CHAPTER 6 Daily Practice of Neofamilism

How were the components of neofamilism perceived in daily personal experiences? And how was neofamilism practiced as a part of individual survival strategy? Surveys inform analysis of the perceptional aspects and behavioral consequences of neofamilism, going beyond the analyses of its institutional consequences. In a 2015 survey, respondents were asked about the importance of neofamilial ties at three levels: in Korean society in general, in personal life, and in the workplace. An overwhelming proportion (98 out of 106, 92%) indicated that neofamilial ties were extremely influential, considerably important, or somewhat important in Korean society. Only eight persons (8%) stated that neofamilial influence was not significant. When asked about the influence of neofamilial ties on society, notably 99% said neofamilial ties were paramount.¹

When asked the influence of familial, school, and regional ties on personal life, the basic pattern stands, with 66% of respondents saying neofamilial ties were seriously influential in their personal lives. It is interesting that the influence of neofamilial ties at the personal level is lower than respondents’ perception of the influence of neofamilial ties on society. When asked specifically on the influence of neofamilial ties at the workplace, 70% of the surveyed said the ties seriously and considerably influenced their business activities at workplaces. It is clear the influence of neofamilial ties is important in all contexts.

When asked to rank the importance of the three components of neofamilial ties—blood, school, and regional—in their personal life, 64% (45 out of 70) of respondents indicated that blood ties were most important. Twenty- six percent said school ties were most important, and 10% stated that regional ties were most important. When asked to identify the second-most important form of neofamilial tie, 22% indicated blood ties, 44% school ties, and 34% regional ties. For the third-most, regional ties stand out at 56%, school ties at 30%, and blood ties at 14%. Overall, these figures show that blood ties ranked as the most important of neofamilial ties, followed by school then regional ties.²

NEOFAMILISM AND POLITICAL BEHAVIORS

On the general question of how neofamilial ties affected the election of the president and members of the National Assembly, 40 out of 106 respondents (37.8%) expressed that the level of influence on elections was enormous, whereas 48.1% indicated that there was considerable influence, and 9.4% said that elections were somewhat influenced. Overall, 95% of respondents said neofamilial ties affected elections one way or another. However, a quite different pattern emerged when asked how the ties actually affected their personal choices in elections: 9.4% indicated an enormous level of influence, 26.4% expressed a considerable level of influence, and 34% indicated that they were somewhat influenced, yet 30.2% said almost no influence. That is, about 70% of total respondents indicated that ties affected their personal choices in elections.

The regional variations on the same question of how neofamilial ties affect personal political decisions show an interesting pattern, where those from the southeastern and southwestern regions are much more affected by neofamilial ties: 53% (Ch’ungch’ŏng Provinces), 8% (Kangwŏn Province), 74% (southeast), and 67% (southwest). It is significant to note that there was little difference (7%) between the southeastern and southwestern regions, while the central regions, Seoul (56%), and Kyŏnggi (53%) were relatively less affected by neofamilial ties than were the southeastern and southwestern regions.

Among of those who did not vote based on neofamilial ties, a majority said this was based on candidates’ ideological orientations. Nineteen out of 32 (59.4%) indicated political ideology as a determining factor, while 28% went by candidates’ election pledges at the central and local levels. Although the extent of its impact upon election behavior varies, it is safe to say that neofamilial ties are very important in determining political choices.

NEOFAMILISM AND ECONOMIC ACTIVITIES

A general question is posed in the 2015 survey as to how the neofamilial ties affected various economic decisions and behaviors in Korean society during the 1960s and 1970s; these include decisions and behaviors related to the purchase of goods, procuring real estate, management, investment, saving, and insurance purchases.³ Survey responses roughly confirm the overall assessment of the impact of neofamilism, with close to 90% saying neofamilial ties affected economic behaviors, but with some differences. The proportion of respondents who considered neofamilial ties to have an enormous influence on economic matters turned out to be significantly lower, at 11%. This was followed by those who indicated that neofamilial ties considerably influenced (42.5%) and somewhat influenced (34.9%) economic decisions and behaviors. To the question regarding the influence of neofamilism in their personal life or decisions, the pattern was different: only 3.8% of 106 respondents indicated an enormous influence, 17% a considerable influence, 46.2% somewhat an influence, and 32% not much influence. Although they perceived Korean society and the economy to be under the strong influence of neofamilial ties, respondents felt that this influence did not extend as much to themselves. Nevertheless, the overall patterns remain the same in that the ties were significant in economic areas as well.

Respondents were asked about the circumstances under which neofamilial ties mattered to their economic behaviors. Forty-nine percent said neofamilial ties were a factor only when their interests were served. Twenty- eight percent said they mobilized neofamilial ties when economic interests were difficult to calculate. Twenty-three percent opined that there were more occasions when neofamilial ties took precedence over their personal economic interests. Finally, only 6% said neofamilial ties were respected even when their economic interests were infringed upon. These results indicate that people were more calculative and cautious in relying on neofamilial ties as related to economic behavior, but it is also clear that neofamilial ties played an important role in this sphere.

