[VIEWPOINT]Mimicking markets won't work

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[VIEWPOINT]Mimicking markets won't work

Although today's economic globalization is progressing rapidly, the movement of capital around the world today is still not as much as the flows of the late 19th century. Capital movements then were larger than they are now relative to the world's total capital. Surprising? Consider the boom in factory and railroad construction in North America and the considerable amount of money being invested in South American plantations, mainly by investors who bought listed shares in such ventures on European exchanges.

Population movements over national boundaries was also heavy. There was massive immigration from Europe to North America and large cross-border population moves in Asia.

As is the case today, the technological revolution played a big part in global development at that time. New transportation means such as automobiles and airplanes were invented, and the invention of the telephone and telegraph revolutionized communications. Contemporary with such inventions, the Olympic Games were revived in 1896. At that time, there were two bestsellers that predicted a bright new world in the future. They were titled "The Riddle of the Universe" by Ernst Haekel and "The Great Illusion" by Norman Angell. Haeckel, a German biologist, posited that science would solve all problems, including war; Angell, a Nobel Peace Prize Laureate and English economist, asserted that in a world where all nations are interdependent economically, war would result in nothing but losses to both the victor and the defeated. Unfortunately, after World War I, the Great Depression, and World War II, the naivete of such views was clear. Optimistic expectation of automatic world peace and improved welfare because of the development of communications technology and economic integration was proven to be completely false.

That kind of rosy future was crushed by the political philosophies of imperialism, fascism, communism, and isolationism, which guided the world toward financial restrictions and "beggar thy neighbor" trade policies. The world began to realize that economic development and impro-vements in welfare do not automatically follow technological revolutions or market power. History witnessed that economic growth and welfare were fragile when they were not supported by the dominant ideology of the time and strong national leadership.

While trying to catch the wave called "the globalization of the 21st century," Korea is beginning to take the first steps toward a market economy and democracy. Although we have nearly joined the ranks of developed countries, until now the route has been through dictatorships and a government-initiated economy. It is erroneous to say that just by imitating the market economy and democracy of other countries, our economy will advance and the people's welfare will be promoted as a side effect of globalization. It is crucial to set up systems of democracy and market economy, especially at the initial stages of development, and national and government support is indispensable. Without the establishment of such order and rules and their supporting social spirit, the market economy will only become an instrument to enhance the interests of a minority group seeking its collective profit.

The existence of a tendency to protect group interests and political populism, which tries to utilize group interests, poses greater threats to a nation than a dictatorship, particularly in a country that blindly adopts a market economy. Many countries have sacrificed their futures by recklessly mimicking others' democracy and market economies.

Looking back on the labor conflicts we witnessed in the course of economic reforms, confrontations among different interest groups in the medical reform and the government's ineptitude in handling the garlic trade issue, I am skeptical of achieving economic development and welfare with our level of democracy and market economics. It is necessary that our intellectuals, the press and political leaders set up necessary regulations and a social order to follow.

If we do not have the discretion to identify and will to fight against pressure, merely adopting a market economy and democracy will not automatically make our country rich, powerful and a better place to live.


The writer is a professor of economics at the Graduate School of International Studies, Sogang University.

by Cho Yoon-je

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