Lecture Summary

The Urgency of Practicing the Major Campaign Promise: Economic Democratization

Kim, Jong-In, Former Chief Advisor of Economic Design

The Epoch-making Three Awakenings of the United States

What has made the currently powerful and prosperous United States is not condoning the indiscriminate greed of the wealthy. The United States has gone through three major awakenings and fundamental changes of its operational system. The first happened when George Washington and the Founding Fathers established the democratic republic through the Revolutionary War with Great Britain. The second was racial integration achieved by Abraham Lincoln and the Civil War. The last was economic democratization which was designed by Theodore Roosevelt and settled by Franklin Roosevelt. American economic democratization restrains the insatiable greed of those who have economic power by means of institutions. By imposing monopoly regulations and high inheritance taxes, the United States stringently controls the economic world and through this facilitates establishing charitable foundations and alleviates economic polarization. Like the United States, most advanced countries have undergone the process of breaking up economic powers when their greed ran wild. The balancing of growth and stability and that of order and freedom are the most effective tools for market economy and economic democratization.

The Economic Operating System of South Korea South Korea has experienced compressed growth. Former President Park Chung-hee, helped the chaebol (conglomerates) to flourish during his 17-year autocratic rule, allowing them to drive the country’s rapid economic development. But the conglomerates’ gluttonous business practices have suffocated small and medium-sized firms, stifled innovation, undermined job creation, and left much of South Korea’s population in relative poverty. The origin of the so-called "Miracle on the Han River" was the dynamism of the Korean people and the deeper origin of the dynamism was the widespread hope for the future among them. However, after turbulent economic growth, the shadow of such compressed economic growth had darkened and the effectiveness of it had faded out, which led to political democratization in the 80s. However, even though things have changed, the succeeding governments have been preoccupied with the illusion of accelerated growth and fancy economic figures. This has led them to depend on cheabols again and again whenever changes are required. Every new government wanted to make the same thing that former President Park had achieved long ago.

The Cases of Japan and Germany

Japan and Germany were the two most economically successful countries after World War Two. In Japan, General MacArthur broke up cheabols but in the deepening Cold War after the 1949 Chinese Communist revolution, the economic control from the United States had weakened and Japanese cheabols were reborn. After a while, the economy was driven by their wills and the ruling party is pathetically led by the economic power of those chaebols. In the end, many curious financial investment maneuvers occurred which ended the bubble economy and resulted in Japan’s economic woes over the last twenty years. By contrast, Germany has no chaebols. They has committed so many evils against neighboring countries that the international community forced Germany to establish "management-labor common decision making panels" which prohibited the capitalists in some industries from making their own decisions. Although many predicted this measure would drive the country into depression because of the strong unions, German labor unions turned not to strife but to collaboration, finding ways to benefit both parties. This "common decision making" system spread to other industrial areas and the economy has flourished.

Ways of Realizing Economic Democratization in South Korea

In these 25 years since the last amendment to the Constitution, last year's election breathed new life into economic democratization. The people hoped that the cycle of greed and corruption that is weakening South Korea’s economy would finally be broken. There was public consensus of those who had suffered from compressed growth and the despair of serious economic polarization. The dynamism of the people which is the engine of national development will not be stirred unless the government and politicians respond to this urgent wish. In order for South Korea to avoid following in Japan’s footsteps which led to underdevelopment, the nation has to be disillusioned from fanciful growth and equip itself with institutional tools which will force the economic powers to strictly abide by laws and conventions. Economic democratization means that market economy should adapt itself to the changing atmospheres of the market. We should not fall into the illusion that several chaebols can still lead the economy as they did in the past. Politicians with brains have no choice but to put economic democratization into practice if they expect the situation to improve.

Translated by Kang, Soo Jung

President of Salt&Light