Kim Yongbum Announces Forthcoming "New State" and "New Fiscal Policy" Theories for AI Era: Calls for Productive Debate over Ideological Disputes

"Public Finance Should Move Beyond Simple Redistribution Toward Building Future Capabilities"

"Exploring New Productive Relations Between State, Corporations, and Finance"... Focus on Macroscopic Productive Relations Theory

Kim Yongbum, Policy Chief at the Blue House, has announced plans to sequentially propose the concepts of a "New State Theory" and a "New Fiscal Theory" aimed at fundamentally redesigning the role of the state and public finances in response to the artificial intelligence (AI) revolution. He intends to present a new "role of the state," which utilizes public finances not only for "ex post redistribution" but also as a means to organize the nation’s productive capacity and accumulate future capabilities.

Policy chief Kim Yongbum is speaking at the cabinet meeting held at the Blue House on the 14th, presided over by President Lee Jae-myung. July 14, 2026. Photo by Blue House Press Corps, Yonhap News Agency

On July 17, Kim posted an article titled "A Macroeconomic Perspective on Productive Relations in the Age of AI" on Facebook, in which he wrote, "In the era of the AI-driven production revolution, we must explore what economic role the state should play and how public finances should evolve from simple redistribution to become a system for organizing productive capacity and accumulating future capabilities." He added, "Moving forward, I plan to explore the 'New State Theory' and 'New Fiscal Theory' in sequence."

Kim views AI as not only transforming the labor market and corporate production methods but also initiating a structural shift that will fundamentally alter the nation’s economic administration and the functions of public finances. This means that the task of building AI infrastructure, forming an industrial ecosystem, nurturing talent, and distributing technological innovation outcomes should not be left solely to individual companies or the market. Instead, Kim argues that the state, businesses, and financial institutions need to establish a new division of roles. As a result, the "New State Theory" and "New Fiscal Theory" that Kim will soon introduce could form the basis for the Lee Jae-myung administration's mid- to long-term AI, industrial, and fiscal policy visions.

In this article, Kim suggests that productive relations in the AI era should be approached by distinguishing between "micro-level productive relations" and "macro-level productive relations." "Micro-level productive relations" encompass performance distribution within companies, labor-capital dynamics, collaboration between primary contractors and subcontractors, and stakeholder capitalism. He noted, "Recently, the Ministry of Employment and Labor and the Ministry of Trade, Industry and Energy each initiated meaningful discussions from their respective perspectives, and related debates are expected to continue in the National Assembly." He pointed out, "Since Korea has substantial institutional and theoretical experience, the key issue is how to select and combine various alternatives."

Looking ahead, Kim plans to focus on "macro-level productive relations," discussing the future roles of the state and public finances in response to the AI revolution. He emphasized, "There is still neither an adequate theoretical framework nor proven policy models in this area—it's truly uncharted territory." He added, "South Korea is one of the most rapidly and comprehensively advancing frontiers of the AI revolution, which is why we must consider these issues before anyone else."

He also stressed the importance of engaging in productive dialogue rather than unproductive ideological debates. The intention is to find institutional solutions that can enhance actual productive capacity and improve citizens’ quality of life, rather than viewing AI industrial policy through the conventional ideological dichotomy of state intervention versus market autonomy.

Policy Chief Kim Yongbum is speaking at the ministerial work briefing presided over by President Lee Jae-myung at the Blue House State Guesthouse on the 16th. July 16, 2026 [Photo by the Blue House Press Corps] Yonhap News

Kim also introduced an earlier international joint declaration entitled "We Must Act Now: A Statement on AI's Transformation of the Economy" in this post. The statement has been signed by thousands of people, including Nobel laureates in economics, CEOs of major technology companies, and renowned AI scholars, with the number of signatories continuing to grow.

This statement warns that AI could trigger economic transformations in the next 10 years that surpass the impact of the Industrial Revolution and contains the argument that economists and policymakers should begin preparing new institutions and governance structures now.

Kim noted that these concerns closely align with the themes of his recently published series, "AI Production Revolution Theory." He explained, "That is why I welcomed the statement, and it also alleviated much of the anxiety and frustration I felt from writing somewhat controversial articles." In "AI Production Revolution Theory," Kim proposed several roles for the state in the AI era: building productive infrastructure such as power grids, industrial sites, and supply chains; reproducing productive capacity through education; and designing a virtuous cycle in which the fruits of production are reinvested into the capabilities of the next generation and social trust.

This content was produced with the assistance of AI translation services.