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Lee Dong-geun |
Economic democratization, in other words, fair competition among all concerned parties, is the campaign buzzword for the upcoming presidential election.
The term can mean a wide range of things ― from limiting the investment opportunities of the conglomerates and devising stronger regulations to protect smaller companies, to promoting fair trade laws.
But the gist of it is to weave a powerful regulatory web for keeping the business sector in check.
Before talking more about the concept of the term, two phenomena are seen to have contributed to the recent popularity of economic democratization. The first is the concentration of wealth in conglomerates, and the second is social polarization.
On the second issue, many agree that an uneven distribution of wealth is inevitable in a capitalistic society, but whether the riches are concentrated at only the conglomerates is a sticking point.
Some economists claim that wealth is indeed being concentrated at large industrial groups given that their sales volume in proportion to the nation’s GDP has grown to unprecedented levels over the past 30 years.
Others argue that the conglomerates are making less money when compared with other businesses.
If the latter is found to be true, the entire premise for economic democratization would have been misplaced. In the case of the former, we must take the time to carefully review the validity of the policy proposals from our presidential candidates.
If wealth is indeed concentrated at the conglomerates, it’s hard to believe that regulations alone, such as investment limitations, could solve the problem. In fact, they could touch off new problems.
For instance, the small and mid-sized companies would be incapable of taking over those that the larger firms may have to abandon in the face of excessive rules and regulations.
Companies may also have to fight harder for their management rights, meaning they might use funds for acquiring more stake control. In such cases, our economy will lose its potential to add more jobs and grow.
Economic democratization defined and pursued with restrictions, and not with market autonomy, has distinct limits and may pose bigger problems for the economy.
By prioritizing independence and creativity, the market-based economic system is what fueled our economy over the past years.
Excessive regulations may therefore undermine economic growth drivers, which is why we must exercise extreme caution when seeking stronger regulations and adjustments outside the boundaries of a market-based economy.
In recent surveys, we have seen even smaller companies admitting that the economy would unlikely benefit from pointedly regulating the conglomerates.
The corporate sector and businesspeople all understand the need and objectives of economic democratization. But it must be able to foster balanced development between different economic parties and help companies become more competitive to ultimately bring more benefits to our lives, such as through job growth and more investment.
Some abilities are manifested only when the contenders stop walking and start running. We cannot expect to experience true economic development without accepting these disparities. New policies will be necessary, of course, to ensure fair competition, and any behavior or activity impairing it must be corrected.
We hope to see new policies from our candidates for protecting the underprivileged by staying within the boundaries of sound competition and creative activities that form the crucial pillars of a market-based economy.
By Lee Dong-geun
The author is executive vice chairman of the Korea Chamber of Commerce and Industry. ― Ed.
