After a career as an academic—and the President of Seoul National University—then as the Prime Minister of Korea, you started the Korea Institute for Shared Growth. How did you come up with the idea for this?

During my service as the Prime Minister of Korea, I witnessed the gap between conglomerates and small and medium-sized enterprises (SMEs) widening. I listened to concerns raised by SME executives regarding the polarization of wealth in Korea. In response, my office conducted research on the ecosystem of SMEs and received alarming reports. The chronic problem of conglomerates exerting undue power over SMEs was exacerbated to the point where it endangered the health of the market economy and could not be tolerated any longer.

I immediately brought the president’s attention to the issue and advised that Korea’s economy would suffer grave consequences should we fail to stop conglomerates’ reign over the market. As a result, the Commission for Cooperative Growth was established, and I served as the first commissioner from December 2010 to March 2012. The Commission strived—and still does—to restore economic justice. After I stepped down from leadership at the commission, I saw the need for a more long-term and systematic approach toward shared growth and decided to start the Korea Institute for Shared Growth, a privately funded research institute. My work at the Korea Institute for Shared Growth deals with the concept of shared growth in a broader spectrum of societal issues, and not just in terms of businesses.

Can you tell us more about this concept of “shared growth”?

Put simply, you could say that shared growth is similar to the concept of shared value, proposed by Michael Porter in “Creating Shared Value,” published in the Harvard Business Review in 2011. Porter suggested the possibility of integrating corporations’ for-profit economic activities with social responsibility.

On a deeper level, shared growth also takes into account Korea’s unique economic situation of conglomerate-led super-speed economic growth. In addition to the economic problems Porter lays out, Korea has more specific issues of polarization—especially between conglomerates and SMEs, the wealthy and the poor, cities and rural areas, the South and the North—which are getting worse at an accelerated rate and are causing conflicts in Korea’s mechanism for economic growth.

A common misconception people have about shared growth is that shared growth is achieved by taking wealth from the wealthy and distributing it to the poor. This is not how shared growth is achieved. Shared growth aims to foster an environment where different groups grow together, instead of taking something from one group and giving it to another. When we work together to make the pie bigger, the growth should be distributed among contributors justly. Shared growth is about securing justice in the process of distributing the fruits of growth.

You are challenging the trickle-down, big business-led economic development strategies that have been taken for granted for decades in Korea—the successful, rapid development of Korea has been attributed to these strategies. Please tell us more about the economic justification for your ideas.

I do not mean to argue that conglomerate-led, export-based strategy for economic growth is wrong. What I do argue is that serious social division and polarization is an innate problem of such strategy. The current economic polarization in Korea has been predicted even decades ago. For example, back in 1990, I published a paper, “For Democracy in the Korean Economy,” in which I tried to raise concerns regarding polarization of wealth and economic sustainability in relation to economic democracy.

Can you tell us of some successful cases where this “shared growth” model has been implemented?

Although we are seeing great potential for success it is still too early to tell if there are cases where shared growth is successfully implemented. Currently, the methods that the government and conglomerates use to achieve shared growth are mainly limited to providing funds. This type of supporting SMEs through monetary aid has always existed.

In addition to financial aid, comprehensive policies should be implemented to cover a wide variety of areas such as increasing the influx of talent, improving education, supporting exports, and protecting fair trade in favor of SMEs. More importantly, leaders of conglomerates should actively take leading roles in achieving shared growth instead of reluctantly meeting the bare minimum. What is more important than monetary aid, indeed, is the paradigm shift within the leaders of conglomerates.

In the context of Korea, there has been increasing dissatisfaction with underemployment and unstable labor, as well as (more recently) the entitled behavior of chaebols. What do you think is the reason for the increasing sense of inequality?

To answer this question, I would like to share an analogy I heard between chaebols and poor families. Before Korea’s economic growth, it was nearly impossible for families to afford education for each of their children. At the same time, education was the only way to exit poverty. So a common strategy was pull together all of the family’s resources to invest in the elder child’s education for his success. Similarly, the Korean government supported promising businesses to lead the nation’s economic growth when the nation’s resources were limited. This method was successful because many of the elder children used the family’s support to gain wealth and fame; in the same way, the governmental aids helped turn Korean corporations into global enterprises. All of this was possible because I think that the Korean people have a strong sense of community.

