&#91OUTLOOK&#93Market economy? What’s that?

No notion is more deeply ingrained in the Korean people’s minds than the one that economic reforms should be continued to establish a market economy. During the period of rapid economic growth, major players in the economy generally worked in accordance with the guidelines of the five-year economic development plans. But to become an advanced economy, we have to shift our development strategy toward putting the market at the forefront of development. No one disagrees that the financial crisis of 1997 resulted from the failure of institutional reforms to make the market work properly. But a problem remains: Institutional reform should be preceded by economic education so that the way of thinking and the practices of economic actors comply with the principles of market economy.
Without systematic education on how the market economy works, we cannot expect the economic players to properly understand the principles involved. When they have different concepts of the market, they cannot agree on solutions to problems. If the economy is compared to an elephant, different people can have different understanding of the economy depending on whether they touch its trunk, legs or body. It is quite natural that large corporations, small and medium businesses, merchants, farmers, and consumers all have different perceptions of the economy. It is not until they understand at least in theory what the elephant is like that rational coordination among their conflicting interests becomes possible.
The principal actors of our economy enter society without receiving a proper education about the market economy. The neglect of economics in school is a serious problem. While junior and senior high school education in Korea is closely related to the college entrance examination, economics accounts only for a meager portion of the scholastic ability test.
Consequently, economic education is doomed to be neglected in school. Applicants for the departments of humanities are asked only four questions about economics out of 38 social studies questions. That is less than 2 percent of the questions. In the case of elective subjects, where the applicant chooses one subject from economics, political science, socio-cultural studies, world history or world geography, very few students select economics because it is considered more difficult than the other subjects. Even in the case of these few students, economics amounts to a mere 5 percent of the examination. For the applicants to natural sciences curriculums, it is not exaggerating to say that the importance of economics is almost negligible. If it’s not on the test, the students do not study it, and our consumers and businessmen enter the market without knowing what it is all about.
Another problem is that very few teachers who teach economics have a degree in the subject because education colleges do not offer an economics major, and those who majored in economics in other universities rarely become teachers.
It is encouraging that some news media have begun giving more coverage to economic education for youth. The private sector does not pay the cost just because something is desirable for society; it tends to pay when there is a social demand. I wonder if our education authorities perceive changes in the demand for economics education, and even if they do, I also wonder if they can implement what they have perceived. The key question is whether they can persuade the educational system to increase the portion of economics within the limits of classroom hours.
What should be more feared than improper education about market economy is for students to enter mainstream society with a distorted view of the economy, which is a side effect of insufficient education in school. “On-the-job” training in society may complement school education, but cannot replace it. If the education authorities cannot solve the problems of expanding and reinforcing economic education themselves, they should cooperate with other government agencies that are responsible for implementing economic reforms. Market participants, as primary actors in economic reforms, should know how the market works, what rules they should follow and how our competitors behave.
In short, what distinguishes the advanced and the less developed countries is how much people understand the market economy.

* The writer is the president of the Korea Development Institute.

by Kim Choong-soo