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2017-09-22 17:37
By Lee Sun-ho



Quite often, I enjoy reading a one-page children’s weekday section titled “Newspaper as a teacher” of The Chosun Ilbo (daily) and to listen to the one-hour evening broadcast on Sundays for high school students called “Challenge golden bell” on KBS1-TV. There I have noticed some topics or quizzes on the world’s influential economic theories advocated by several classical or neo-classical economists. Even though I majored in economics at college, I either forgot or have a vague knowledge of the implications of such theories or names of those economists pioneering well-known human-life philosophies at best. The two Korean mass-media outlets remind me how to find the easiest and simplest way to explain such matters for growing young students as a whole, as far as my forgotten memories go.

Adam Smith (1723-1790) was a Scottish economist, moral philosopher and the author of “The Wealth of Nations” (1776).  The book was the first modern work of economics against mercantilism. Smith was the founder/symbol of the “free market economy.” He used innovative terms, such as “absolute advantage,” the metaphorical “invisible hand,” “division of labor” and “the labor theory of value” in his masterpiece. David Ricardo (1772-1823), a British political economist, was also one of the most influential of the classical economists. Ricardian theory of “comparative advantage” is a domain-specific field, applying in situations where capital is motionless, along with “autarky,” “trade” and “labor productivity.” Like Smith, Ricardo was an opponent of protectionism for international economies.

Turning to Karl Heinrich Marx (1818-1883) and Friedrich Engels (1820-1895), they were a Prussian-born economist and a Prussian-born social scientist. They are famous (or infamous depending on one’s perspective) and were political theorists, journalists, and revolutionary socialists. They co-authored “The Communist Manifesto.” Engels supported Marx financially to conduct research and write “Das Capital.” After Marx’s death, Engels edited the second and third volumes. Engels even organized Marx’s notes on “Theories of Surplus Value.”

The above-mentioned four renowned economists’ theories were criticized yet, through modification, revision, revival and dissent since then by neoclassical or modern economists, in line with unpredictable variables in human livelihood environments, have stood the test of time. In between the two main ideological categories mentioned above, several cases can be exemplified. The market principle of “supply creates its own demand,” was created by Jean-Baptiste Say (1767-1832, French). Like long cyclical trends, it was streamlined by Alfred Marshall (1842-1924. British) as “marginal utility,” revised by John Maynard Keynes (1883-1946, British macro-economist) as Keynesian “effective demand” and “stagflation,” and debated by Joseph A. Schumpeter (1883-1950, Czech-American) through Schumpeterian books entitled “Creative Destruction” and “Capitalism, Socialism and Democracy.” It was also reversed by Frederick A. Hayek (1899-1992, Austrian-British) as “free market economy,“ and “eventual collapse of the slave-driven socialist planned economy,” asserted by Milton Freedman (1912-2006, American) as “against market intervention by the government,” and revived again by Say’s initiative as the Fourth Industrial Revolution has been underway.

With my rough memory concerning classical or neoclassical theories asserted and modified by world-renowned socio-economic geniuses in recent centuries, I have to watch how well and to what extent Korea’s liberal Moon Jae-in government will deal with its labor policy as shown by the measure raising the minimum wage-level taken for workers’ compensation and welfare populism. More important is how it is going to handle the on-going renegotiation of the free trade agreement (FTA) with America’s protective Donald J. Trump administration as the most reasonable and updated, bilateral accord as necessary. There is a lot of uncertainty in these arrangements, and I hope there is a mutually beneficial outcome for all involved, although we only need to look to the past and the great thinkers of economics to truly understand which path we should follow.


The writer is an ombudsman columnist for The Korea Times in Seoul.  He can be reached at kexim2@unitel.co.kr. 


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