The Korean Economic Forum
A Capitalist Manifesto: The Capitalist Economy is a Corporate Economy
Sung-Hee Jwa (Park Chung Hee Memorial Foundation)Year 2021Vol. 14No. 1
AbstractThe purpose of this paper is to argue that the capitalist economy is a corporate economy dominated by corporate organizations based on theoretical analysis and historical experience. The joint-stock company system, a social technology invented by mankind, despite Karl Marx’s stigma as a means of exploitation and ignorance of market-oriented economics, has led to the prosperity of the capitalist economy today. Like the market, the corporate organization is a device that induces shared growth by motivating production factors through selection and differential compensation based on economic performance. However, unlike market transactions that rely on consensus, the corporate organization is a device that internally allocates resources through hierarchical control, so it cannot only correct market failures by saving transaction costs, but also monitor and evaluate the performance of production factors more efficiently. By presenting a general theory of economic development that explicitly introduced the role of economic development of the corporation as well as the market and the government, this paper clarified the nature of capitalist economic development and, thereby, could theoretically substantiate the capitalist manifesto that capitalist economy is a corporate economy.