The extent of the concentration of power in the economy is indicated by the fact that just four "Super Chaebol" - Daewoo, Samsung, Hyundai and Lucky Gold Star - have combined sales equal to half of GNP. Daewoo's turnover is now over $52 billion a year (greater than that of other world giants - Unilever and Nestlé). Samsung has 48 principal affiliates, making anything from semi-conductors to loaves of bread and airplanes to shirts. It runs insurance and advertising firms and has just gone into car-making. It even has its own chain of cinemas.

Hyundai virtually 'owns' the city of Ulsan - a city with 'metropolitan' status equivalent to that of a province. The company dominates the lives of the more than 700,000 citizens from the cradle to the grave. One-third of all adults work in its shipbuilding, heavy- and precision-engineering or car factories. Most of what they get in their pay packets will go straight back to Hyundai. It owns the schools, colleges, shops, department stores and hospitals. It builds the apartments and runs the cultural centers and of course has a monopoly of the vehicles on the road. One of its founder's sons - Chung Mong-jun - 'represents' Ulsan in the National Assembly.

The grandiose library that overlooks the city was graciously "donated" by Hyundai. Way below, on the shore-line of the East Sea, beyond the ugly blocks of workers' flats, stands "Goliath" - the giant gantry crane, known and loved throughout Korea as a symbol of workers' resistance. In the great shipyard strike of 1989 it was occupied for more than 100 days until a full-scale military operation was mounted from land, sea and air to end the strike.

From building no ships in 1973, Hyundai became the world's biggest ship builder. With no knowledge of the industry in 1968, Posco Iron & Steel became the sixth largest steel maker in the world. South Korea has been the fifth largest car-producing country for some time and Daewoo is now aiming to produce two million cars a year worldwide.

Throughout the 1960s and 1970s, industry and manufacturing in South Korea was growing twice as fast as in comparable "middle-income oil importing economies" (World Development Report 1982). Between 1960 and 1970 exports grew at 34% a year. At the beginning of that decade fuels, minerals and metals accounted for 30% of exports; in 1979, one per cent. At the beginning of that period, no machinery or transport equipment was exported; by 1979 they constituted 20% of all exports. By then, other manufactures and clothing accounted for 69%.

Designated as a "low income" country by the World Bank in 1960, South Korea had a per capita income of $82. By 1994 it was more than a hundred times that figure and last year GDP per head was $11,910. Even though the mass of the population has not received anything like an equal share of the benefits, the average male in his '20s in South Korea is now a full five inches taller than he would have been in 1962.

The regime of Kim Jong-il, son of Kim Il-sung, is reckoned to spend a huge amount of its budget on defense including its nuclear weaponry and regularly threatens military action. But in its severely weakened state it would have difficulty carrying anything out. Southern governments hold regular civil defense drills, with mock air raids etc. probably more as propaganda exercises than out of serious concern for the safety of the population. The threat of invasion is as good an excuse as any for putting patrols of armed soldiers on the streets, organizing road blocks and doing identity card checks.

These days, the dire economic situation in the North makes state ownership and planning look much less attractive to workers in the South than it did in the period just after World War ll. Then, it meant a rapid development of the considerable natural resources of the area while the capitalist South was floundering.

At that time things were quite different in many respects. While not socialist, Stalinism in the Soviet Union and Eastern Europe - one-party dictatorships resting on state ownership and planning - had been strengthened. China was 'lost' to imperialism as private ownership of land and industry had been eliminated. A whole number of countries in South East Asia, including Korea, were threatening to follow suit like 'dominoes'. It was undoubtedly in the strategic interests of world capitalism to create a bulwark against the spread of 'communism' in the whole region and to hold the revolutionary working class of Korea in check.

At one stage, the US was pouring in technical and financial aid to the South at the rate of $2.2 billion a year. It kept tens of thousands of troops in the country after the Korean War (and up to the present day). It was party to the establishment of the murderous Park Chung-hee and Chun Doo-hwan military dictatorships in 1961 and 1980 respectively - both of them notorious for crushing in blood uprisings, demonstrations and strikes.

