The Myth of Market-Based Economy

Are the advanced economies in North America and Europe exercising a market-based economy?

It is widely recognized that a state-controlled economy fuels market distortions. Yet, markets in an advanced economy have been rigged as well.

Many argue that the government-corporate kleptocracy in the so-called market-based economies is as bad as one in state-controlled economies.

In the wake of the 1997 financial crisis, the IMF demanded Korea adopt austerity measures including capital market liberalization in exchange for emergency funding it provided.

Foreign ownership of financial institutions has been significantly increased. Many were hopeful that market forces instead of government interventions would help Korea’s financial sectors fix their problems and advance their practices. However, that didn’t turn out to be the case. Korea has completely opened its stock market to the West since the 1997 financial crisis. According to the FSS (The Financial Supervisory Service), as of July, foreign investors held about 30 percent of Korea’s listed shares. Foreign capital now controls some major corporations like Samsung.

It is notable that despite Western pressures, China is not opening its capital market including currency trade and banks to the West.