Since the global financial crisis of 2008, economists and financial experts have been forecasting the shape of new economic systems to come. Among them, capitalism 4.0 proposed by Anatole Kaletsky stands out. Kaletsky, a journalist for the British newspaper The Times, compares capitalism to a software program which evolves as environments change in economic systems.
In 1776, Adam Smith defined laissez-faire in The Wealth of Nations which became the first version of capitalism. A new program was needed in 1931 when the Great Depression brought financial ruin worldwide. Keynesian capitalism, or Capitalism 2.0, remained relevant until the stagflation of 1980, at which time it evolved again. Dubbed neo-liberalism, the third version of capitalism lasted until quite recently and ended with Alan Greenspan and the Bush administration.
Capitalism 4.0 adapts to the current environment -- of unpredictable complexity and uncertainty -- by emphasizing the role of a smart and active government in the market economy. Experimentation and ideological flexibility are key concepts, as well as social awareness and responsibility. In Capitalism 4.0, a smarter government plays an active role in engaging both the general public and the private sector towards greater social responsibility.
By emphasizing social responsibility for all, this latest version of capitalism has much in common with Sustainability Management (SM) and Corporate Social Responsibility (CSR). SM and CSR have gained widespread acceptance in organizational management and are now practiced in the public and private sectors as well as in international institutions such as the UN, OECD and the EU. In fact, the recently created a new SM standard (ISO 26000).
Capitalism 4.0, Korea
The shape of Korean capitalism has also evolved considerably in the past few decades. It was the government-led industrial capitalism, equivalent to Capitalism 2.0 above, in the 1960s and 1970s. Then it changed to the market-led capitalism equivalent to Capitalism 3.0 from 1980 to 2008. Now what could Korean Capitalism 4.0 look like
One of the most serious social problems that policy-makers face today is welfare populism. Unlike Scandinavian countries, South Korea has a relatively low tax rate and wide income disparity. For South Korea, a selective welfare system could be more suitable than a universal one.
In addition, the government could support the middle class in order to boost purchasing power and improve the quality of the workforce. To resolve income disparity and regional inequality, the government could encourage businesses to take on social responsibility.
The role of the three major economic units (households, enterprises, government) in Korean Capitalism 4.0.
In Korea, public institutions have yet to adapt Sustainability Management on a wide-scale. At the end of 2010, there were only 42 public institutions that published SM reports, including 17 State-Owned Enterprises (SOEs), 10 quasi-governmental institutions and 12 non-classified public institutions. Providing guidelines and training on SM and CSR best practices would accelerate further adaptation.