7 card boom, which for some credit card firms and for very many families ended in disaster. Then there was mortgage financing, which in turn drove up prices in the real estate markets(see Diagram 4). The Bank of Korea and the govern­ment were(and are) seriously concerned about this bubble. Therefore the government in 2007 imposed a special tax on the sale of apartments above a certain value(approx. 500000 Dollars). In Diagram 2 one can see how dramatically household debt to banking institutions has in­creased. Household debt by now is larger than the debts of non-financial enterprises. Last year close to 3 million people were unable to comply with their repayment obligations to banks, that is no less than 8,4 percent of the economically active population! In sum, the differences between the accumula­tion regime and the OECD-type financial market regime are quite remarkable and even disheart­ening. into real investment is of almost nobody’s con­cern. That savings are directed into the compre­hensive modernisation of a country and its economy, in practice, is of no interest whatso­ever. The results of the accumulation regime in Korea are far superior to the ones of the financial mar­ket regime. That does not mean necessarily that the accumulation regime would also work at the present level of development of the Korean economy. Certainly, economic planning in the Soviet Union and Eastern Europe did not work well after they had mastered standardised mass production. Yet, Korean economic planning was different and much more flexible, as it operated through the control of credit. As there is so much liquidity in the financial markets nowadays, and as Korean firms, in particular the large chaebol, enjoy high profits and possess vast amount of liquid assets, the old system of credit rationing through the state could not work any­more. First, the liberalised financial markets were and are a necessary condition for the huge and fear­some world macroeconomic problems of saving­investment and trade disequilibria, largely caused by short-sighted US economic policies. Second, in Korea the liberalisation of financial markets has, among other things, inflated stock and real estate markets. This certainly has much to do with the lacklustre performance of its economy in recent years, in particular when compared to the one of the accumulation re­gime of Park Chung Hee. Equally, there is much more uncertainty and anxiety now about the fu­ture, while economic and social inequality have increased. Is it really surprising that many people in Korea feel such a high esteem for Park Chung Hee? Democracy, State and future challenges One basic difference between the two regimes is how they deal with savings. Park Chung Hee had a point there. In the accumulation regime, savings are directed purposefully to real accumu­lation and modernisation. In the financial market regime, savings are the raw material with which profits are made in differentiated markets, often within the financial markets themselves, often in speculative and even illegal activities, and often on the back of uniformed people who are lured into these markets. That savings are directed The question remains however what could be done to reduce the dysfunctionality of the finan­cial markets. What is their use and common purpose, if they do not lead to increases in real investment and in the efficiency of real capital, and hence depress employment and labour in­comes? What is their use and purpose, if their valuation of the value of enterprises is out of touch with their real value in terms of tangible and intangible assets? What is their use and purpose, when their role in financing new in­vestment is only negligible? What is their use and purpose, when stock markets play only a marginal role in the allocation of new capital and are basically secondary markets 12 , where “old” stocks are traded on seas of speculative expectations, exacerbating inequalities of in­come and wealth? Against this background of misallocation, speculation and solipsism, how could it happen that movements in the financial markets are often interpreted as divine judge­ments on government policies, unions etc., wel­fare states etc.? Not that there are easy answers, but it is quite clear that the financial markets and, to a lesser degree, the concentration of capital, do not op­erate in accordance with the common good and therefore, if we want to face it or not, present a 12 Scitovsky, Tibor. 1994“Towards a Theory of Second­hand Markets,” Kyklos 47: 33-51.