The Concentration of Economic Power in Korea

경제력집중(經濟力集中) : 기본시각(基本視角)과 정책방향(政策方向)

The concentration of economic power takes the form of one or a few firms controlling a substantial portion of the economic resources and means in a certain economic area. At the same time, to the extent that these firms are owned by a few individuals, resource allocation can be manipulated by them rather than by the impersonal market mechanism. This will impair allocative efficiency, run counter to a decentralized market system and hamper the equitable distribution of wealth. Viewed from the historical evolution of Western capitalism in general, the concentration of economic power is a paradox in that it is a product of the free market system itself. The economic principle of natural discrimination works so that a few big firms preempt scarce resources and market opportunities. Prominent historical examples include trusts in America, Konzern in Germany and Zaibatsu in Japan in the early twentieth century. In other words, the concentration of economic power is the outcome as well as the antithesis of free competition. As long as judgment of the economic system at large depends upon the value systems of individuals, therefore, the issue of how to evaluate the concentration of economic power will inevitably be tinged with ideology. We have witnessed several different approaches to this problem such as communism, fascism and revised capitalism, and the last one seems to be the only surviving alternative. The concentration of economic power in Korea can be summarily represented by the "jaebol," namely, the conglomerate business group, the majority of whose member firms are monopolistic or oligopolistic in their respective markets and are owned by particular individuals. The jaebol has many dimensions in its size, but to sketch its magnitude, the share of the jaebol in the manufacturing sector reached 37.3% in shipment and 17.6% in employment as of 1989. The concentration of economic power can be ascribed to a number of causes. In the early stages of economic development, when the market system is immature, entrepreneurship must fill the gap inherent in the market in addition to performing its customary managerial function. Entrepreneurship of this sort is a scarce resource and becomes even more valuable as the target rate of economic growth gets higher. Entrepreneurship can neither be readily obtained in the market nor exhausted despite repeated use. Because of these peculiarities, economic power is bound to be concentrated in the hands of a few entrepreneurs and their business groups. It goes without saying, however, that the issue of whether the full exercise of money-making entrepreneurship is compatible with social mores is a different matter entirely. The rapidity of the concentration of economic power can also be traced to the diversification of business groups. The transplantation of advanced technology oriented toward mass production tends to saturate the small domestic market quite early and allows a firm to expand into new markets by making use of excess capacity and of monopoly profits. One of the reasons why the jaebol issue has become so acute in Korea lies in the nature of the government-business relationship. The Korean government has set economic development as its foremost national goal and, since then, has intervened profoundly in the private sector. Since most strategic industries promoted by the government required a huge capacity in technology, capital and manpower, big firms were favored over smaller firms, and the benefits of industrial policy naturally accrued to large business groups. The concentration of economic power which occured along the way was, therefore, not necessarily a product of the market system. At the same time, the concentration of ownership in business groups has been left largely intact as they have customarily met capital requirements by means of debt. The real advantage enjoyed by large business groups lies in synergy due to multiplant and multiproduct production. Even these effects, however, cannot always be considered socially optimal, as they offer disadvantages to other independent firms-for example, by foreclosing their markets. Moreover their fictitious or artificial advantages only aggravate the popular perception that most business groups have accumulated their wealth at the expense of the general public and under the behest of the government. Since Korea stands now at the threshold of establishing a full-fledged market economy along with political democracy, the phenomenon called the concentration of economic power must be correctly understood and the roles of business groups must be accordingly redefined. In doing so, we would do better to take a closer look at Japan which has experienced a demise of family-controlled Zaibatsu and a success with business groups(Kigyoshudan) whose ownership is dispersed among many firms and ultimately among the general public. The Japanese case cannot be an ideal model, but at least it gives us a good point of departure in that the issue of ownership is at the heart of the matter. In setting the basic direction of public policy aimed at controlling the concentration of economic power, one must harmonize efficiency and equity. Firm size in itself is not a problem, if it is dictated by efficiency considerations and if the firm behaves competitively in the market. As long as entrepreneurship is required for continuous economic growth and there is a discrepancy in entrepreneurial capacity among individuals, a concentration of economic power is bound to take place to some degree. Hence, the most effective way of reducing the inefficiency of business groups may be to impose competitive pressure on their activities. Concurrently, unless the concentration of ownership in business groups is scaled down, the seed of social discontent will still remain. Nevertheless, the dispersion of ownership requires a number of preconditions and, consequently, we must make consistent, long-term efforts on many fronts. We can suggest a long list of policy measures specifically designed to control the concentration of economic power. Whatever the policy may be, however, its intended effects will not be fully realized unless business groups abide by the moral code expected of socially responsible entrepreneurs. This is especially true, since the root of the problem of the excessive concentration of economic power lies outside the issue of efficiency, in problems concerning distribution, equity, and social justice.

경제력집중(經濟力集中)은 경제적(經濟的) 자원(資源)과 수단(手段)의 상당부분이 소수의 경독주체(經瀆主體)에 집중되어 이들이 자원배분(資源配分)의 흐름에 큰 영향을 미칠 수 있는 상태를 말한다. 그러므로 경제력집중(經濟力集中)은 본질상 자유시장기구(自由市場機構)의 생리와는 부합하지 않지만 자본주의(資本主義)의 역사로 볼 때 그것이 바로 자유경쟁(自由競爭)의 소산이라는 측면도 있다는 점이 문제가 된다. 구미(歐美)와 일본(日本) 등에 있어서 자본주의체제(資本主義體制)의 진화궤적(進化軌跡)은 이 문제가 어떻게 전개되는가에 따라 결정되어 왔다. 우리나라에서의 경제역집중(經濟力集中)은 다수의 독(獨) 과점적(寡占的) 대기업(大企業)들이 소유관계(所有關係)로 결합되어 있는 기업집단(企業集團) 즉 소위 재벌(財閥)의 문제로 집약될 수 있다. 우리나라의 기업집단(企業集團)의 성장은 시장기구(市場機構)의 작동결과에 기인한 면도 있지만 고도경제성장기(高度經濟成長期)의 정부정책(政府政策)에 의하여 촉진된 것도 부인할 수 없다. 기업집단(企業集團)에 의한 경제력집중(經濟力集中)은 과거 우리나라의 정치(政治) 경제(經濟) 사회(社會)가 거쳐온 진화과정(進化過程)을 집약적으로 나타내는 것 이다. 그러므로 우리나라에서 민주주의(民主主義)와 자본주의(資本主義)의 이념(理念)과 질서(秩序)에 대한 국민적(國民的) 합의(合意)를 모색하려는 현시점에서 경제력집중(經濟力集中)을 객관적으로 인식하여 효율(效率)과 형평(衡平)을 조화하는 적절한 대응방향을 모색 하는 것은 매우 긴요한 과제이다.