How Upper Class Become Even More Superior?

In modern Korean society, money, class and corruption seems to be connected in the way that they move with each other; every element seems to be necessary to form a benefiting network among the authorities. Although there are lots of inside stories, they are all covered up by the authorities who are in part of the chain. The bribery network is a driving force which makes upper level stays on top of the society. In my paper, I would like to argue that upper class can always be superior and expand its power across professional fields, because of their strong social network, the constant high level bribery, and their corrupted relationship with the authorities.

What is Jaebeol[1]?

First, jaebeol is known as a large-scale company that has lots of sub companies under one single control head. Jaebeol usually has its power expanded to lots of different industries. In South Korea, only a small amount of families owns jaebeol companies and they are able to control the market monopolistically and able to bring influence in the fields (Sun and Park 2017, 1114). Moreover, only a small amount of people is able to rule jaebeol firms, it is not hard to see that they are also the elite who are on the top of the social hierarchy. The resources in a jaebeol group are all shared among the sub companies under the same head, for example, economic resources and human resources (Sun and Park 2017, 1114). Although all companies share the same resources, each of them has its own independent labor market which allows personnel transfer (Sun and Park 2017, 1114). Further, the advantages of shared and common resources within a jaebeol group is that companies are able to perform vertical systemization of industry (Sun and Park 2017, 1114).

Second, jaebeols are able to control Korea economy that 40% of GDP are contributed by 30 jaebeols (Chang and Hong 2000, 429). Some examples of jaebols are Samgsung, Hyundai, LG and Daewoo (Chang and Hong 2000, 429). By contributing 40% of GDP, they have been leading economic growth of Korea through production and exportation. Further, they have also helped Korean economic development by creating lots of job opportunities within the companies (Sun and Park 2017, 1114). One would think that Korea government should appreciate what jaebeols have done because without jaebeol, Korean economy will never be able to arrive to how it is right now. But, the truth is, without government’s support, jaebeol will not have the money and authorities to bring forth the wind and rain.

The Relationship Between Korean Government and Jaebeol

Why does the government accept the existence of jaebeol? Aren’t they afraid that jaebeol will be ruling over government? The truth is, jaebeols are actually the products of government’s devotion. Everything started back in 1960s and 70s where economic started to developed. But it was not until 1980s when Park Chung Hee impose state capitalism. Under Park Chung Hee’s governance, jaebeols were born(Cheek and Lindau 2001: 106).[2] With government’s help, exclusive resources and protections, big companies started to expand (Lee 2000: 1). Further, jaebeols had the rights to be joining certain businesses and rights are exclusively for jaebeols only (Lee 2000: 1). As a result, Korea’s economy was able to grow fast and Korean was able to go through rapid industrialization (Cheek and Lindau 2001: 106)[3]. Moreover, the government created policies in favor of jaebeols, for example, low interest tax, import and export licenses (Lee 2000: 1). Under the strong relationship between government and jaebeol, it is not hard to see how much power does jaebeol actually hold. Jaebeols have really strong backing because the man behind the scene is Korean government.

The Example: Chief Kim

Chief Kim is a South Korean drama aired on KBS2 directed by Jae-hoon Lee and Yoon-suk Choi at the beginning of 2017[4]. The drama is about corruption, bribery and the operation of jaebeol, TQ Group. In the following parts, I will be using examples from the drama to show the ideas of how strong social network, constant high bribery and corrupted relationship with authorities work together.

The Bribery Chain

I. The Power Jaebeol Holds: Relationship with Authorities

I believe that the relationship between jaebeol, authorities in different fields and government can be summarized into chain reaction. There’s no one to blame for the growth of jaebeol because all of people who made up the chain have faults. The mistake started when president gave power to jaebeol. The chain involved too much dark stories behind the scene and if government decided to wipe down jaebeol, Korea will be in huge financial crisis. Deep down, government knows that jaebeol is a problem that needs to be solved. But they also know that, if they try to reduce jaebeol’s power, Korea’s GDP will be in great suffer since Samsung, Hyundai, LG and Lotte have been dominating Korea’s economy by making Korea world’s 5th largest exporter with the 11th largest GDP (Chang and Hong 2000, 429). Although initially it seems like it was jaebeol’s fault when they are trying to bribe people to accomplish what they want, the fault should be assign to the government. Because the ignorant and eager nature of government officials, they accepted jaebeol’s bribery and did not take actions against jaebeol or try to cover the illegal actions for them since the officials have become part of the jaebeol by accepting bribery. Because jaebeol had drew benefit from bribery and know that bribery works, so they keep doing it to accomplish their goals. An example from the drama will be shown in episode 19. When CEO Park was facing jail penalty because he purposely faked the tax report to hope for investment from a Chinese company. When he was caught and when everyone was happy that the whole event can finally come to an end, he was able to connect to the “old man” who controls everything behind the scene. The “old man” used to work as a really high position in the government and he still holds lots of power even though he has retired. He was able to call manager Choi, an “political architect” who can make things look like whatever you want them to, to help CEO Park stay out of trouble by making an employee as a scapegoat.