A related question was posed to identify the areas of economic decisions in which neofamilial ties were used, including the purchase and management of real estate, purchase of goods and insurance, finance and investments, and obtaining loans. Neofamilial ties were most employed as follows: purchasing goods and insurance (22%), getting bank loans (20%), finance and investments (11%), and real estate purchase and management (9%). Neofamilial ties were thus instrumental in gaining access to financial resources, but, strikingly, 44% of respondents said that they did not rely on neofamilial ties at a personal level, once again revealing the gap between general perceptions and the personal use of neofamilial ties. However, a different pattern emerges when respondents expressed the second-most utilized area of economic activity: real estate purchase and management (49%), goods purchase and insurance (28%), financial investment (23%), and bank loans (6%). As for the third-most used area, purchase of goods and insurance come first at 22%, followed by bank loans and financial investment (20% and 11%, respectively). Forty-four percent said they did not consider any neofamilial ties to be relevant, even as a last resort option in securing information or other help in economic decision-making.

Two follow-up questions were posed: How did the neofamilial ties affect decisions when they were the most important source for making decisions on economic matters, and how did the ties affect decisions when they were the second-most important source for their decision on economic matters? Three different situations were offered as options. First, “Information was secured through the neofamilial ties, but decisions were made independently based on the information”; second, “Although economic outcomes of the decisions were uncertain, I just joined those who shared neofamilial ties”; and third, “Even when economic loss was foreseen, I followed people who shared neofamilial ties.” When neofamilial ties were regarded as the most important sources, 53.2% said they made independent decisions only by using information secured through neofamilial ties; 40.3% said they followed the decisions among those who shared the ties, even when they were not sure about future outcomes; and only 4% said that they followed those who shared the ties, even when loss was foreseen. When neofamilial ties were regarded not as the primary source of information but as being of secondary importance, 48.5% said they followed those who shared the neofamilial ties although there was uncertainty in outcome. When neofamilial ties were the third priority to consider in their decision, 72.6% said they followed those who shared the ties, even when outcome was uncertain. This outcome indicates the importance of neofamilial ties as information sources as well as the level of trust in the ties. Put differently, the majority of people resort to neofamilial sources when they make critical decisions, and they go along with group decisions among those who shared same ties regardless of outcomes.

As to the outcomes of economic decisions made based on neofamilial ties, 57% (39 out of 62) indicated that both positive and negative outcomes occurred more or less evenly, while 19.4% (12 out of 62) replied that the outcomes were mostly positive, and 17.7% (11 out of 62) stated that results were negative most of the time. Relatedly, 43.4% (46 out of 106) had served as a guarantor when someone they shared neofamilial ties with was obtaining financing, while 56.6% (60 out of 106) did not; among those who were guarantors, 78% (36) said they experienced financial loss, while only 22% (10) did not. A distinctive regional pattern regarding experiences of serving as loan guarantor due to neofamilial ties is that those in the southeastern region had many more experiences in serving as a loan guarantor than those in other regions, where a far smaller proportion of the respondents said they had served as a loan guarantor (58% vs. 39% [Seoul]).

PRINCIPLES VERSUS NEOFAMILISM

The respondents were questioned about their perceptions of Korean society in terms of the extent to which blood ties, school ties, and regional ties were considered in legal implementation and economic policies. Nearly 19% said that almost all cases were affected by those ties, 58.5% answered that the ties were important on many cases, while 21.7% indicated that cases were frequently affected. Nearly all (99.1%) acknowledged the influence of neofamilial ties in the implementation of laws and economic decision-making. It is striking that the remaining proportion, composed of only one person, said that ties bore almost no influence on these matters. This indicates a pervasive lack of universalism, especially in the application of laws. When asked about whether they sought to utilize neofamilial ties when they were in violation of the law or facing economic loss because of neofamilial ties, the responses contrast with the general perception that acknowledges the pervasive influence of neofamilial ties. Only 6.6% said they tried to rely on the ties on many occasions, 10.4% said not infrequently, 36.8% indicated a few times, and 46.2% said almost never.

The respondents were given a more specific situational question: whether they have contacted state bureaucrats for their own personal economic purposes, such as new information gathering for business, inquiries related to state decisions on their business, and interest coordination. Their responses were consistent with their answers to the general question whether they ever asked for favors through neofamilial ties. Forty-six percent said they contacted state bureaucrats for various purposes as in the question, while 54% said they almost never did.

ECONOMIC CHANGES AND NEOFAMILISM

On the questions regarding to what extent the degree of dependence on school, blood, and regional ties has been changing since the financial crisis at the end of 1990s and how they think the influence of school, blood, and regional ties has been changing since the democratization, 28.3% of respondents said considerable change occurred, 50.9% stated a little change, and 20.8% expressed that there was little change. Asked whether neofamilial relations changed due to economic structural changes arising from industrialization in the 1960s and 1970s, all three groups said there had been changes, but most expressed that the degree of change was slight. The second-largest proportion of responses indicated that considerable changes to neofamilial relations had occurred. Responses that there was no fundamental change and only slight change contained the greatest proportion of respondents with higher levels of formal education. Another contrast to note is between higher- and lower-income levels; responses indicating that there was no or only slight fundamental change to neofamilial relations contained the greater proportion of respondents in the highest income brackets.

