Managed Capitalism Emerging
By Kim Tae-gyu
Staff Reporter
Prof. Lee Joon-koo of Seoul National University, arguably the most famous micro economist here, contends the world should move to ``managed capitalism'' from ``unbridled capitalism.''
In a recent telephone interview with The Korea Times, Lee made the point that unbridled capitalism caused the current credit crunch and subsequent financial turmoil.
``The unrestrained management of capital based on high leverage resulted in global financial distress. Such unbridled capitalism is on the decline and the blind belief in market self-regulation must be discarded,'' Lee said.
``There is nothing sacred about the almighty market, which has drawbacks and advantages. Hence, we have to bring checks and balances in the form of managed capitalism to control the drawbacks,'' the 58 year-old said.
Lee pointed out that countries including the United States are learning the downsides of uncontrolled capitalism. But he said things are different in Korea.
``Based on overemphasis on a free market, conservative economists here are still attempting to attribute the ongoing financial funk to the government,'' Lee said.
``There is some truth in their remarks. But basically, they turn a blind eye to the fact that this crisis took place since the government did not sufficiently fulfill its obligation to rein in capitalism,'' he said.
Lee likened the local conservatives who still resort to unbridled capitalism to socialists in the early 1990s, when Communist systems collapsed in Eastern Europe.
``Back then, a lot of socialists claimed that the political systems of Eastern Europe folded since they were not genuine socialism. But history shows it marked a death sentence to the ideology,'' Lee said.
``Things are similar for unbridled capitalism. Some conservatives in Korea are saying unbridled capitalism is the answer. But they should realize that it has already collapsed,'' he said.
Yoo Jang-hee, professor emeritus at Ewha Woman's University, concurs, but only partially.
``We need a mechanism that indeed enables the government to slam the brakes on when financial bubbles are hyperinflated. It is a lesson that should be learned in the aftermath of the financial tsunami,'' Yoo said.
``However, I think it is an evolution of capitalism, particularly in the financial field, rather than the demise of unbridled capitalism. I don't think in such terms,'' he said.
As one of the country's most authoritative micro economists, Lee has gained prominence by offering overt opposition against many government policies that he thought violated economic principles.
For example, the outspoken economist came into the spotlight early last year by lashing out at the ``Grand Canal Project'' of the Lee Myung-bak administration.
Prof. Lee fired a salvo at the construction plan of digging a canal across the country while claiming that spending taxpayers' money on the project would be contrary to the nation's development path to becoming a high-tech society.