Preface to the Second Edition:

The South Korean director Bong Joon-ho won the most prestigious prize at the 2019 Cannes film festival. The Palme d’Or was awarded for his dark social satire, Parasite, which is as a direct attack on capitalism. In Parasite, a poor family insinuate themselves into the lives and home of a much richer one. But the intruders bear the unmistakable scent of people from a lower social strata. One of the film’s key messages is that it is almost impossible to bridge the gap between rich and poor. Anti-capitalism has clearly made inroads into capitalist South Korea, where the French anti-capitalist critic Thomas Piketty is almost as well known as he is in the West.

In Germany and South Korea, we have seen and can still see very clearly which economic system is superior: socialism or capitalism; planned economy or free market economy. Given the fact that our two countries were or are divided, we have been able to observe historical experiments with very clear outcomes. East Germans escaped the socialist GDR to build new and better lives in capitalist West Germany. Hundreds were shot when they tryd to flee. Today people are fleeing from North to South Korea. Interestingly, no South Koreans seek refuge in North Korea, and nobody fled from the Federal Republic of Germany to the GDR.

Again and again, media reports highlight the food crisis and famines in North Korea. And South Korea? I have lots of high-quality products from South Korea in my home, including my television. I admire what the people in your country have achieved over the last few decades. Nevertheless, despite the clear superiority of capitalism, socialist thinking is currently experiencing a worldwide renaissance, including in South Korea.

In contrast to Europe, South Korea is also home to a strong, pro-capitalist counter-movement. I have been delighted by the extent to which South Koreans have embraced the book you are about to read. It’s incredible to see the publication of the second edition so soon after the first was released. In May 2019, I visited Seoul and had a number of very interesting conversations with leading pro-capitalist figures. I was hugely impressed by the work of institutions such as the Center for Free Enterprise and The Korea Hayek Society, which are successfully educating people about the benefits of capitalism. I was also excited to see the many YouTubers in Seoul who are committed to capitalism and whose videos reach millions of people across the whole of South Korea.

In so many of my conversations, I was struck by the fact that South Koreans are in danger of forgetting the policies that fueled their country’s amazing economic success. As recently as the 1960s, South Korea was one of the poorest countries in the world, comparable to the poorest African countries today. The success of South Korea – today the sixth strongest export nation in the world – is evidence of the success of capitalism, as I demonstrate in Chapter 4 of this book. 

Despite all this, the current left-wing government of Moon Jae-in apparently wants to reshape South Korea as a European-style welfare state. Just consider the country’s minimum wage legislation: the minimum wage was introduced in South Korea back in 1988, but has always remained very low. In recent years, however, it has risen dramatically. Smaller companies in particular can no longer afford to pay the minimum wage. According to calculations from the Center for Free Enterprise, a ten-percent increase in the minimum wage would push unemployment up by between 0.7 and 0.8 percentage points. Other areas of the labor market are also increasingly subject to restrictive government regulations, such as the limit on weekly working hours. Entrepreneurs face prison sentences of up to two years if their employees work longer than the permitted maximum, which is often unavoidable, especially in smaller companies. And spending on the welfare state in South Korea has risen by over 30 percent in recent years. Just like in Europe, South Korea’s politicians hope to buy votes by increasing the money they allocate to social benefits.

I think there is a real risk that South Korea could turn its back on the policies that have kept it on the road to success since the 1960s. The aim of this book is to show readers in South Korea that, in all its forms and all around the world, socialism has failed time and time again. Nowadays, socialists do not even attempt to compare real-world capitalism with historical examples of real-world socialism. Instead, they measure capitalism against a vague utopian concept of a “just” society. In some cases, they cite “Nordic socialism,” the variant of socialism that emerged in countries such as Sweden, as an example, although they completely forget that the Nordic countries, having learned from their failed socialist experiments of the 1970s, have long since abandoned the socialist path and today, despite having higher taxes, are no less capitalist than, for example, the United States, as I reveal in Chapter 7 of this book. 

I am a huge admirer of South Korea and its people. I look forward to future invitations to speak in South Korea, especially as they give me the opportunity to learn from the people of South Korea and to share my experiences of socialist experiments in Europe. Please help to spread the word about this book and to make sure people understand that capitalism is not the problem, it is the solution!

Dr. Rainer Zitelmann, June 2019