When questioned on the degree of social conflict due to industrialization, 24% of respondents said it was serious, 50% responded that it was gradually growing, 22.6% indicated that it was not that serious, and only 1.9% expressed that there was almost no social conflict. When considering the two questions (Q11 and Q12) together, it is reasonable to interpret that as the economy had been showing unprecedented scale of change and was thus quite overwhelming, respondents must have assumed the presence of unknown or unforeseen changes of varying magnitude.⁴ At the same time, in relation to changes in neofamilial ties, respondents were likely to think that economic change would be sure to affect even neofamilism-based human relations; yet, despite these conceptions, neofamilism continuously functioned within the social fabric of Korean society, as reflected in the respondents’ awareness that neofamilial ties had an overwhelming influence in Korean society during industrialization.

Such conceptual schizophrenia is well reflected in responses to the following question: “In the 1960s and 1970s, were you able to mingle well with those with whom you shared blood, school, and regional ties but were much richer or poorer than you? Or were you uncomfortable with them?” Of the responses, 12.2% said it was very uncomfortable, 30.0% indicated that it was getting increasingly uncomfortable, 28.3% expressed that it was not uncomfortable, and 20.8% said there was no discomfort at all. The distribution of the answers reveals an interesting dynamic within Korean society at the time. Although those who did not have much problem mingling with those from a different economic status (49.1%) are slightly more than those who felt uncomfortable (42.2%), the answers show that Korean society was quite divided in terms of social distance between classes. When inquired about their overall assessment of how the significance of neofamilism has trended from the 1960s to 1970s to the 2010s, slightly over half of the respondents (51.9%) said that it is still significant, 46.3% said it has changed little by little, and only 1.8% said the significance of neofamilial ties is almost nonexistent. This finding illustrates the continuing importance of neofamilial ties in Korean society, although signs for gradual change are also visible.

To explore the resiliency of neofamilism, another question asked how they assessed the impact of the abrupt financial crisis in 1997–98 on neofamilial ties and their influence in Korean society. About 24% of respondents thought neofamilial ties were further reinforced; 53% expressed that Korean society came to depend less on the ties, and 17% said there was no change or no relevance. These responses are interesting in that they illustrate the persistence of neofamilial ties; not a single person thought the shock of the economic crisis itself would bring about immediate, drastic change to the influence of neofamilial ties. What is more interesting is that a considerable number of respondents (77%) seemed to have the view that in the wake of the financial crisis, they relied on neofamilial ties, probably for the sake of surviving the crisis.

Finally, respondents were asked to provide their view about the future of neofamilial ties in Korean society: “What do you think of the importance of blood, school, and regional ties in the future?” To this question, 4.7% of respondents said the ties would further be reinforced, 50% said they would continue to exist if not be reinforced, and an equally significant proportion (41.5%) said these ties would gradually weaken. Just 3.8% said neofamilial ties would disappear very soon. The picture that emerges from these responses is one of divided attitudes in Korean society, although the notion that the ties will remain important is still significant.

The following three questions turn to specific personal experiences in neofamilial practice in the 1960s and 1970s, as well as during and after the financial crisis in the late 1990s. The first asked whether respondents themselves had used neofamilial ties. The second inquired whether they had been approached by someone through neofamilial ties for special consideration. The third pertained to whether they had observed the preceding two situations during the financial crisis in the 1990s. Responses illustrate how extensive and pervasive neofamilial practice was during industrialization in the 1960s and 1970s, especially as a key survival strategy: 64% had relied on neofamilism for personal benefit. Among the respondents, 59% indicated that they had been contacted to do something for other people through neofamilial ties, and 47% had observed such neofamilial practices beyond their own experiences. The figures indicate that neofamilial practices were actively performed, while the lower proportion of responses confirming others engaging in neofamilial practices suggests that neofamilial activity was not as overt or visible to third parties.

Neofamilial practices run the gamut of life but are centered mainly on economic areas, indicating that neofamilial ties were then seen as critical survival strategies for average Korean people. The following are more specific areas of neofamilial practices in the daily lives of Korean people: emergency economic assistance; job-related help such as job seeking, transfers, and promotions; and access to financial institutions.

MAPPING OF NEOFAMILIAL BEHAVIORS

It is clear from the survey results that neofamilism was widely practiced during the period of industrialization in the 1960s and 1970s. Whether at the macro level of Korean society, at the personal level, or in the workplace, neofamilism was an important part of the lives of Koreans. Responses provide empirical confirmation that neofamilism was important to individual identity and for personal survival. As table 13 shows, blood, school, and regional ties covered an extensive range of aspects of life. Although all three ties were extensively mobilized for a variety of purposes, blood ties stand out compared to the other ties as being present in almost all the categories of human life: personal economic assistance, financing, employment, and other activities for survival. Next came school ties, which were also widely used, particularly for job-related matters such as recruitment, promotion, and transfers. Regional ties also came into play but were described by many respondents in terms of employment and sales networks, including financial products such as insurance.

