[OUTLOOK]Businesses must heed social justiceI believe the nation will prosper when businesses make profits. Jobs are created when businesses are in operation and the government manages state affairs with the tax paid by those businesses. However loudly politicians talk about social polarization and fair distribution, their words will be in vain if there is no wealth to dole out to people. It is the businesses that create wealth for the nation and who fill people’s shelves.
I cherish private property. Property rights are an inherent right, like basic human rights. Without private property, it is difficult to defend human rights and freedom. Even if communism had succeeded and could afford to support all the Korean people, communism is nothing but a dictatorship. That is because individuals who cannot manage their own independent lives are powerless and so will ultimately become subject to those in power. Private property rights are directly connected with the freedom of inheritance. If people cannot will their property to their descendants, they may not try to make more money.
But the freedom of leaving one’s wealth to your descendants sometimes creates conflict with social justice. In a capitalist society based on competition, the ethical problem of comparative conditions for competition arises. In a 100-meter race, if someone starts 50 meters ahead of the start and another is already at the finish line, it will be frustrating for those who stand at the start. Professor John Rawls of Harvard University wrote in his book, “A Theory of Justice,” that the level of social justice is decided by the social community. Korean society has a strong sense of egalitarianism so, naturally, our society applies stricter standards on succession than others.
The Hyundai Motor Company is under investigation by the prosecution. In recent years, South Korea’ big businesses have been investigated, such as Doosan Group for creating slush funds, SK Group for fraudulent accounts and Samsung Group, which donated 800 billion won ($823 million) for the public interest. Whenever the problems of conglomerates were raised, those who supported a market economy felt uneasy because they worried that the market economy itself would be restrained by the investigations.
The weakest point of Korea’s conglomerates is the expedient means used in handing down their ownership. Business owners still think of the corporations as their private companies and try to transfer them to their offspring. There are differences between the inheritance of money or land and that of a company. A business corporation is already a social institution. Reflecting on the spirit of the law, it is right to pass down only the securities held by the owner to his descendants, not the institution.
Samsung Group under Chairman Lee Kun-hee and Hyundai Motor under Chairman Chung Mong-gu have been successfully inherited by the second generation. They have also succeeded in management so that their companies have become world-class conglomerates that compete in the global market.
The third generation may also grow to be great managers as they underwent good management training. The problem is that the companies have grown to such a magnitude that it is difficult to secure management rights by inheriting the shares held by the family in a legal way. In order to secure fairness, the owners’ family should shoulder the level of burden that is acceptable to the community.
When they try to evade such a burden, they employ expedient measures. As a result, the prosecution has even published a handbook on investigation on expedient inheritance practices of businesses. When the succession of businesses becomes opaque, people naturally raise questions about social justice. The irregularities committed in such a way amplify the voices of anti-business and anti-market advocates. When things go this far, an absurd situation is created in which the entrepreneurs who should spearhead the fight to defend the capitalist system instead destroy capitalism.
The United States also has a dark side to its business history. President Franklin Roosevelt even said, “Let’s save capitalism from the hands of the capitalists.” Business owners in South Korea are now faced with a crisis of fairness over the succession issue. If they are not sensitive enough to the level of social justice acceptable to the community, they should keep in mind that they will not only create a crisis for businesses, but also bring damage to the market economy itself. As our business history is relatively short and we had to achieve rapid growth in a short time, however, our businesses did not have enough time to prepare for business succession.
The government should keep in mind that if it pursues fairness too hurriedly, it could kill the goose that lays the golden eggs.
* The writer is the chief editor of the editorial page of the JoongAng Ilbo.
by Moon Chang-keuk