In this example, it is obvious that the “old man” represent the government authorities. They never be in front of the scene, and only equal-powered or class people are able to “hire” him to solve the troubles for them. The authorities always appoint a trusted employee to deal with problems so they are “invisible”. Although orders are delivered from the top of, for example, police department, no one ever knows who is the person that has so much power to change a decision. To be clear, the reason why the “old man” decided to help CEO Park is because of collusion that there it was not because of friendship, gratitude or loyalty (Ehrilch and Kang 2002: 5). This is also why it is hard to relate jaebeols and government together, but indeed, they are.

Further, because of how powerful jaebeols are, and their influence over media, they can twist the story easily. They are good at manipulating stories to control audiences’ emotions. The story usually is related to shame as shaming is one of the unacceptable emotions in Korean society (Heo and Park 2017: 1). Jaebeol has the ability to change the direction of discussion and this is what they do in order to change people’s anger against jaebeols and be mad at innocents. The result of is that the whistle-blowers will feel ashamed thus reconsidering whether they have actually done something wrong. Therefore, jaebeols can always get away with the public’s comments on their actual wrong doings. It is hard to reveal the illegal doings in jaebeol because employees do not have that much power to fight against jaebeols. As a result of fighting against and revealing the inside stories, that employee will be portrayed as a bad person that will bring shame and jokes to his family. Shaming wrongdoers is the way to expose the wrongdoings (Heo and Park 2017: 1), but how could a normal employee control media’s direction? Besides, he knows that he will “loose” because he is fighting against jaebeol who is good at creating the direction of the talk. Therefore, jaebols stay powerful because the result of messing with them will be painful.

Another reason why jaebols are powerful is that majority of higher level positions are occupied by family members or trusted shareholders. As a hired employee, it is almost impossible for one to see a deeper information, unless you are hired directly by the CEO. Even though one is able to reveal, his plan of letting jaebeol get caught will never achieve. For example, Lee gwa jang was an employee who has high integrity. So he wanted to reveal the wrong tax report with the prosecutor. But he not only did not succeed, but also his story was reported as traitor. Before TQ Group make a statement about Lee gwa jang’s actions, all the comments were against TQ Group. But right after the statement was released, everybody started to justify what media said and forgiving the “wrong reports”[5] than started to blame everything to Lee gwa jang.

Concluding this section, Korea will not arrive at where it is right now if joaebeols have never existed. But without government’s help, jaebeols[6] will not be able to gain power through exclusive relationship with government. Without cooperation with experts and authorities in different field, jaebeols will not be able to expand its power and escape with illegal doings.

II. High Bribery Rate

In Korea, for a job that’s done well, money is often used as the medium as a token of gratitude (Ehrilch and Kang 2002: 4). Money was also used as a sign of to build a friendly relationship (Ehrilch and Kang 2002: 4). There are different kinds of bribery, it doesn’t have to be money specifically, it can be favor. Sometimes, banks will give special permissions to jaebols or government officials will be giving special permissions to jaebols ((Ehrilch and Kang 2002: 4). However, corruption is the best way to get money. It will be especially helpful if politician who needs funds to run election (Ehrilch and Kang 2002: 5). If the politician is elected because of the help from the jaebeol, the relationship will be helping on expands jaebeol’s social network. It will not only expand jaebeol’s power but also it will be easier for jaebeol to get away with illegal doings. As for politician, he does not need to worry for the funds for election champion as it is the part that needs the most money. The win-win relationship is so attempting that no one will reject a cooperation between two people in different expert field.

Further, corruption is an extreme form of “competitive factionalism” that people compete for power (Kalinowski 2016:631). Competitive factionalism can be happening between two companies who are trying to rank and compete for who is the most influential person. Therefore, corruption is also a best way to help one ranked into a higher class. Class is important in Korea because it defines who you are, where you belong to and how much power you hold. The scene in episode 3 at the beginning when Seo Yul joined TQ Group clearly illustrate the statement. He knew it was the only way to join the upper class because being a successful prosecutor and winning lawsuits would never get him there. So, he offered TQ Group his talent in tax law and in return, the company offered him a top management position. Moreover, in EP10, since Seo Yul constantly helped the company get away with tax evasion lawsuits, the company even offered him TQ Retail, a subsidiary of TQ Group. What Seo Yul wanted was not just the high salary, but the title and power of being a part of TQ Group. What makes being in the upper class so desirable are the privileges that come with it. “Privilege is measured by the extent to which one is an exception to the rules (Kang 2002:21)”. And how exceptions to the rules are made? From bribery and corruption. Bribery and privilege come in different forms and levels. There are two ranks of people in the drama. CEO Park, his assistant and Seo Yul represent the upper class because they have the power to control majority of people and they have connections with the authorities in different professional fields. The rest of the corrupted management employees are classified as middle class since they need to follow orders and do not have the power nor the connections.

For the upper class, since everyone is rich and affluent, wealth is only the basic prerequisite. They value power over money, so for them, money would not be their first choice as bribery, but rather a promise for a favor or more power. These favors are usually things that money cannot solve. As we can see from the drama, when the CEO was bribing, there was no money involved because the people he was trying to bribe are in the same class who do him favors.

