Make Up Your Mind to Get Comfortable with Capital

There is a saying: “When an old person dies, a library disappears.” It means that in primitive societies, the experience of the elderly played a very important role. The character “老” in the word for elderly person carries the meanings “to grow old” and “to be familiar with.” In an era that valued empirical facts, the elderly were objects of respect and learning.

As times changed, society also came to value young intellectuals who make good use of technology and knowledge and are sensitive to change. Capital is transmitted through knowledge or used to create new value, and this is because it is not learned only through past experience but also conveyed through knowledge.

We must make capital our ally and our friend. There are many kinds of capital. Human capital, experiential capital, social capital, moral capital, and laws and institutions are all forms of capital that our society has accumulated over a long period. Capital goods such as machinery, and social overhead capital such as roads and logistics networks, are also important forms of physical capital, and so are firms equipped with technology and organization.

To make capital our friend, we must understand how it helps us. We must strive to build capital within ourselves and create an environment around us that enables capital to be accumulated well.

Value creation means “leaving a profit.” It means making it possible for those who consume a product to be better off because of my activity. It means helping reduce costs and increase benefits. Value creation also means “helping.” It means enabling something that used to cost 100 won to be solved for 50 won. The basic spirit of value creation is to find ways to save even a little more cost and achieve a state of greater satisfaction.

The reason mobile phones became a universal device used by people all over the world in such a short time is that they saved enormous amounts of time. If mobile phones had been merely game devices, such massive consumption would not have occurred.

There are cars that are more convenient and higher-performing than before, yet cost the same as they used to. Much faster laptops with more features are sometimes launched at affordable prices. Technological innovation, productivity, and business have brought about value creation. Helping people work smoothly is precisely the effectiveness of value creation. Saving time and money is its fundamental measure.

Countries where capitalism is more developed have higher productivity than those where it is not. This is possible because of capital. It is common for firms to use the power of capital to discover new ways of doing things.

A country can grow simply by following what advanced countries have already put into practice. But developing countries are in a situation where even that is difficult to carry out. Developing countries can never acquire the ability to change the paradigm, because that ability, too, comes from capital.

The Republic of Korea, which was one of the poorest countries in the world right after the Korean War, developed dramatically. Many people speak vaguely of “the excellence of the Korean people” as the secret, but a country’s development has nothing to do with being smart. The Republic of Korea achieved dazzling growth because it engaged in “capital-friendly activities.”

This was thanks to President Syngman Rhee’s U.S.-ROK alliance being maintained, and to President Park Chung-hee’s choice to be pro-capital and pursue pro-market and pro-trade policies. Not only businesses but individuals as well understood and accepted that capitalist society is a highly developed civilization.

Adopting the most effective way is the path to success. We must move in the direction of further advancing and civilizing the capitalist way of life that has worked well so far and will continue to make our lives more valuable.

The voices that once cried out for fairness have turned into a desire for economic freedom. To gain economic freedom, we must become close to capital. Make up your mind to “become familiar with capital.”

The way to become close to capital is to grow familiar with it, learn how to use it well, and strive to enable its accumulation. The more people there are who understand capital accurately and use and accumulate it effectively, the more prosperous the country will become and the richer individual lives will be.

Sung-no Choi, President, Center for Free Enterprise (CFE)

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Original title: 자본과 '친숙해질 결심’을 하라

Author: Sung-no Choi

Date: 2023-11-14

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=3&idx=26269