I am following the prescription to "Read your Hayek, read Your Mises," and am working through Hayek's The Road to Serfdom again and wanted to discuss my thoughts.
According to Hayek, there can be no middle ground between central state planning and freedom.
Yet this middle ground appears to be exactly where South Korea was able to get to. Coming out of the ashes of WW2 and the Korean War, a strongly top-down and repressive Government was able to build a centrally-controlled economy in its early days, handpicking industrial strategy, and directing companies in a socialist way.
The South Korean's did utilise a hybrid socialist / competitive model where two or more companies would "compete" to tender to the state, and South Korea began to lead the world in steel production, ship building, and many other sectors despite being quite centrally planned.
From the 1990s, there was a lot of reform in the Government and a move towards democracy. Today South Korea has become a wealthy and relatively democratic and free nation.
Joe Studwell's book, How Asia Works: Success and Failure in the World's Most Dynamic Region, explores South Korea in some depth. The author argues that a period of protectionism and a focus on "export discipline" + land use reform is what led Japan, Taiwan, and South Korea to become successful in comparison to countries which came into free markets and international capital early on such as Malaysia, the Philippines, and Indonesia.
Is this approach of protectionism + central planning a valid development model?
- What is an Austrian perspective on this? Can we think of this initial layer of socialism seen in South Korea as the 'bootstrap' that the real market economy then emerges from? At what point is this line drawn?
- The rush to get export-focussed at all costs is what drove South Korea to develop local industrial excellence, how does this differ from policies prescribed by the IMF and World Bank for developing nations today?
- Is it simply a case that South Korea's socialism was 'less bad' than the North's? Were they lucky to have been able to pivot out of it when they did?
- In a country with an extreme level of poverty and destruction, is the scale of economy that is possible with central planning a better alternative than nothing at all?
I look forward to your thoughts and feedback.