TABLE 13. Types of activities and distribution of neofamilial ties

Source: Data from author’s 2015 survey.

Several of the respondents’ statements indicate the importance of blood and school ties and their pervasiveness in everyday life: “Blood ties, school ties and regional ties are as natural as breathing; school ties and regional ties are always to be confirmed as if looking for necessities in life. Blood ties are undoubtedly like insurance or savings.”⁵ On family and relatives: “I can open myself to family members and relatives regarding my problems and those of my family. I can share secrets and be open about my weaknesses and problems.” On school alumni: “They can render all kinds of mental and physical support on both public and personal matters.” On regional ties: “Closer than coworkers but slightly less important than school alums.” On school ties, another survey participant wrote, “I regard school alumni in the workplace and society as if they are my brothers. Among alums, seniors can freely call juniors by first name without using honorifics in a way that signals, perhaps even boastfully, the closeness of the relationship.”

One respondent conveyed the following as the atmosphere during the industrialization: “I still remember I used to take care of people with the same regional background as mine, and that I did not feel comfortable since my regional background was different from that of the owner and that the owner himself paid unusual attention to those who came from his own hometown.”

On regional ties, one typical example is as follows: “Serving as guarantor for someone else’s bank loans is risky for me, so it is not easy to consent to the request; but when asked for example to purchase insurance by way of regional ties, there was not much choice but to accept although the product was no better or different from what could be purchased elsewhere. The times were such that it was not easy to refuse requests for favors based on regional ties even when backgrounds are so different.”

Neofamilism was practiced most extensively and intensively in the case of economic activities. This is understandable, given rapidly changing economic circumstances that presented prospects of upward social mobility. Economic activities based on neofamilial ties can be broadly classified into those characterized by “giving” or “taking.” On the taking end:

• Until recently I received financial support from my brothers.
• I received financial assistance from blood relations because my own family situation was so bad.
• Because my older brother was rich, I used to call upon him for help whenever I had difficulties.
• I asked brothers and friends (school ties) for favors in financial matters.
• I have experienced getting employment through the connection of my brother-in-law (husband of my sister).
• I got a job after my brother asked his friend.

Compared to the taking end, much more diverse responses are recorded on the giving side of economic activities:

• I helped people who were connected by blood and school ties.
• I purchased insurance policies when asked by a school classmate.
• There were endless calls for help from blood relations, so much so that not much was left of my salary. I helped those who were homeless and could not afford food or school tuition to the best of my abilities.
• I ended up in debt from supporting relatives.
• Because I guaranteed personal loans of friends, I ended up losing my home when I had to take over debts. It took more than 15 years to recover from it, and there is still outstanding debt.
• As my personality was such that I could not say no when asked for a favor, I complied to requests based on blood, school, and regional ties. However, every time I had to swallow financial and other damages. Due to the distrust and sorrow of repeated betrayals, I confined myself to home and avoided people, not attending school alumni meetings.

It is clear that people responded by citing more unfortunate cases due to neofamilial ties and obligations from the ties. What is also clear is that there were frequent interactions resulting in positive economic gains and mutual assistance. One current example is that of guaranteeing the loans of others, personally or institutionally. While fewer respondents guaranteed loans for family members, relatives, and school friends than those who did not, the proportion is still significant at 43%. Of this group, a majority (78%) ended up having to repay debts.

Given the frequency of reports on financial losses from personal guaranteeing, it is clear that neofamilial interactions brought about difficulties for many Koreans. The main reason for the need for guaranteeing was the lack of institutional mechanisms in the 1960s and 1970s for guaranteeing and checking creditworthiness. Furthermore, capital was in short supply. Such circumstances led to a scramble for loan guarantors through neofamilial ties in securing institutional or private sources for capital. The rapid industrialization projects that were unfolding at the upper echelons of the economy—also based on neofamilial recruitment in business and in the state bureaucracy—created the need for sources of trust to identify and secure new business opportunities. With a scarce base of trust within a highly volatile environment and at a time in which hopes were mixed with rapid success and abrupt failures, people either grudgingly or with some degree of anticipation engaged in a certain level of risk; only when things turned sour did they realize they had made a mistake.

