The phenomenal success of Gangnam Style, a video by Korean rap artist Psy that has been viewed 280 million times, is a quirky (and rather catchy) indication of South Korea’s rising fortunes. The dance video gently sends up the nouveau-riche, plastic surgery-enhanced lifestyle that has been made possible by an economic transformation so extraordinary it is known as “the miracle on the Han River”.

But something curious is happening. Just as South Korea is growing more confident on the world stage — culturally, economically and diplomatically — it is going through something of an existential crisis at home. Suicides are drastically higher, fertility is perilously low and the electorate is flirting with the idea of jettisoning traditional presidential candidates in favour of an untested IT entrepreneur.

It seems an odd moment to be having a national nervous breakdown. Samsung and Hyundai have established themselves as premier consumer brands from Canberra to Cupertino, Korea’s per capita income of $30,000 is fast closing in on the European Union (EU) average of $33,000, possibilities of winning $20 billion nuclear contracts in the UAE, pouring money into emerging markets such as India, China and Brazil, or vying with Japan to be Washington’s best friend in Asia, Seoul is having a global impact like never before.

That is not how it feels at home though. The more that the residents of the fashionable Gangnam district live it up, the more Koreans feel their economic model is skewed towards a privileged elite. Some statistics suggest Korea is among the most unequal of advanced countries. Chaebol conglomerates, the pride of the nation abroad, are considered by many to be economic bullies at home, blamed for squeezing suppliers and pushing small businesses into bankruptcy.

Whatever the impressive macroeconomic data may suggest, more Koreans feel poor, overworked and weighed down by social pressures. Chief among their concerns is the stress and expense of putting their children through “exam hell”, even in the knowledge that there are too many graduates chasing too few well-paid jobs. No wonder Korea’s birth rate has plummeted — to 1.23, well below the 2.2 replacement rate and lower even than Japan at 1.4.

The outgoing conservative government of Lee Myung-bak was good at putting on an international show. It hosted the G20 summit with aplomb. It attracted attention with its “green growth” agenda. But John Delury, assistant professor at Yonsei university, says it neglected domestic social and economic issues. Suicide rates have doubled over the past decade and are now the main cause of death for people under 40. The position of women has advanced at a much slower pace than the economy.

Nowhere is the sense of dissatisfaction more apparent than in the campaign for December’s presidential election. The surprise package has been Ahn Chul-soo, a university professor and founder of Ahnlab, an antivirus company, who has gained a cult following especially among the Korean youth. The 50-year-old independent — a sort of “anti-politician” — is polling above 40 per cent even though he only declared his presidential ambition this month. Ahn is running against two establishment figures. Park Geun-hye is a conservative from the same party as the presidential incumbent. On the liberal establishment side, the Democratic United party has selected Moon Jae-in, aide to a former president.

It is a measure of how much Koreans want a break from the past that Park saw fit this week to apologise for the human rights abuses of her father, the dictator Park Chung-hee, who ran the country for 18 years until he was assassinated in 1979. (On hearing of his fate, his pragmatic daughter’s first words were said to have been “Is the border secure?”) Park has felt it necessary to ditch her impeccably conservative credentials by moving towards the centre. She has taken to talking about “economic democratisation”, a buzz phrase that embraces the idea of weakening the stranglehold of chaebol and fostering a more even distribution of wealth.

Ahn, whose supporters compare him with Barack Obama — the promising 2008 vintage, not the corked 2012 version — represents a rejection of old-style politics. “Moon is the man of the past, Park is a relic of the past, Ahn is the man of the future,” is how Jang Sung-min, a former parliamentarian puts it.

The three-way race makes the election result highly unpredictable. Many expect Ahn and Moon to come to some sort of a last-minute pact. If they do not, they risk splitting the liberal vote and handing victory to Park, a result that would appear to be at odds with the anti-establishment mood.

One possible interpretation of the political mess in general and the popularity of the political novice Ahn in particular is that Korea is going through a crisis of democratic legitimacy. That would be quite the wrong conclusion. The country that threw off dictatorship in 1987 is now as robust, if imperfect, a democracy as any in Asia, a rebuke to those who argue that Confucian societies or “Asian values” are somehow incompatible with the ballot box. Far from suggesting that democracy is failing Korea, the noisy tussle around the presidency shows a system adapting to the popular will. That, at least, should brighten the national mood.

— Financial Times