Economic democratization over market principles?

A revision bill to the Credit Finance Business Act, which enables the government to directly intervene in “price-setting,” a market economy fundamental, passed the National Assembly on Monday. The bill was meant to protect small merchants, but the Financial Service Commission’s fixing of commission rates that vendors pay to credit card companies likely constitutes violation of a business` freedom to conduct economic activities as guaranteed by the Constitution. Credit card companies immediately started steps to make constitutional appeal, while the government announced its intent to revise the act again in April. The distribution industry also submitted an appeal to the Constitutional Court Feb. 17 against the Distribution Industry Promotion Act, which restricts late-night operating hours of super supermarkets. The ruling Saenuri Party and the main opposition Democratic United Party are fiercely competing to pursue “economic democratization,” but the fundamental principles of market economy seem to have been discarded.

Ahead of the general and presidential elections this year, the two parties are stressing welfare, jobs and economic democratization as their values and policy directions. Critics warn of a change of “systems” in a way that puts Clause 2 of Article 119 in the Constitution, which reads “The state...can impose regulations and make adjustments on the economy to assure economic democratization,” over “market economy principles” in Clause 1 of the article. It is questionable whether they seek to change an open trade regime under free democracy and market economy principles into a social democracy, in which the government deeply intervenes. Discontent has increased over economic polarization and mounting demand for distribution around the world following the onset of the economic crisis. But even in advanced economies, governments have merely expanded its roles in the financial sector. Clause 2 on economic democratization under Article 119 of the Constitution also says, “State regulation and adjustments are meant to assure balanced growth and proper distribution.” So if stronger measures designed for wealth redistribution are taken on top of the enactment of the Credit Finance Business Act, entrepreneurship is feared to suffer a setback and the national economy might not achieve sustainable growth, as citizens feeling their property rights under threat.

Certain large corporations have frequently violated and circumvented laws, and this effectively necessitates the introduction of “regulations” in Clause 2 of Article 119. Companies, however, are “frontiers of economic security” that have created jobs and raked in 300 billion U.S. dollars in foreign currency earnings. If politicians oppress companies in the name of economic democratization, how can the Korean people make a living from next year after the elections this year are concluded?

Capitalist greed is under attack amid the theory of capitalism in crisis, but greed among politicians is a bigger problem. At this year’s Davos Forum in Switzerland, participants blasted crony capitalism, in which politicians who disregard national interests collude with finance and capital and thus seek to gain “rent” through regulations. For Korea to increase national wealth, ensure individual self-realization, and create happy workplaces, revisions and improvements must be made as required while the principles of market economy as stipulated in the Constitution must be followed. Korea cannot afford to enable politicians, who are neither more competent nor more ethical than the market but seeks to dictate their way to the people, to take economic leadership.