An Era That Needs Education on the Market Economy

We live in an age of highly advanced finance in the global economy. Accordingly, everyone needs an understanding of the market economy. To make that possible, we need an education system that teaches economics and helps people understand its principles. Schools also need to provide programs that teach and train students in economics, the foundation of life, through real-world examples.

Advanced nations are capitalist countries with well-developed liberal democratic market economy systems. At the heart of such advanced economies lies vibrant business activity. The United States, the world’s largest economy, is the country where the market economy system is most highly developed. People there understand well the benefits of the market, and laws are designed to increase the efficiency of the economic system. Based on such laws and government services, the competitive structure of businesses is made more sophisticated. The reason the world’s leading venture companies emerge in the United States and entrepreneurship flourishes there is that it has an institutional foundation in which market principles function effectively.

In countries where market functions work properly, free market competition is active rather than government interference or protection. Government intervention inevitably undermines market functions and suppresses economic vitality. By contrast, in socialist countries, institutions have been designed so that economic activity operates under government direction and control rather than through market functions, and as a result economic development does not occur. Countries such as Cuba, Venezuela, and North Korea are among the most serious examples of this harm.

Of course, European countries that had chosen the market economy and developed into highly industrialized nations also pursued socialism at times and sought big government under the banner of building welfare states. During those periods, these Western countries also experienced the side effect of economic decline. They regained vitality thanks to small government and privatization policies. The United States and the United Kingdom likewise restored economic vitality when their political leadership acted to revive the market economy.

Whether a country’s economy prospers or declines ultimately depends on whether it can build a system faithful to the principles of the market economy. Countries that understand the market economy and business well and adopt institutions and policies that support them prosper, whereas countries that, out of distrust of the market economy and business, shrink market functions and expand government functions inevitably fall into decline.

Korea achieved today’s prosperity by joining the capitalist camp that supports free trade, together with the United States. Its rapid growth has been almost without precedent in the world. However, distrust of the market economy is now widespread, and as government intervention expands, the country is falling into the trap of big government. As a result, the economy is stagnating over the long term and its growth potential is also declining. To return to the path of economic growth, institutions and policies must be improved in a way that remains faithful to the principles of the market economy.

For a country to adopt pro-market policies, public sentiment must be favorable toward the market economy, and to achieve that, the public must be properly informed about market economy principles and young people must be taught them correctly. A proper understanding of the market economy and business is an essential factor in economic development.

In that sense, the content of economics textbooks for adolescents is highly important. They should instill a sense of pride based on an understanding of the market economy in which we live. Economic education should remain faithful to trust in the market and a positive view of business competition. It would be problematic if the focus were placed on government intervention rather than market competition, or on content that increases distrust of firms and entrepreneurs.

If economic education for young people, who will become the economic actors of the future, is conducted from a positive perspective on the market economy, the future of our economy will be that much brighter. Helping young people understand the value of entrepreneurship, develop a proper view of business, and engage in rational economic activity is a way of brightening the future of our society.

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

---

Original title: 시장경제에 대한 교육이 필요한 시대

Author: Sung-no Choi

Date: 2019-08-14

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=24&idx=20432