Korean communists had built their own party and fought throughout the 1920s and 1930s to organize trade unions in the teeth of atrocious state terror from the Japanese occupiers. Now their movement was coming into its own. But it was not only US imperialism who feared the victory of a workers' and peasants' revolution in the Korean peninsular. The establishment of genuine socialist democracy in any country and an appeal for workers elsewhere to do the same would have sounded the death knell for the parasitic elite ruling the Soviet Union under Stalin.

State-owned, planned economies were established, in post-war Eastern Europe, China and so on, following popular revolts and the virtual 'flight' of capitalism. But, with a heavy involvement of the 'Red Army' of the Soviet Union, or in the case of China, its own peasant-based army, from the beginning they were under the tight control of a developing authoritarian bureaucratic elite. Fig-leaf 'coalition' governments were artificially cobbled together. Behind them, a ruthless policy was pursued of physically excluding from power not only what remained of the bourgeoisie but the workers too. Regimes were set up in the image of Moscow's centrally controlled society. In the Soviet Union, Stalin maintained the state terror that he had used to crush all opposition and all the elements of workers' democracy established by the Bolshevik revolution.

A congress in Seoul in September 1945 was attended by approximately one thousand delegates from North and South. A 'Korean People's Republic' was proclaimed. Its program included the nationalization of all basic heavy industries, natural resources, means of communication and transportation; the establishment of compulsory primary education and a guarantee of basic human rights, freedom of the press, assembly and religion.

The task of the US War Department, having drawn its line across the body of the country, was to move rapidly to put an end to this uprising and to impose the Syngman Rhee government on South Korea. Moscow was forced to settle for Kim Il-sung in the North. Remaining decidedly in the anti-imperialist camp - retaining state ownership of industry and carrying through rapid collectivization - he developed a highly personal form of 'Bonapartist' rule. The three main groupings in the 'communist' movement were systematically physically eliminated - first the Korean, then the Yenan (Chinese) returnees, and lastly even the wing most closely allied to Moscow!

There were many heroic struggles up to and during the Korean War. In each one of them, the leaders would demand the restoration of the people's committees, land redistribution and unification of the country. US forces were still fighting guerrillas throughout South Korea until well into 1952. Their actions were combined with wave upon wave of mass political executions carried out under the orders of their puppet, Syngman Rhee. Over 100,000 were rounded up and slaughtered in the immediate period after the US presence had restored him to power for a second 'term' in 1950. (This campaign alone eliminated more people than the US claimed to have been murdered by 'communists' North and South during the whole war).

No organized left political forces remained in the South at the end of the Korean War. Yet, before long, as if rising from the ashes, there were once again powerful movements of workers and students for 'unification of the country and socialism'. They could only be contained by the heaviest of state repression and the American presence.

In his authoritative book, 'Rush to Development', Martin Hart-Landsberg explains: "Rule by military dictatorship was a logical consequence of the illegitimacy of the entire US project to create a separate South Korea; it could be saved in no other way". But he goes on to show how the building of Korea's modern industries did not figure in the plans of American imperialism but was the deliberate decision of a military caste determined to grow rich on the proceeds. Quite cynically and methodically it would use its 'special (favored ) status' to build the basis for becoming independent of its 'sponsors'. Opting for the capitalist road, it would literally have to create a capitalist class to fill the vacuum that existed after the collapse of Japanese imperialism and the end of 40 years' foreign domination in every sphere of life.

Special factors obviously prompted the largest imperialist power to set aside considerable resources to build its defenses in that region and, in the process, develop the country to some extent. The special trading concessions, the big expansion into Korea of Japanese capitalism and even the land reforms pushed through under US tutelage to stave off peasant uprisings went a long way towards making South Korea an exception that proves the rule. But it is now widely accepted, and confirmed again in a March 1997 'Policy Review' published in London by the 'Overseas Development Institute', that the single most important factor behind South Korea's 'miraculous' development (and, to some extent that of the other 'Asian Tigers') was, after all, the state.

