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 that he will sequentially introduce new concepts of the "New Nation Theory" and the "New Fiscal Theory" to fundamentally redesign the role of the state and public finances in response to the artificial intelligence (AI) revolution. He aims to propose a new "role of the state" by deploying national finances not only for ex-post redistribution, but also as tools for organizing national productive capacity and accumulating 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

In a Facebook post titled "A Macroeconomic Theory of Production Relations in the AI Era" on July 17, Kim wrote, "In the era of the AI production revolution, we must consider what economic role the state should play, and how public finances can become a system that goes beyond simple redistribution to organize production capacity and accumulate future potential." He added, "In the future, I intend to sequentially explore the New Nation Theory and the New Fiscal Theory."

Kim diagnoses the AI revolution as a structural transformation that alters not only the labor market and corporate production methods, but also the nation's economic management and fiscal functions. He argues that the building of AI infrastructure and industrial ecosystems, cultivating talent, and distributing the achievements of technological innovation should not be left solely to individual companies or the market. Instead, new systems of role-sharing must be developed among government, industry, and finance. As a result, the forthcoming New Nation Theory and New Fiscal Theory are likely to serve as medium- to long-term policy frameworks underpinning the Lee Jae-myung administration's AI, industry, and fiscal policies.

In the article, Kim suggests that the production relations of the AI era should be approached by dividing them into "micro-level production relations" and "macro-level production relations." Micro-level production relations encompass internal profit-sharing within firms, relations between labor and capital, cooperation between main contractors and subcontractors, and stakeholder capitalism. Kim noted, "Recently, the Ministry of Employment and Labor and the Ministry of Trade, Industry and Energy have initiated meaningful discussions from their respective perspectives, and related debates are expected in the National Assembly." He added, "Given our accumulated institutional experience and theoretical knowledge, the key challenge lies in how we select and combine various policy alternatives."

Kim explained that he will focus his future commentary on "macro-level production relations," addressing the role of the state and public finances in the face of the AI revolution. He noted, "This field lacks both sufficient theoretical groundwork and verified policy models—it truly is uncharted territory." He further stressed, "The Republic of Korea is at the very forefront where the AI revolution is unfolding faster and more pervasively than anywhere else. For this reason, we must think through these issues ahead of anyone else."

He also called for productive debate rather than unproductive ideological disputes. He argued that instead of viewing AI industrial policy through the established dichotomy of state intervention versus market autonomy, Korea should seek institutional solutions that genuinely improve productive capacity and the quality of life for its citizens.

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

Meanwhile, in his article, Kim also introduced the recently released international joint statement entitled "We Must Act Now: A Statement on AI's Transformation of the Economy." This statement has garnered thousands of signatures—including Nobel Prize-winning economists, top big tech CEOs, and leading academics in AI—with the number of signatories continuing to rise.

The statement diagnosis that within the next ten years, AI may bring about economic change surpassing the industrial revolution, and urges economists and policymakers to begin preparing new systems and governance structures now.

Kim noted that the issues raised align closely with his own recently published series, "The Theory of the AI Production Revolution." He stated, "That is why I was particularly pleased, and it eased much of the anguish and unease I have felt while publishing somewhat controversial pieces." Through "The Theory of the AI Production Revolution," Kim proposed three key roles for the state in the AI era: building productive infrastructure such as power grids, industrial sites, and supply chains; replenishing productive capacity through education and training; and designing a virtuous cycle whereby the fruits of production are reinvested in the next generation's capabilities and in strengthening society's trust.

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