Financialization of Poverty: Consumer Credit Instead of Social Wage?

Abstract

In post-crisis South Korea, the loss of stable and decent jobs among ever-increasing numbers of citizens has inevitably led to the stagnation and even decline of wage income across society. Even after struggling to reduce consumption, households in rapidly growing numbers and proportions have been entrapped into heavy indebtedness to banks, credit card companies, private usurers, kin members and friends, and even the state. Within a decade since the crisis, the total debts of South Korean households nearly tripled. In particular, the first few years of the twenty-first century saw South Koreans’ household debts literally exploding. The extent of South Korea’s household indebtedness, vis-à-vis both disposable income and financial assets, now far surpasses those of most developed countries (including the much-troubled United States). Not surprisingly, the poorest group shows a particularly high debt-service burden. This is another, increasingly crucial, component of the so-called financialization trend in the contemporary world political economy.