Although located firmly in the camp of capitalist nations, with a developed and very concentrated class of owners, the 'Chaebol economy' was by no means an example of unregulated laissez faire capitalism. On the contrary, there was here an exceptional involvement of the state in every aspect of economic as well as social life. The bourgeois state was even prepared to sacrifice some of "its own" when necessary and limit the freedom of the Chaebol themselves in order to keep the whole show on the road.

Interestingly enough, when the military took over in 1961, a group of colonels is said to have looked at the parlous state of the economy - especially compared to that of the North, which was going ahead - and developed a draft plan based on state ownership and principles of self-reliance. It was shredded for fear of US disapproval! Nevertheless, the Five Year Plans adopted by the military regimes and the targeting of investment in heavy industries achieved results through using methods strongly resembling those of the bureaucratically-run, state-owned economies of the Stalinist camp. In the early 1970s, 12 of the country's 16 largest firms were actually state-owned and, ignoring Western advice and risking US ire, the Park regime used the state-owned banks to direct loans into six totally new industries - petrochemicals, electronics, iron and steel, machinery, ships, and other transport equipment.

Although not suffering as seriously the periodic crises that afflicted other capitalist countries in the 1970s and 1980s, South Korea was not immune to 'cyclical' dips in growth rates. Now it faces actual recession caused by the vagaries of the market - domestic as well as international. By continuing to pay appallingly low wages and putting precious little into welfare spending, Korean capitalism has severely restricted demand at home. Wages in the newer industries with large workforces have increased dramatically in the past ten years - about 150%. This is not some automatic result of the 'globalization' process but of bitter and persistent struggle on the part of the newly organized workers in these industries. The majority of Koreans work in low-paid service jobs. At least five million are not on any payroll and 2 million work on the land.

Producing for the foreign market, therefore, while consuming vast amounts of 'start-up' capital, has nevertheless been the quickest way for 'Korea Inc.' to make its profits. Exports increased by 800% in 30 years. But the heavy dependence on selling abroad to fuel the dazzling growth rates has built another fatal flaw into the foundations of the economy. It has made it particularly vulnerable to the effects of downturns in other parts of the capitalist world. It is also highly susceptible to fluctuations in markets and prices. South Korea controls 35% of the world memory chip market but last year the world price of a 'direct random access memory' (DRAM) semi-conductor fell drastically to $8 from $84 a year before.

South Korean capitalism, far from enjoying a privileged status in its dealings with the USA and Japan, now suffers from aggressive protectionist measures on the part of its trading 'partners'. They retaliate against cheap goods with anti-'dumping' rules. It suffers adverse effects when the Japanese yen falls against the dollar, increasing the competitive edge of Japanese products - including cars and ships - in the USA and elsewhere. Also, as the second biggest recipient of exports from Australia, South Korea pays heavily when the government in Canberra moves to strengthen its currency.

Even the features in the South Korean economy that bear an outward resemblance to those of a Stalinist state have turned from being advantages to disadvantages. As there, the emphasis on quantity rather than quality has led to an inability to adapt to, and develop, new technology. This problem is compounded in Korea by the fact that much of its "miracle" growth was due to the use of Japanese technology borrowed under contract. Now that Japan sees South Korea as a rival rather than an offshore production base for its own firms, these contracts are not being renewed. The big firms are now either having to drive into the 'lower quality' markets of South and Central America, Eastern Europe, China and Asia or invest vast sums to develop their own technology... or both.

The state itself has the second biggest national debt after the US of $104 billion. The lack of resources put into research and development and the absence of a 'home-grown' machine tool industry has meant Korean capitalism has had to pay for its spectacular export record with a spectacular level of imports of energy (40%), capital goods and components. In 1995 imports increased by 32% in one year to a total of $144billion.

