect, is materialized by capital exploitation and social relationships today. Financialization, which is a social process rather than simply the accumulation of ownership or liquidity, materializes as a concrete reality through the medium of a series of discourses, institutions, and technologies in a social formation with its own temporality. Thus, it does not develop in a one-sided manner according to the inherent dynamics of capital. The rise of financialization in Korean society was sluggish due to the state’s “financial suppression” policy, which allowed it to mobilize and control capital. However, following the momentum of the Asian financial crisis, a series of policies, institutions, and technologies were introduced, which facilitated the growth of financialization as a hegemonic social reality.
In the wake of neo-liberal financialization, the principles of financial profitability and responsibility have become a paradigm and a way of life dominating not just the behaviors of financial institutions and firms, but also the governing principles of individuals’ economic activities in Korean society. Policy-making authorities began to use financial tools in their governance instead of job security and welfare measures, while simultaneously pursuing policies for capital market activation and consumer credit promotion. Financial institutions, including banks, securities companies, fund companies, insurance companies, credit card companies, and loan firms, won individuals over as investors or debtors by mobilizing unique discourses and apparatuses for each party. In effect, financial discourses have led to the emergence of two types of financial agent: aesthetic agents who actively put up with risk and ethical agents who manage risk under the principles of self-responsibility. By this means, financial agreements have “individualized” the investment risks and debt redemption responsibilities that resulted from financial subsumption. In other words, the capital-labor relationship appears as the contractual relationship of the seller-consumer or creditor-debtor in the financial market through financialization. In this process, individuals are governed by financial norms through their individualization as either investors or debtors. This study emphasizes that this reification of the capitalistic power relationship and the dialectics of individuals and classes are among the most crucial political implications of financialization.
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