The majority of the respondents said neofamilial considerations were given priority over laws and regulations. This response in part reflects the speed at which decisions had to be made and implemented. People relied on neofamilial ties to secure information quickly, and the ability to get access to state incentives was a critical factor in determining business success. Given such conditions, combined with the top leader’s (president) orientation, which tended to be lenient toward violations of laws and regulations as long as export goals were met, it is not surprising to observe that expediency, attainable via neofamilial ties, was prioritized over laws and regulations at lower levels of Korean society on a daily basis.⁶

The findings provide an interesting implication for the relationship between social conflict and class consciousness. On the one hand, most people generally sensed that social conflict was growing, due to industrialization of the 1960s and 1970s. On the other hand, there was a split between those who were uncomfortable with members of a higher economic status and those who did not feel as such. At the same time, the majority of survey participants acknowledged that neofamilial ties have been significant in Korean society since the 1960s and 1970s. It can be interpreted that neofamilial ties played a role in mitigating class tensions for respondents who expressed that they did not feel uncomfortable with people of higher economic status, with whom they shared neofamilial ties. Even for those who felt uncomfortable, frequently resorting to neofamilial ties for opportunities of upward social mobility must have created enough hope and expectation for an improved economic future sufficient to mitigate present discomfort. The finding indicates that rather than directly applying class analysis, a more nuanced approach is required to understand social change in late industrialization, where interaction between industrialization and tradition gives rise to distinct social units (neofamilial networks) and life expectations.

The survey respondents provide interesting observations of neofamilism’s emergence and its future prospects. On the question of why neofamilism became so significant in Korean society, the following remarks are particularly germane:

Blood, school, and regional ties played an important role largely because the labor market lacked systematized processes of employment. The rights of recruiters were unusually strong and there was no systematic control over the use of school, regional, and blood ties.

The reason blood ties and regional ties were mobilized is because small-medium industries were the backbones of industrialization; trust was absolutely needed between owners and employees. Since trust between superiors and subordinates was necessary, blood, regional, and school ties—the emotional bases of Korean society—were the foundation for business in the 1960s and 1970s.

In the case of small-medium enterprises, accounting and finance are crucial for financial stability. Thus, the persons in charge of these two areas were filled with people based on blood ties. They were also needed for the sake of saving labor costs and for managing and ensuring the secrecy of the CEO’s slush fund. In the case of big business, regional ties and blood ties were important from the time of recruitment. Regional background was an absolute criterion in recruiting for Kyŏngsang- and Chŏlla-based companies. School ties were a dominant factor for securing trust from superiors and getting promoted.⁷

The remarks above indicate that trust was limited in Korean society during industrialization, a characteristic amplified by the rapid pace at which industrialization was pursued. As the top leader needed competent and loyal bureaucrats, so did entrepreneurs, although loyalty seemed to be given more weight in order to keep business secrets. Furthermore, there was no well-functioning labor market from which employees could be freely recruited due to labor market segmentation. Under such circumstances, blood ties were important for the SMI sector while regional ties played as important a role as school and blood ties for the recruitment of big business, particularly for the sake of securing company-wide loyalty.

On the continued influence of neofamilial ties, 55% of respondents said that such ties will either be reinforced or continue to exercise influence in Korean society. At the same time, 45% stated that they would either weaken or soon disappear. However, their written statements on the future of neofamilism reveal a much more complicated picture:

As society becomes more transparent, is run more exactingly, and information is increasingly shared, blood, regional, and school ties may play some role in securing access to people, but they may not be of much help in fundamentally solving problems.

A positive change in the aftermath of the financial crisis is the emphases on merit and competitiveness. Competitiveness (merit) should come first before school, regional, and blood ties. Social connections should not take precedence over merit. This is a change in a desirable direction.

Due to globalization and the upgraded scale of business that requires system-based operation, a change has occurred from considering blood, school, and regional ties to what is required of jobs and general ability. Ability is the top priority to secure competitiveness in domestic and international markets.

In order to get out of the financial crisis, more innovative and creative ways are required in which case people will be judged more by ability than connections.

We will be facing a new society where ability is ultimately needed for the resolution of problems.

Individualism will be pervasive; there will be no permanency in trust in human relationships. Repetition of one-shot associations and dissociations will be the norm. Neofamilial ties will be of limited help as dependence on them will weaken and ultimately disappear.

Simple affection-based school, regional, and blood ties should be replaced with ones based on ability, so that exiting from past practices is sure to come.

There is less dependence on school ties, regional ties, and blood ties, but the dependence itself has not disappeared. Especially so in the political circles.

In the case of private companies, if the owners of companies adopt strict controls against school, regional, and blood ties, dependence on them will be greatly reduced and transparency will be strengthened. But unless politics changes and the general public realize the possibility of the change, fundamental changes will be difficult.

From the moment people feel that they cannot depend on other people, all the relations will be severed, and the current financial crisis is the entry point to the severance of the relationships. The severance phenomenon will be more severe for the middle and lower classes.

Most important is rampant individualistic thinking and selfishness. School, regional, and blood ties were based on trust and credibility. With the rapid economic development and ensuing mammonism, distrust among people is becoming a serious issue. It may be a natural consequence when efficiency and ability are the main consideration, but trust is being lost among people. It is a problem to lose humanness.

There will not be a fundamental change in the roles of blood, school, and regional ties as they are the emotional backbones of Korean society.

