Don’t Treat Capital as an Enemy

Capital is built on the accumulation of good outcomes, and that capital fundamentally benefits life. Yet there are people who are hostile to capital. Accumulated capital should be used for many beneficial activities, but if it is treated with hostility, it cannot function properly. If a situation arises in which capital is suppressed, damage occurs both individually and socially.

Even advanced countries do not have completely capital-friendly institutions. In the 1930s, when socialist states were exerting influence, many European countries, and even the United States, were swept up in socialist currents and adopted many socialist and anti-capitalist institutions and regulations.

Even in capitalist societies, countries that moderately embraced socialism’s anti-capitalist institutions developed more slowly, and naturally accumulated less capital. This was because they adopted economic policies that regulated businesses, hindered capital accumulation, or obstructed the investment activities of capitalists. As a result, their economies became less dynamic and more rigid. Naturally, people’s lives moved further away from prosperity.

Under such influences, the Great Depression struck the United States, plunging it into a prolonged slump. Its effects continued into the 1970s, resulting in severe inflation.

From the 1980s onward, economic policy shifted back to classical liberalism. This was because socialist countries were steadily declining, leading to a recognition that their approach had been mistaken. As countries became more capital-friendly, the global economy returned to a path of rapid growth.

Since the 1990s, a global economy has taken shape under free trade, the world has grown rapidly, and liberalism has become the standard.

Nevertheless, anti-capitalist and socialist policies still remain in many advanced countries, including Korea and Japan. Socialism cannot disappear completely, because it draws strength from the primitive instincts of “envy and egalitarian consciousness.” As long as humanity endures, capitalism will remain a subject of constant debate. This is because socialism, which aims for an equal society, appears attractive to people. Equality can also serve as a plausible political justification. But when equality is put first, the vitality of capital declines, and society’s dynamism is undermined as well.

The guarantee of free capital activity must be institutionalized. If stable conditions are not established, capital will move to other countries, go into hiding, or disappear. A capital-friendly environment must be created with great precision and strength, and sustained over the long term. If unstable conditions continue to recur, swinging back and forth between pro-capital and anti-capital policies, capital will eventually escape.

Although our country is a capitalist society, anti-capitalism sometimes intensifies depending on the administration in power. When anti-capitalist policies deepen, more people emigrate abroad, and businesses move their funds overseas. Anti-capitalist policies can also lead to intensified tax investigations of businesses. When tax investigations make it difficult to operate, capital has no choice but to flow overseas. If holding capital means it will be taken away, who would choose to keep capital at home?

A society that is hostile to capital is bound to fail. Most countries that professed socialism or adopted socialist policies declined. When capital leaves, society inevitably becomes desolate and sinks. A civilized order makes our lives comfortable and prosperous, and gives us convenience along with stability.

Capital is essentially a good thing. It is good for me, but it can also be used for others. Enabling others to use it is the most rational, realistic, and ideal approach. Capital-friendly institutions must take root so that good things can be used for others. At the same time, socialist and anti-capitalist regulations and policies must be abolished.

People create capital and accumulate it as they strive for a better life. The future will develop in better ways through capital. Capital will surely be used as a resource to build a prosperous future. Capital investment is the driving force that will create a vigorous future.

Sung-no Choi

Ph.D. in Economics, Korea University Graduate School; President of the Center for Free Enterprise (CFE); President of the Korea Christian Economic Association. Grand Prize in the Publishing Category at the 25th Market Economy Awards. Author of Reborn as an Entrepreneur, Become Wealthy Through Financial Knowledge, What Is the Market Economy?, among many others.

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Original title: 자본을 적대시하지 말라

Author: Sung-no Choi

Date: 2023-12-12

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=3&idx=26289