Companies Should Take the Lead in Easing Anti-Business Sentiment

When I ask during lectures, “Which improves people’s lives more—resources, science and technology, or businesses and entrepreneurs?” most people answer science and technology. Of course, science and technology are important in improving our lives. But science and technology alone are not enough. They truly come into their own only when businesses and entrepreneurs turn them into goods that can improve people’s lives.

As is well known, steam technology made the Industrial Revolution possible. In fact, steam technology already existed in ancient Rome. At the time, however, it was used not to raise productivity and improve people’s lives, but only to make toys or devices for aristocrats. It was only in the late 18th century, when entrepreneurs created a variety of machines using steam technology, that production increased and people’s lives improved.

The importance of businesses and entrepreneurs is also evident when comparing cities. Seattle in the United States is far more prosperous than cities in the Midwest. Seattle is home to many world-class companies such as Boeing, Microsoft, and Amazon. Midwestern cities have few such companies. Seattle’s per capita income is much higher than that of Midwestern cities. This is why cities across the United States are so eager to attract businesses. The same is true in Korea. Ulsan, home to many companies such as Hyundai Motor, Hyundai Heavy Industries, and SK Innovation, has a higher gross regional domestic product (GRDP) per capita than any other city. It is nearly twice that of Sejong City, where government office buildings are concentrated.

In July 2021, the United Nations Conference on Trade and Development (UNCTAD) classified the Republic of Korea as a developed country. Then, last June, the Bank of Korea announced that Korea’s gross national income (GNI) per capita had surpassed Japan’s. Entrepreneurs such as Chung Ju-yung, Lee Byung-chul, Lee Kun-hee, and Choi Jong-hyun played a major role in enabling our lives to improve over the past 70 years through Korea’s remarkable economic growth and its rise from one of the poorest countries to an advanced economy.

In reality, businesses and entrepreneurs are the driving force behind the market economy. Entrepreneurs create value by applying new technologies effectively and practically to produce goods and services that satisfy consumers at low cost. They also identify what is lacking in the market and start new businesses or develop new products. Entrepreneurs establish and operate companies to conceive and carry out their ideas, and through innovative activity they produce more and better goods and services, grow the economy, and improve our lives.

And yet, we seem not to fully understand the importance of businesses and entrepreneurs. That is why regulations constraining their activities are steadily increasing. This is clearly shown not only by the bills passed by the 21st National Assembly, but also by the corporate regulatory bills proposed through the end of August after the opening of the 22nd National Assembly. There are too many to count: the three major corporate regulatory laws, strengthened enforcement of the Occupational Safety and Health Act, tighter enforcement of the Chemicals Control Act, the Serious Accidents Punishment Act, revisions to the Commercial Act including the expansion of directors’ fiduciary duty to shareholders, the Franchise Business Act, the Subcontracting Act, and the so-called Yellow Envelope Act (Revised Labor Commission Act).

Behind these regulations and bills lies a negative perception of businesses and entrepreneurs—an anti-business sentiment. The source of that anti-business sentiment is mistaken knowledge about businesses and entrepreneurs. Unfortunately, in Korea, a country that pursues a market economy, there are many intellectuals who are anti-capitalist, anti-business, anti-liberal, and anti-market. Among them are those who, based on “Marxist economics,” whose usefulness has already been discarded, fundamentally deny capitalism and the market economy and harbor hostility toward businesses. Others appear to support the market economy in principle, but on specific issues advocate government intervention in the market and strong regulation of businesses, showing no logical consistency. Such intellectuals create anti-business theories and philosophies out of false beliefs and hostility, and they exert influence over corporate policy.

Since the source of anti-business sentiment lies in false knowledge, it is important to spread correct knowledge about capitalism and the market economy in order to dispel it. If the public possesses accurate knowledge, they will not be easily swayed by agitators. That is why it is necessary to educate and inform the public about capitalism and the market economy, and about the actual role that businesses and entrepreneurs play in our society and in our lives. Businesses and entrepreneurs themselves must take an active role in this education and outreach, because they are the very targets of anti-business sentiment. If we are to become a better advanced country and improve the lives of our people, this is something we can never afford to neglect.

Jae-wook Ahn, Chairman, Center for Free Enterprise (CFE)

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Original title: 反기업 정서 해소에 기업 적극 나서야

Author: Jae-uk Ahn

Date: 2024-09-29

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=26975