But what happens when the elder child refuses to give back to the family who sacrificed everything they had for the elder child’s success? Korean people are increasingly dissatisfied with the entitled behavior of chaebols and harsh economic conditions because they are not getting back what they had sacrificed for the success of selected businesses.

Ironically, dissatisfaction and disappointment from conglomerates is raising awareness of shared growth. In search of ways to alleviate polarization of wealth and unfair competition, more people are turning to shared growth for an answer. As people become more aware and agree with the value of shared growth, current dissatisfaction of Korean people will gather enough momentum to produce a significant change.

Business leaders in Korea—and elsewhere in the world—have political leverage that is necessary to change policies and laws. How do you think it is possible to enlist the support of business leaders?

Only the Super-Rich Can Save Us depicts how billionaires like Warren Buffett, Bill Gates, and George Soros can change the world we live in. Surely, these super-rich people cannot solve every single problem we face today. But I do agree that their wealth, connections, and insights can significantly make a difference.

If you apply the same reasoning to Korea, Korean super-riches like chaebols have so much to offer for Korea. Although chaebols like Samsung have done a lot for the society, from providing financial support to educational institutions to building museums, they can still take a bigger role. I hope that the super-riches of Korea will realize that their success cannot last without the market and the consumers. Clarifying this seemingly obvious fact, I believe, is the first step in enlisting their help.

Advocates of complete free market, as well as industry leaders such as chairman of the Samsung Group Lee Kun-hee, have criticized this approach, saying it is “socialist” and defies market principles. What is your response?

Anti-trust legislations in America, when first introduced, faced strong-armed oppositions. President Roosevelt’s New Deal was criticized for being “socialist” and “anti-market.” J. M. Keynes’ was also criticized for being “communist,” as Roosevelt’s New Deal was based on Keynesian theories. When I, during my presidency of Seoul National University, established a quota for students from rural or relatively impoverished areas, I faced opposition myself as well, but this policy has become widely accepted now. Today, these opposing arguments almost sound absurd. In my opinion, resistance to shared growth shares the fate of those who opposed anti-trust or the New Deal.

What are your predictions for the South Korean economy?

Recently, the Economist published a feature article on Korea, which was titled surprisingly—and rightfully—“Parallel Worlds.” Korea, in addition to being a divided nation, suffers from the burden of social and cultural division. Not only that, Korea also suffers from internal division between conglomerates and SMEs, and the young and the old, etc. For example, while Samsung is worried about how to maintain its top position as the world’s leading electronics company, SMEs are barely sustaining themselves. The gap between the conglomerates and SMEs is growing day by day and it is becoming increasingly difficult to unite the society. This is why some refer to Korea as the “Stalled Miracle.” Under these harsh conditions, Korea also needs to prepare for reunification, which is projected to impose an unimaginable financial burden on South Korea. Korean leaders must be on alert for these difficult hurdles, which are approaching fast. And those hurdles underscore the need for implementation of policies to strengthen shared growth.

Many East Asian countries have followed, or are set to follow, a trajectory similar to that of Korea of development led by a few major companies supported by the government. Do you think the same problems apply there as well? So far you have advocated shared growth specifically in the context of Korea. Should shared growth only be a priority after a certain level of growth? Or is it a concept that is applicable to all stages of development?

Let’s take China for example. China, externally, has continued fast economic growth to become one of the economic super powers in the world. Internally, however, China is suffering from polarization of wealth and coastal-inland income inequality. Although the value of shared growth started to draw attention after Korea gravely suffered a financial crisis in 1997, China can prevent such a crisis by adopting shared growth policies early in its development stage. China’s responsible actions to alleviate polarization of wealth within its borders will contribute significantly to stability of global economy. In other words, developing nations will be able to avoid ramifications of fast growth by applying shared growth policies early in their development stage.

Drawing from your experiences at Seoul National University, what do you think is the role of higher education in promoting sustainable growth?

Education is one of the most effective ways to spark a paradigm shift in our society. By encouraging active discussions among students on the importance of shared growth and sustainable economy, shared growth will gather enough energy to break free from outdated economic beliefs. Moreover, higher education is the place where students should be encouraged to follow their passion and be creative. Universities must share growth with the local community and serve as the source of energy for creativity.

Do you have any goals in the near future?

At the moment, I am focusing my energy into raising awareness for shared growth. As the acceptance of any new idea does, the introduction of shared growth into Korean society requires devotion and persistence. I plan to devote myself to promoting shared growth in Korea and restoring economic democracy.