I do not expect any basic changes to neofamilial ties; going through difficult times under the financial crisis brought about an important lesson that blood, school, and regional ties are not the whole thing, rather ability and self-standing power is more important. In that sense there was clearly a change.

With the increasing insecurity due to changes in retirement and making a living, people will look more for those whom they can trust. As such, a deepening sense of crisis will increase dependence on traditional human relations.

There has not been visible change in dependence on school, regional, and blood ties since the financial crisis. Dependence on these ties has deepened in seeking for jobs and financing related to maintaining a household.

Dependence on blood ties has been strengthened.

The primordial emotional base is bound to affect business although the new circumstances and the scale of economy will dictate somewhat to secure efficiency. But it will depend on whether the owner decides to secure ability-based operations.

School ties will continue if not be reinforced. Regional ties will continue for a considerable time. Blood ties will be visibly weakened.⁸

The above statements express two possible views: one describes weakening neofamilial ties and their influence, while another depicts neofamilial ties either strengthening or maintaining the status quo. A differentiated picture emerges for the first trend: shared among the statements are the fundamental challenges that are brought to neofamilism by the eruption of the financial crisis of 1997–98. The crisis had an undermining effect on neofamilism. Neofamilism, in this view, stands for loyalty over efficiency, secrecy over transparency, mutual care over competitiveness, collectivism over individualism, looseness over discipline, and emotional ties over merit. Neofamilism is thereby viewed as a source of all sorts of ills in Korean economy and society. With the challenges brought about by the financial crisis, Korean society, according to this trend, had to change or had already begun to change. The first trend foresees an arrival of a new society in which individualism will become a new norm, in turn requiring and generating relationships based on short-term trust rather than permanency. Neofamilism, according to this view, will not have a place in an information age that was rapidly coming to Korean society. One of the concerns that this trend illuminates is the need for a base of trust that would replace neofamilism once that base is lost to individualism and market principles.

Within this narrative of disappearing and weakening neofamilism are different views on the nature of how neofamilism’s decline is occurring. While overall structural challenges to the Korean economic system are commonly highlighted as key factors for changes to neofamilism, some question how and where such changes will be initiated. One view acknowledges weakening dependence on neofamilial ties and maintains that this weakening will lead to a disappearance of the ties altogether; the primary concern here pertains to Korean politics, which is considered to be the main culprit for leading Korean society to neofamilism. The background of this view is that Korean politics has been entrenched with regionalism, and this sets the tone for society at large in terms of the prevalent practice of neofamilism. Unless a conscious effort extending to broader society is made to end neofamilial practices within Korean politics, neofamilism may persist. At the micro level, this view considers the owners of private enterprise to play a critical role by substituting neofamilism in company operations, particularly through a new pattern of recruitment based on merit.

The second perspective holds to the continuity of neofamilism, broadly contending that neofamilism will persist because it forms the emotional backbone of Korean society. However, such cultural determinism does not preclude possible changes to neofamilism. First, this view acknowledges objective changes occurring in the external economic environment, as well as the need for change. But it focuses more on social psychological tendencies as a source for neofamilism’s continuity. For example, it contends that growing insecurity due to changes in the economic environment will drive people to depend more on personal ties for safety and security. This view predicts that neofamilial ties will still be needed for seeking jobs and financing and getting access to people and institutions. It also presents a differentiated view that blood ties strengthen or weaken, depending on circumstances, and the same goes for school ties and regional ties, but all three ties are generally viewed as enduring, despite external shocks to the Korean economy.

Like the first view, the second also sees politics and company leadership as initiators of change at macro and micro levels. Both views also acknowledge that Korean society is facing a fundamentally different international economic environment since the financial crisis. Where the two views diverge is on whether change is sought in the context of continuity or discontinuity of neofamilism. This difference notwithstanding, both views agree that change is not spontaneous and is based on social consensus through political process at the macro level. What is also important to note is that the institutional and social backgrounds for neofamilism have changed considerably since the period of state-led industrialization. The critical question then is whether and if so how neofamilism operates under different institutional, social, and political environments, which is the subject of chapter 7.

NEOFAMILISM: PERSONAL STORIES

While neofamilial practices are pervasive in Korean society, individuals experience the level and scope of neofamilial ties and practice neofamilism in different ways. The following interviews with the selected individuals, based on differences in their family, educational, and social economic status, demonstrate how neofamilial ties affected their paths in life in terms of the types of jobs and the roles and functions that they played.⁹

The Case of CEO Mr. C

Mr. C was born in the southeastern region of Korea and graduated from a prestigious high school, subsequently entering the School of Engineering at SNU.¹⁰ After completing his military service as a naval officer, he entered the MCI through a special employment process. By recommendation from the director of the General Affairs Department of the ministry, he went on to work under the chief secretary for economic affairs at the Blue House (the president’s office and residence of Korea). After the chief secretary was appointed minister of finance, Mr. C moved to the ministry with him as one of his secretaries. When the minister stepped down, Mr. C moved to company D, the chairman of which was close to the minister, and Mr. C shared high school ties with the chairman, who was senior to Mr. C. He served in different capacities at the group: branch head of the group in San Francisco, head manager of steel and metal parts, managing director and vice president for planning and coordination, and CEO of the entire company.

