The 'Invisible Foot'

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The 'Invisible Foot'

Is the mid-summer tropical atmospheric depression the reason? The forecast for this country is desperately unclear. Even the mid-term objective, let alone the final goal, is difficult to grasp. In such chaos, people seem unable to distinguish the baby from the bathwater. Suddenly, the theory of the 'invisible foot' comes to mind. This notion was first introduced by Denis Langlois, a French institutionalist economist rather unfamiliar to Koreans.

We often refer to the 'invisible hand' of Adam Smith, the British economist, when explaining the logic behind the individual pursuit of profit that leads to the social accumulation of wealth. 'Market power', a more recent buzzword in Korea, refers to the same idea.

But when we discuss 'market power' we have to admit Korea's immature grasp on it. Look at the developed countries - where now, 'market failure' is in. People there are so used to market power that they are now even debating its failure.

Market power in Korea is unpredictable. It appeared to be working some time ago when the trade unions in several banks came out on strike, but was impotent when it came to the Hyundai crisis. In the midst of this souring crisis, we are more likely to feel the grasp of not an invisible hand, but a 'visible fist'.

The Korean economy is more familiar with this visible fist than with the invisible hand. Government regulation and collusion between the government and companies are its most recognizable feature. Such practices made Koreans pay for the champagne they popped open too early. Would it be too harsh if we compared it to 'the blissful public suicide' described by Urlich Beck, the German sociologist?

"Forgive, but don't forget," Koreans repeat. But the present Korean economy is in forgetting mode. After a brief belt-tightening, people are indulging in the champagne celebration again. But with the bubbles come warnings of another financial crisis.

Hyundai Construction Co. repeatedly warns of the blow the present imbroglio could strike on the national economy. Some critics say Hyundai is playing hostage with the government, charging a ransom for its own mistakes. Perhaps that is too harsh. However, we cannot deny it was exactly the rhetoric that Korean companies, including banks, used to urge for their protection in the past. They liked to demand that society pay the bill when their risk-taking went wrong.

Most economists argue that "we should not confuse an individual company's crisis with a larger social risk." They also warn that a makeshift solution will lead to an even bigger crisis. We've already been there with the 1997 financial crisis. Nonetheless, the government shrinks pitifully from all its challenges.

That is why it is necessary to reflect upon the invisible foot. Unfit participants will be shown the boot according to the rules of the game and depending on their competitiveness. British author and critic John Ruskin that the real value of a nation could not be judged solely by its wealth, but could be discerned in the moral conditions surrounding the wealth.

If we follow the logic Langlois proposed, the invisible hand stands for the market function of entry, and the invisible foot for that of exit. To have a strong capitalism, we need both hand and foot. If the future is in danger, what good is it to be rich and famous now? In the market, nobody is ever permanently barred - but nobody gets a standing invitation.


by Huh Eui-do

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