When the CEO or his assistant was demanding things from the management level employees, they always use money as a medium for bribery. Because the upper class knows, people below them can easily be satisfied with money.

From the above cases, it is obvious that when you are in different classes, with different social groups and the amount of power you hold, although bribery medium depends, bribery still exist.

III. Strong Social Network

A level of class is formed because all the “members” have similar social status and qualifications to be considered as part of the social group. Usually network is formed within same class level, unless one has desirable skills that are beneficial to others, for example, Seo Yul’s knowledge about tax laws in the drama. Network can be classified to two forms: relational association and within-network favoritism (Kim and Whitaker 2013: 4) Relational association is defined to be any actions related to members within a social network (Kim and Whitaker 2013: 4). On the other hand, within-network favoritism is known as a person can be multiple social network so that he can be benefited for multiple ways (Kim and Whitaker 2013: 4). Both relationship association and within-network favoritism can be seen commonly within upper class. An example will be CEO Park always have dinner with authorities from different field and each of them doesn’t know each other. But CEO Park and each individual always have beneficial relationship.

Further, the term “gold spoon” can describe the situation in which it means inequality as inherited(Kim 2017: 843). When a kid is born in jaebol cooperation, it basically means that the kid will be enjoying lots of privilege that others won’t even have even though they have been working for their entire life. Privileges includes power, money and exceptions. In Korean society, one’s life chances are determined by wealth and social status (Kim 2017: 844). Most importantly, his social group will be full of the “gold spoon” people that will be benefiting each other’s business because they are in the same class and sharing similar social network.

Expanding from the example of CEO Park escape jail penalty given in section “The Power Jaebeols Holds”, the “old man” did not help CEO Park for free. The reason why he was willing to help CEO Park was because of the powerful social network and resources that CEO Park owned. Although the “old man” has retired, he still wants to control and own power. He not necessary is doing everything for money, but he was looking for same value item[7] as payback. In the “old man’s” perspective, escaping from jail penalty is not hard since he has good connections in police department. But by doing CEO Park this big favor, he knows CEO Park will do all he can as payback. The old man also knows that this is a great opportunity to join CEO Park’s network and share the resources. So the relationship between jaebeol with authorities will always create a win-win situation.

Summarizing above, the purpose of the network is to save each other when being caught from doing illegal business, to benefit each other, to get around with punishment, to expand business, power and network to another level. If a social network is full of people that have the same status, their thoughts will be similar in the way that they think about similar factors before deciding on whether they want to develop a relationship with others. Therefore, their actions will be similar when trying to benefit themselves: bribery.

In conclusion, it is fair to conclude that the reasons why upper class can always stay on top of everyone and expand its power across different fields is because of the way they build their social network, using bribery as a method to benefit themselves and to develop relationship with authorities. Should the upper class, jaebeol, be penalized because it brings sickening trend of bribery? Not necessary, because they are not the only side who is at fault. Upper class can always be superior and strengthen its power. Should we blame government for ignoring corrupted relationships? Not necessary because in Korean society, money and status defines who one is. Yet, money and status are what upper class do not lack of.

[1] Upper class will be representing by jaebeol which I will be using throughout the paper.

[2] The purpose of this citation is to show the historical information about rise of jaebeol. It is not intended to show most recent information. But I will still include the bibliography at the end.

[3] The purpose of this citation is to show the historical information about rise of jaebeol. It is not intended to show most recent information. But I will still include the bibliography at the end.

[4] Information taken from Wiki page about Chief Kim

[5] Which are actually the truth

[6] A symbol of upper class

[7] It can be an object or a difficult favor

Bibliography

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Cornejo, Romer A., Juan D. Lindau, and Timothy Cheek. "Market Economics and Political Change: Comparing China and Mexico." The Journal of Asian Studies 60, no. 4 (2001): 1127.

Ehrlich, Craig P., and Dae Seob Kang. "Independence and Corruption in Korea." Columbia Journal of Asian Law 16, no. 1 (2002).

Heo, Mansup, and Jaeyung Park. "Shame and Vicarious Shame in the News: A Case Study of the Sewol Ferry Disaster." Journalism: Theory, Practice & Criticism (2017).

Kalinowski, Thomas. "Trends and Mechanisms of Corruption in South Korea." The Pacific Review 29, no. 4 (2016): 625-45.

Kang, David C. "Comparing Korea And The Philippines." Crony Capitalism, 2002, 21-60.

Kim, Hyejin. "’Spoon Theory’ and the Fall of a Populist Princess in Seoul." The Journal of Asian Studies 76, no. 04 (2017): 839-49.

Kim, Usic, and Mark D. Whitaker. "Network Subversion: The Contrasting Effects of Multiple Networks on Bribery in South Korea." International Journal of Law, Crime and Justice 41, no. 1 (2013): 16-35.

Lee, Phil-Sang. "Economic crisis and chaebol reform in Korea." APEC Study Centre, Discussion Paper Series 14 (2000).

Sun, Eun-Jung, and Sung-Jin Park. "The Relationship between Chaebol and Firm Value using Bayesian Network." Journal of Applied Business Research 33, no. 6 (2017): 1113-1128.