Consumption inequality and Social Conflict in South Korea

Jong-Hyun Yi (이종현)

Why do we study inequality issue? Perhaps because we think that inequality causes social conflict and has a negative effect on economic growth. However, the problem is that the inequality indices and socioeconomic conflict do not correlate well with each other. This indicates that the problem of inequality needs to be understood in a historical context and not by an objective indicator alone. Different historical experiences make the same degree of inequality felt differently. In this respect, I try to understand ‘inequality in historical context'.

At present, the inequality indices of South Korean society are not too bad at the global level but indices of social conflict such as suicide rate, low social trust and happiness index are the worst among the countries. This means that inequality research needs to grasp the reality around inequality through accurate indicators and, on the other hand, understand historical context of inequality perceived through experiences of the people.

To explore inequality in historical context, I will focus on consumption. This is because people perceive equality/inequality at the consumption stage, not the income stage. They perceive inequality through quantitative and qualitative comparison at consumption level. Even when income is unequal, people cannot empirically perceive inequality if consumption is equal. Consumption in South Korea has changed dramatically. This change is related to changes in the political regime and to the progress of democracy. It is deeply connected to the fact that the developmental state of South Korea has actively utilized consumption repression as part of economic and social policies.

However, the situation has changed dramatically since 1997. The whole industry, including financial sector, has opened up and so-called neo-liberal policies have been fully introduced. The South Korean developmental state has retreated and the rules of the market have been introduced all over the economy and society. With this, policy and social regulations on the consumption have also been dismantled, resulting in polarization of consumption. This study proposes the perceived inequality through polarization of consumption as a direct cause of social conflict. In particular, it will show that social conflict caused by inequalities have exploded as the long-term consumption equality, controlled by the South Korean developmental state, has collapsed sharply.

In short, this study seeks to analyze ‘equality/inequality in historical context’ from the perspective of ‘consumption/consumer in historical context’ and to examine the unique perception of inequality and behavior of South Korean people.

The study of inequality through ‘historical consumption/consumer’ will contribute to theoretical and empirical development of inequality research by characterizing social conflict around inequality and seeking policy alternatives.

Table of Contents

Chapter I Introduction : 1. Introduction, 2. Literature Review and Theory 

Chapter II: 1970-1997 : 1. Inequality in income, 2. Perceived inequality in consumption, 3. Social conflict and Economic                                      growth, 4. Concluding remarks

Chapter III: 1997-Present: 1. Inequality in income, 2. Perceived inequality in consumption, 3. Social conflict and                                                  Economic growth, 4. Concluding remarks

Chapter IV: Conclusion and policy implication