It is a myth that the special status of South Korea meant massive investment from abroad in capital goods development. Most of the money put into Korea in the post-war period was in the form of 'aid' (including military) and loans. In addition, there were special foreign exchange and trade terms which gave South Korean goods disproportionate access particularly to US and Japanese markets. Now that world relations have changed, following the collapse of the state-owned planned economies, US and Japanese governments no longer need to bolster the South Korean economy.

In fact, for some years now, they have come to regard South Korea as a dangerous competitor on the world market. As well as the removal of the strategic reasons for propping up Korean capitalism, the slow-down in world trade and the difficulties experienced by most capitalist economies has intensified competition.

The US has for a long time been engineering more and more trade disputes, even before general hostilities in the 'Cold War' ceased. Japan has stepped up the withdrawal of its technical 'know-how'. The Frankenstein's monster they had helped to nurture had developed too many of the attributes of its creators - an appetite for profits, an ability to compete and an awkward propensity to try and defend its own interests. Tight monetary policies aimed at cooling the over-heating economies of China, Malaysia and Thailand also hit trade with South Korea.

In 1984 the founder/owner of the Kukje-ICC group made the mistake of only donating $400,000 to the 'New Village' movement of dictator Chun Doo-hwan, when the other large Chaebol-owners had been persuaded to give over $1 million. The empire was brought crashing down and its component parts redistributed to all the better-behaved conglomerates. Only later (after the General was murdered by the CIA and a new dictator came to power), did the owning family's fortunes revive. The company reassembled and regained at least some of its former position.

Hanbo, on the other hand, even after its collapse, continues to receive vast handouts. A government that wants to see the completion of its prestigious new Tonjin steel mill is busily constructing feeder road and rail links to the 'green field' site. All the pieces of this broken conglomerate are being picked up by other Chaebol predators in the field (and even some not yet in that particular field). The government bailed out the now private banks affected to the tune of $7.1 billion, thus dramatically inflating its already massive budget deficit.

While formally freeing trade and opening up to foreign goods, the South Korean government is desperately trying to hold the lid on imports. The latest moral crusade against "luxury" goods has angered the US Trade Department which suspects it is aimed at protecting domestic producers. But now that more of Korea's exports go to Asian countries than to the United States, the slowing down in the economies of all these countries is heightening tensions between them - including with China which was on its way to taking more South Korean exports than the US. (In the period 1987-94 exports to Asia increased by four and a half times to $25.8billion, to the US 12% to $20.5 billion and to China 38 times to $8 billion. In 1996, exports to the United States fell to just over $10billion).

The National Debt has gone over the $100 billion which, as 'Business Korea' noted, was double what it was at the time of Kim Young-sam's inauguration in 1993. Now, according to the government's own estimates, it could reach $144 billion by the end of 1997. Interest and repayments on it cost $10.1 billion per annum - interest alone amounting to nearly 13% of the national budget. Offshore borrowing costs $7 billion in interest. Foreign direct investment, which has always been a small proportion of total investment, is actually declining from a high point of no more than $1.5 billion. South Korea ranks second only to India for discrimination against foreign investment according to the Hong Kong based 'Political and Economic Risk Consultancy'.

Investment by the top 200 Korean companies was expected to fall in absolute terms this year when only two years ago it was increasing at a rate of 47%. Meanwhile, these same firms have been doubling their own overseas direct investment and in the case of 'information and communications' and 'machinery', trebling and quadrupling it.

In the field of labor-intensive production like clothes and shoes, some South Korean firms (and some famous American and Japanese 'names' previously operating in South Korea) have moved to lower wage economies in the region and elsewhere. Capital-intensive industries regard easier access to markets as a more important consideration. Although cars form a substantial share of South Korea's exports, they still represent only 1.9% of total sales in Europe. Companies like Daewoo are looking for ways of getting into that market. If they set up factories in Europe itself, they not only get round the EU external trade barriers but brings down the cost of transporting the final product to its destination. Even where wages are higher than in Korea, these other considerations can be more important in the investment decisions of the Chaebol.