Creativity and capitalism

I write this column from London, where a tiny studio of around seven pyong (250 square feet) in an unpleasant area of town costs the equivalent of 1.5 million won ($1,345) per month. Every time I swipe my Oyster Card - something like Korea’s T-money - to go on the Tube, it’s 3,000 won. A plate of utterly average spaghetti costs 35,000 won - tax and tip included - when Jamie Oliver’s name is above the door. And even when it isn’t, it costs 30,000 won.

Recently, my mother’s friend’s son quit London and came back up north. He is a teacher, and he simply can’t have anything remotely approaching a decent life in the capital. It’s the same for nurses, police and anyone with an ordinary job. Up near Manchester, my parents have a nice detached house with a garden, but if you were to sell it and move to London, the proceeds would get you a seven-pyong studio in an unpleasant area of town.

For the struggling creative types that have always made London special - the artists, designers, writers and musicians - the struggle now looks over. And the result is that London seems to have no edge any more. Even columnists in The Telegraph, the most reliably “establishment” newspaper, have been lamenting the “corporatization” of formerly seedy, bohemian places like Soho. Everywhere is kind of the same - there’ll be a chain supermarket, chain coffee shops, some expensive restaurants, and former council flats that are now “apartments within an exclusive community.” And the people who live in those apartments are kind of the same, too: bankers, or at the very least, accountants.

You may be reading this thinking “the writer is a commie.” But proper (i.e. non-crony) capitalism needs imagination, so we can create value and do more with existing resources. That is what is missing now. The cost of taking a chance is too high, for the entrepreneur as well as for the would-be actor or rock star. Opening a bar or shop in Soho is so obscenely expensive that there is no room for error; so, those who do open variations on tried-and-tested themes.

I can’t help but draw a parallel with Korea. The cost of taking a chance is too high in Korea as well. Unless you are well connected or are blessed with some special talent, the least foolish option for starting a business would probably be to become some sort of franchisee (preferably with one of the less predatory franchises), and earn what basically amounts to a market rate of return. I met very, very few truly self-made people in Korea.

I haven’t taken my own advice. In my case, I’m one of the founders of an independent craft beer business. We started with one shop and now have eight. Obviously we didn’t invent craft beer, and we weren’t the absolute pioneer in Korea. But we were among the first movers, and expanded due to a combination of factors like: good product at a good price; unique design and layout; and quite a lot of luck with publicity. We’ve also recently started importing from a range of esoteric but brilliant brewers from around the world; one Danish brewer has been our particular focus up to now. So far so good.

The other day, I switched on my computer and saw all over social media that we had a new competitor. Now, there’s nothing wrong with a little competition, of course. Until now, every time I saw a new pub with its own recipes, I felt a sense of community, and even happiness about being part of what seems like a movement. But this new bar is ginormous - at 400 pyong, it is about 20 times bigger than our first bar. Not bad for their first outlet - but then, the owner is one of the big consumer-focused conglomerates.

For many years, conglomerates ignored beer. Upon reading about the new bar, I wondered: why didn’t you guys do this five or 10 years ago? And why are you so interested in the very same Danish brewer that we are? Of course, it is because someone with much less capital has taken a chance, and started doing well. In such circumstances, the risk-reward ratio is very favorable for large companies. Throw a small fraction of your money on the table, and instantly grab a big share of an exciting growth market. That’s better than trying to come up with something new.

But where’s the creativity? In Korea’s market environment, conglomerates have little incentive to be creative, and because of the risk of conglomerates swooping down, small businesspeople have their incentives reduced as well. So in Seoul, as in London, where is “new” going to come from?

*The author is the former Seoul correspondent for The Economist.

by Daniel Tudor