[Opinion] American Capitalism

Jean Calvin, a French reformer who led the Reformation with German-born Martin Luther in early 16th Century, taught his protestant doctrines mostly in Geneva, Switzerland, where early capitalism was in its burgeoning stage. He realized that the gap between the haves and the not-haves is growing in the course of accumulation of capital and began to stress the need for a form of social control over capital based on his theological belief. This is why Max Webber later days intensely discussed Calvinism in his book `Protestant Ethics and Capitalist Spirit.`

▷ Calvin was a man with practical sense. He believed that by using effectively profit taking and productivity, two main forces driving the growth of capitalism, people could improve quality of their life. Before him, Christian belief disapproved money-lending business that reaps profits from interest payments. But Calvin said that the business could be justified as long as there were ethical disciplines, an idea very unconventional at that time. He argued that as it was okay to lend raw materials for production of goods, lending money for raw materials should be approved in the same manner. This Calvinist theory advocating self-multiplication of capital, then, later gave a great influence on Christian teachings in Britain and the U.S.

▷ Puritans, however, took Calvin wrong. He emphasized the benign effects of capital accumulation on the society, but Puritans grew obsessed with amassing wealth for their own interests saying individual financial success is God’s blessing. According to a recent report, the U.S. is ranked the second following Russia in terms of the gap between the rich and the poor. A chief executive officer in a large business last year earned a 400 times higher salary than a laborer working in a factory in the country. Also, the top 1 percent accounted for 38 percent of the country’s wealth. And experts point out that one of the main reasons is the tax system losing its balance, as well as disappearance of quality jobs.

▷ At the first glance, the tax system in the U.S. appears very strict. Employees are not allowed to buy more than 2 glasses of martini when they treat a guest. There is also a limit in flight expenses for high-ranking managers. Yet, stock options offering to big wigs are subject to tax exemption, and the tax limit set for a high-income bracket group fell from 90% down to 30%. It increasingly becomes harder to find American dream in the country, which was known for opportunities for hard-working people. This so-called `American` capitalism is by far the No.1 export item in the U.S., which Korea has been eager to embrace as the Bible of reform since the financial crisis.

Lee Chan-guen, Guest Editorial Writer, Professor at Incheon University

ckl1022@incheon.ac.kr