He acknowledged that at company D there were many of his high school alumni (nearly 30%–40%), including the founding president, and that he relied on his high school ties when contacting the ministries and the Blue House. He said it was inevitable to rely on the ties as there was no officially sanctioned lobbying. According to him, regionalism is not limited to Korea or to the present time; it is in fact ubiquitous all over the world and has persisted throughout Korean history. He noted that different regimes favored people who shared the same regional background with the president. He further mentioned that during Korea’s industrialization, having a connecting link with the state was necessary for business. He also recollected that the business sector was inferior to the state in terms of personnel management and planning and thus had to emulate the state. On the matter of labor relations, however, each enterprise adopted its own method in dealing with labor because the state did not suggest any institutional examples to follow. Workers’ conditions varied in terms of the size of the enterprise and type of industry. Regarding the different roles of the state, he contrasted Korea with the United States as follows: the government’s industrial policies in Korea during the industrialization period was such that it further encouraged those who were doing well, which is quite different from the case of the United States, where the government role was more about maintaining a level playing field.

Regarding the scope of human and social relationships, he said that the bulk of his human contact during the heyday of industrialization in the 1970s was with those within the company (around 60%), while 20% was with high school friends outside the company. Regional ties were weak for him as he had left his hometown early in his life. He was little involved in NGOs or civic organizations.

The Case of Labor Organizer Mr. L

Mr. L was born in the countryside in C province in 1946.¹¹ He finished his high school education in his hometown. After finishing military service at an early age, he left his hometown and got a technical job at S cement factory in K province in 1968 through an open, competitive recruitment process. He worked there for three years and learned technical skills in the cement industry under a graduate of SNU engineering school. Then he applied for a job at K cement industry in J province. He was put in charge of a part of building the new cement industry there and worked hard. Production started in 1973, and he had a good relationship with the owner of the company until 1976, when he initiated organizing a labor union in the company. He explained the reason for organizing the union as follows: the working conditions were horrible, with long working hours from seven o’clock in the morning until eight in the evening. Monthly salaries were frequently not paid on time, with payments being deferred for up to two months, and 400% of salary as bonuses, which workers were supposed to receive, were unpaid. More seriously, the company did not treat workers as human beings; workers were treated as servants and were only sustained to barely survive. Management thought that workers did not have much choice other than to work at the company. The workers were mostly from the local areas adjacent to the company and from J province. There was a total of about 500 workers.

Mr. L was not a local person. He had had experience with a strong union at the previous company where he worked. He attributed the poor treatment of workers to the lack of a union. But the owner was wary of Mr. L’s unionization efforts, even making frequent death threats to Mr. L. Management keenly monitored the workers to prevent them from joining the union. But Mr. L persuaded the owner that the company would not collapse even with a labor union. Utilizing contacts in the government, the company tried to delay issuing the permit to unionize, but ultimately the permit was issued in January 1977 after more than seven months of delay. Mr. L said the company’s attitude to the workers changed for the better after the new labor union was formed; management stopped calling workers names and treating them like servants He had to yield the chairmanship of the labor union to a person close to the company for three years, and only in 1979 did Mr. L became the leader after a close election victory.

Even after the union was established, management and the owner continued to pressure workers to withdraw from the union; at one point only four members were left, but eventually membership recovered. He recollected enduring the times and the struggle for justice. He also said the main sources of his success were in his honesty, establishing trust by keeping promises, and punctuality. While not scared, he confessed how lonely he sometimes was under the tough situation. Other than the support of his nuclear family, particularly his wife, he had no one who shared school, regional, or blood ties in his effort to create the union within the hostile environment.

The Case of Successful SMI Entrepreneur Mr. H

Mr. H was born in Ch’ungnam Province, in central South Korea.¹² He finished high school near his hometown and went to Seoul for college. He graduated from H university, majoring in industrial management. He planned his future business while performing his military service in the air force. The list of business ventures that he considered was quite long, including instant rice cakes, peanuts wrapped in squid, paper cups, and leather clothing. While manufacturing leather clothes, Mr. H met a businessman in helmet manufacturing and became a supplier of a helmet component. He came to know the helmet manufacturer through the businessman and took over the business from him. Mr. H recalls having to borrow from relatives and friends to take over the company. His business began to grow as he started exporting cloth helmet linings to Japan.

He also recollected his dealings with state officials. They were always lukewarm if not negative regarding his efforts to build new factories and gave various excuses. Every time he contacted them, he served them meals and gave money. In the worst case, it took him 10 years to solve one problem through a state agency. All the banks and agencies were like that, except for one SMI promotion corporation and the Korean Trade Association. Applying for bank loans involved reciprocation of some sort; sometimes bank clerks would outline personal demands in exchange for loans to be approved. He said he did not try using school or regional ties to get access to connections at banks and state agencies.

