Democracy and Market Economy

If there was a prevailing trend in the affairs of nations in the past twentieth century it was the increasing role of governments in the allocation of society's resources. Especially in Korea spotlighted as a paragon of developmental state among developing countries, the government was deemed to play a decisive role in its economic development. As the government-driven economy reveals its limit at the turn of the century, however, the government is no longer regarded as the institution to achieve social welfare maximization even though there is little doubt that the government is a central institution in the allocation of social resources. With a worldwide sweeping trend of neo-liberalism and globalization, a tough criticism currently arises against governmental intrusion into market economy. The criticism against governments is basically based on disbelief in democracy as a mechanism to efficiently allocate society's resources. Nowadays, a new motto Don't let the market be left to politics! is on the verge of becoming a cliché. This article is particularly planned to suggest counter-arguments against this market-politics dichotomy for fear that it should militate in favor of unconditional expansion of market principle. Under the circumstances it seems imperative that we correctly understand pros and cons of democracy vis-à-vis market economy. Part I tries to define democracy and market economy by enumerating differences and similarities between market and collective action. While competitive behavior is present in both the market and public sectors, private-sector action is based on voluntary choice; public-sector action is based on majority rule. While democracy turns on the rule of one man, one vote, the market on the rule of one dollar, one...이 글은 서울대학교 법학발전재단 출연 법학연구소 기금의 2004학년도 연구지원비의 보조를 받았음