The Paradox of Postwar Reconstruction: Price Stabilization, Controlled Privatization, and Dependent Autonomy in 1950s South Korea

This study examines the paradoxes embedded in South Korea’s postwar reconstruction in the 1950s and illuminates the structural contradictions and tensions that shaped the decade’s economic strategy. The state’s attempt to restore war-devastated manufacturing capacity demanded massive fiscal resources, yet it was sharply constrained by the overriding policy priority of containing inflation. Under these conditions, enterprise privatization and the mobilization of private capital emerged as key policy instruments and were advanced in earnest under the Cold War banner of market-oriented policy. Yet this policy approach did not entail a straightforward move toward the principle of “free enterprise.” Rather, it unfolded as a process of controlled privatization in which the state intervened forcefully, selectively fostering and supporting particular firms and capitalists. At the same time, the government presented “economic self-reliance” as a central goal of industrial planning and pursued a dual-track strategy to promote both light industry and foundational heavy and chemical sectors. The financial basis for this self-reliance project, however, remained unavoidably dependent on foreign aid. This article therefore argues that the 1950s constituted a formative period in which these mutually contradictory policies operated simultaneously and intersected—price stabilization, state-managed privatization, and aid-dependent self-reliance—thereby exerting a decisive influence on the subsequent trajectory of South Korean industrial capitalism.