Regarding recruitment, Mr. H said there were many from his own province. He used high school and regional ties, and those recruited on these bases in turn brought in additional people based on the same connections. He said workers recruited from these sources are usually stable and stay longer. He said that the company adopted open recruitment by advertising in a major newspaper, which had the effect of reducing the proportion of employees from his own province, but nevertheless applicants from his own province still turned out to be recruited more often. He admitted that regional background is an important criterion even when recruitment is done openly. As to the question of what constituted the most important tie in Korean society, he mentioned blood ties without hesitation and added that his younger brother and brother-in-law had been helping him in important capacities. He said he does not trust people until he tests them out for three months.

As for Korean society in general, he remarked that somehow, he had a strong feeling that Korean society was dominated by SNU graduates and people from the southeastern region. Nevertheless, overall, he regarded school ties as not too negative. He said employees who were hired based on school and regional ties usually did not suddenly leave the company. He also said that the obsession with getting into top universities in Korea was not as negative as it is commonly made out to be in some parts of Korean society. On the contrary, he was of the opinion that it was natural that top university graduates receive better treatment for their hard work. He also shared that he found top university graduates to usually be better employees.

The Case of Unionist Mr. K

Mr. K was born in 1945 as the eldest son among four children.¹³ He did not receive formal education and was self-taught. He joined a steel company in 1974 through an open competition. Officially, the recruitment was for regular salaried workers, but it actually served to recruit technicians. The monthly salary was 15,400 won, with 3,000 won spent for room and board. After on-the-job training, high school graduates were put into cold-rolled steel production for the first time in Korea. During the 1970s, a job training office was established, and workers took certification exams after one year of training.

The number of workers at the company ranged between 1,000 and 2,600, and workers were recruited nationwide. The salary was comparatively better than most at that time. Despite the higher compensation, bank workers, teachers, and bureaucrats who would sometimes apply would often withdraw after finding out it was a technician position. A union was organized in 1968, which Mr. K joined, and the union turned radical and continued to be so until 1990. Mr. K, a moderate labor union organizer, fought against the union’s radical members, who launched frequent strikes and physical confrontations. Based on his struggles against the increasingly radicalized company union, he was elected as union leader in 1990. According to Mr. K, most of the workers felt lukewarm about the radical union; they were satisfied with the company’s treatment and felt relieved that they could afford to support their families. Mr. K’s view was that workers’ class consciousness was not strong because their reference was to Korea’s impoverished conditions of the past and also because they understood different and better results could be gained from negotiation than from struggle via militant actions.

Mr. K’s approach to the management of the company was not to rely solely on struggle but acknowledged the need for negotiating with management. His view was that during the 1960s, workers were treated inhumanely, with low wages and long hours of work in the midst of poverty, and the Korean Confederation of Trade Unions (KCTU) (a radical union) took advantage of workers’ cumulated inhumane treatments with the advent of the democratization movement from the 1980s onward. KCTU was against severe discipline and penalties imposed on workers and exploited rank-and-file anger. Convinced that workers were not supportive of radical unions, Mr. K instead worked to improve the welfare of workers almost by himself as a collaborationist union organizer. He concentrated on building a welfare house for workers, sharing profits, and gains in labor productivity. He also was instrumental in establishing a symbiotic model between workers and management.

There were hometown associations, school alumni associations, clan organizations, and retiree meetings in the company. The management tried to use them to deal with labor issues. Such informal organizations were also inevitably used when electing the head of unions. Mr. K, as union organizer and later leader of his company labor union, admitted that 80% to 90% of his personal life revolved around neofamilial organizations. He even pointed out that even within his own province, regionalism could still be observed among counties. He retired from the company in 2003.

In conclusion, the four personal stories illustrate variations in life paths and strategies depending on the individual’s level of education and school, blood, and regional ties. The case of the labor organizer Mr. L contrasts with the case of the CEO at company D. The former, with little education and resources for mobilizing regional and blood ties, struggled against oppressive factory management not only for himself (although his approach was collaborationist) but also for other workers. The CEO, however, used connections through school ties and was able to navigate the world without serious challenges. The case of the SMI entrepreneur is a good example of combining the use of regional ties, blood ties, and effort in order to succeed. Mr. H had to struggle to deal with bankers and bureaucrats but ultimately created his own advantage despite their arbitrariness, without holding a grudge against society as a whole. The case of unionist Mr. K is almost opposite that of Mr. L’s in that while both were engaged in unionization, Mr. K was in a regional environment where he felt comfortable drawing upon regional ties.

Together, the survey results and individual cases show how the top leadership’s choice of personnel and the state’s role as holder of various incentives gave rise to the ubiquity of neofamilial practice in Korean society at both business and personal levels. The overwhelming presence of neofamilism is well reflected in the general perception of the masses, but the extent of its use and strategies as to how to combine the ties varied, depending on individual backgrounds and personal choices for survival.