On Jan. 27, the conservative Grand National Party, now the Saenuri Party, announced it would include “economic democratization” in its party platform. It pledged “to promote economic democratization in order to realize a fair-competition economy that protects the market, small and mid-sized businesses and consumers from mammoth economic forces.”

The right-wing party’s epochal change of stance against conglomerates was in line with the party’s effort to revitalize its image and regain public support ahead of the April 11 general elections.

The party’s new bearing advanced upon public frustration over bipolarization and a “corporate-friendly” administration, resulting in a blueprint for greater regulation of conglomerates and enhanced welfare provision.

But the Saenuri Party’s initiative ― which later helped the party win 152 parliamentary seats ― overlapped with that of the main opposition Democratic United Party in the eyes of voters, despite experts’ insistence of starkly different approaches and details.

Now, as the political parties ready to face off in the December presidential election, they are determined to continue highlighting economic democratization, each claiming their version to be truer and more effective than the other’s.

Numerous political forums to discuss the concept have been set up by lawmakers since the start of the 19th National Assembly, such as “Economic Democratization Forum,” “Democratization of Economy” and “Gathering to Practice Economic Democratization.” The number is expected to reach over 10 this year.

Every presidential hopeful, including Saenuri frontrunner Park Geun-hye, has expressed determination to realize economic democratization, with their respective think tanks busily drawing up plans.

But the parties’ rivalry over economic democratization ― further complicated by opposition from business circles and conflicting views in academia ― have left voters shrugging their shoulders and asking: Just what is economic democratization?

Meaning of economic democratization

There is no dictionary definition of economic democratization. The legal basis for the concept was stipulated in the Constitution upon its revision in 1987.

“The state must regulate and coordinate economic affairs in order to maintain the balanced growth and stability of the national economy, to ensure proper distribution of income, to prevent the domination of the market and the abuse of economic power and to democratize the economy through harmony among the economic agents,” reads item 2 of Article 119 of the Constitution.

Opinions vary on what it exactly means, or whether it precedes or supplements the preceding item on a free economy. Item 1 says: “The economic order of the Republic of Korea shall be based on a respect for the freedom and creative initiative of enterprises and individuals in economic affairs.”

“The scope of economic democratization should be deemed to be extensive. It is to figure out what level of systematic democracy achievable in our society should go hand in hand with appropriate remedies of market economy,” said economist and former lawmaker Kim Song-sik.

According to Kwak No-hyun, superintendent of the Seoul Metropolitan Office of Education and a constitutional scholar, quoted in news reports, it is to “substantiate democratic participation and control over economic plans and regulation processes, while substantiating employees’ participation and control over corporate management and profit, and to realize social security and social welfare.”

Simply put, it is figuring out “how to make everyone live a good life together,” according to Dr. Shin Seuk-hun of Korea Economic Research Institute.

By using the word “democratization,” which carries much political meaning in a country that achieved democracy only in the 1980s, the phrase itself could entail dangerous misunderstandings that could lead to misuse, observers said.

“Despite the fact that democracy and democratization have become a political slogan for specific forces to achieve various forms of benefits, the word democratization still is sacred language in this society. The reason why most people give a positive evaluation to economic democracy derives from this historical situation,” said ethics education professor Shin Joong-sop of Kangwon National University.

“It derives from a mistaken conception to compare ‘economic freedom’ with ‘economic democratization.’ Because the antonym of ‘democracy’ is ‘authoritarianism’ or ‘autocracy,’ it is an erroneous use of language to call reduction of economic freedom ‘economic democratization,’ or call increased economic freedom ‘anti-democratization of the economy,” he argued.

Shin Seuk-hun said it should be noted that the goal of what people describe as “economic democracy” is to achieve a fair society.

“Economic democracy is an ambiguous and contradictory use of the phrase. Because democracy is based on the notion that every person is equal with the one man, one vote principle, it contradicts the principle of market economy where strong companies soar and weak companies decline,” he said.

Kim Song-sik said economic democratization must therefore be used and pursued with the utmost care.

“Economic democratization is not something with a straightforward definition, but to fix what needs to be fixed. It is a process that tries different levels and methods of (change) to add on when needed and to fix when it backfires.”

He underscored the importance of identifying the history and characteristics of South Korea’s economy to understand the purpose of economic democratization.

“In the previous developmental dictatorship (under former President Park Chung-hee in the 1960s and 1970s), the abuse of economic power by the conglomerates was politically and legally controlled by the dictatorial government, which continued until the 1980s,” Kim explained.

This means that with the end of the dictatorship, the country was left with no ample regulation system, and the succeeding governments failed to create an alternative tool that could harmonize democracy and the economy and curb imbalances created by the abuse of economic power.

“While other countries created various types of regulations and rules after World War II and the Great Depression, Korea remained void of such system,” Kim said, contending that this is what political circles must discuss.

He added it is therefore wrong to simplify the notion and call, for instance, opposition to a ceiling on the total amount of equity investment against economic democratization.

Kim more easily described South Korea’s economic democratization by comparing it with similar concepts pursued by other countries at different times.

“(Other countries) have used much broader concepts, such as ‘harmony between democracy and market economy,’ ‘state intervention upon market failure,’ or “social integration through active democracy,” he said.

Advocators of economic democratization

Economist-turned-politician Kim Chong-in is the standout advocate of economic democratization, who inserted the phrase into the Constitution in 1987 as the head of the committee for constitutional revision of economic clauses. He is also currently at the center of debate after openly criticizing Saenuri floor leader Lee Hahn-koo as ill-informed about what economic democratization means. He is tapped to co-head Saenuri presidential frontrunner Park Geun-hye’s presidential campaign committee.

While Lee had retorted that “nobody seems to know what Kim means by his economic democratization,” Kim’s past writings and interviews suggest that, in his view, the core of economic democratization is to respect the market economy but for the state to control avarice.

“If efficiency of the market economy is emphasized, it inevitably accompanies concentration of wealth and monopoly. Humans have instincts of greed and survival,” Kim said last month during the Saenuri Party’s economic forum.

Professor Yoo Jong-il of the Korea Development Institute’s School of Public Policy and Management believes wealth redistribution is key to economic democratization, highlighting the welfare state.

“The development of democracy results in a welfare state that seeks redistribution of profit and expansion of welfare in order to alleviate the inequality of capitalist market economy,” Yoo says in his book “Progressive Economics.” Yoo recently received three months suspension from the KDI for running for the DUP’s candidacy ahead of the April general elections and making unauthorized public appearances where he supported economic democratization.

There is also former Seoul National University president and ex-prime minister Chung Un-chan.

“Economic democracy is a long-cherished wish of a majority of the people and something that has been constantly raised since the beginning of growth,” Chung had said in the autumn edition of quarterly publication “Sasang” in 1990.

“Although the ultimate purpose of economic growth is to improve the quality life of the majority of the people and develop culture, many of those who have been isolated in the dismantlement process of errors of compressed growth are living in relative poverty and their complaints are augmenting every day,” he wrote.

“Therefore, there is a need for a groundbreaking effort to resolve this and it is certain that that is what economic democratization is.”

Debate persists

As the definition and direction of economic democratization remain obscure and changeable, the political, academic and economic debate over the appropriateness and efficacy of the concept persists.

The Federation of Korean Industries and other economic organizations express concern over the escalating emphasis in the political arena on economic democratization, worried that it could easily lead to anti-corporate moves and populism.

Center for Free Enterprise, for instance, plans to increase research into the superiority of market economics and promote it.

“The first meaning of democratization means ‘liberalization.’ As the item 2 of Article 119 of the Constitution refers to how the state can regulate and fine-tune in order to prevent the spreading of inequality caused by market ‘freedom,’ the word economic ‘democratization’ is either an example of the misuse of words, or is derived from the German-style social democratic viewpoint, which interprets democratization as equalization,” said Jun Wont-chack, president of CFE on Wangle, a social networking service.

The Korea Economic Research Institute last month hosted a forum to discuss economic democratization policies, and plans to hold another one next week to confront the perceived errors in the concept item-by-item.

In the academic world, the debate is broader and deeper, with such world-renowned economists as Chang Ha-joon, along with Welfare State Society member Jeong Seung-il, arguing that the discussion on “economic democratization” must go beyond chaebol reform, or even liberalism.

“As reform of chaebol cannot be a goal in itself, all reform must clearly state what the ultimate purpose is,” Jeong said during a WSS forum last month.

In other words, economic democratization will become clearer only what it is clarified whether the ultimate purpose of reform is to create stakeholder capitalism like that of Wall Street, or to create a welfare state like Sweden.

“Historically, every (‘ism’) such as liberalism, social democracy, communism, anarchism and syndicalism had their own version of economic democratization. But the economic democratization being discussed in Korea is only that based on liberalism,” Jeong said.

Regardless, lawmakers of the Saenuri and the DUP are releasing numerous of bills aimed at achieving economic democratization in the run up to the Dec. 19 presidential election.

The Saenuri Party is relatively more focused on introducing gradual measures such as by obligating the exercise of stockholders’ right of the national pension, restrictions on large and mid-sized marts from advancing into traditional markets, banning discrimination in the work environment and welfare benefits for irregular workers, or abolishing the exclusive right held by the Fair Trade Commission to act against fair trade act violations.

The vision set out by former chairwoman Park Geun-hye is also shaping up and a series of relevant bills planned to be submitted by the Saenuri lawmakers in the coming weeks.

Rep. Rhee Chong-hoon is reportedly preparing a revision to the Fair Trade Act, while Rep. Min Hyun-joo is working on revising the act on the Aggravated Punishment, etc. of Specific Economic Crimes, aimed at regulating chaebol’s irregularities. The party is also reportedly preparing a bill to regulate new circular equity investment.

The DUP is pushing for more drastic measures, such as the introduction of a ceiling on total amount of equity investment, division of financial and industrial capital and reforming chaebol and large conglomerates.

Both, however, see eye-to-eye on curbing unfair acts such as favored business contracts among families of chaebols and violating the business criteria of small and mid-sized businesses.

Observers pointed out that the rise of economic democratization should be interpreted with care so as not to restrict the boundary of “democratization” to models of other countries that have different political, social and economic backgrounds.

“(Chaebol) do not change through regulations, and that is why it is important to set the constitutionalism straight first,” Kim Song-sik said.

“As for the chaebols and conservatives’ point of view, they should regard this as whether the current condition of the market economy can draw out social integration and maintain sustainability. Unless the market economy is adjusted through democracy, anti-market forces will consistently come out,” Kim added.

Shin Seuk-hun agreed with the importance of the principles of the Rechtsstaat, or the constitutional state, in which the exercise of governmental power is constrained by the law.

“While ‘economic democratization’ exists because the market is imperfect, we must not overlook the fact that the state that interferes in the market based on economic democratization is also imperfect.”

By Lee Joo-hee (jhl@heraldcorp.com)