Some weeks ahead of the presidential election in Dec. 19, a controversy is flaring up over the much-touted bid toward “democratization of economy.”  Major candidates use the motto to woo support from voters in the run-up to the presidential poll.

Rep. Moon Jae-in of the opposition Democratic United Party has been most active in calling for the economic democratization while independent candidate Ahn Cheol-soo is also lagging behind him with less enthusiastic manner.

Rep. Park Geun-hye of the ruling Saenuri Party is maintaining cautious attitude amid lingering debate within the party between advocates and opponents. 

Most experts share the notion that it is not proper for the nation to pursue the populist economic policy as it will eventually plunge the nation into another economic misery. 

They cite the fact that large conglomerates named chaebol have been playing the locomotive role in leading the nation’s economic growth over the past several decades, pushing the nation to rise from ashes in the wake of the disastrous Korean War in 1950.

Despite some negative viewpoints, the conglomerates have grown to become the target of jealousy from other part of the world. 

“Economic democratization,” a term ordinary people and even economists debate the meaning of, has become a core political concept in the lead up to presidential election.

There exist various definitions of the expression but the general usage of the term narrows down to one meaning in context of the current political landscape: regulating big conglomerates in order to curb social polarization between the haves and have-nots.

Chaebol, meaning Korea’s big conglomerates controlled by individual owners or members of a single family, have been expanding their economic dominance under the big business-friendly, Lee Myung-bak administration.

  The 10 biggest chaebol accounted for nearly 77 percent of the nation’s gross domestic product last year, according to Chaebul.com, an institute that monitors the conglomerates.

In a survey conducted by pollster Research & Research in July, 79 percent of Koreans agreed on “democratizing the economy” and 67.5 percent answered decisions in big conglomerates should be made more democratically for society as a whole. 

The three presidential candidates stress the current capitalist system dominated by a limited number of shareholders is outdated. They claim that the system has caused inequality in society. But the context is quite different when it comes to the question of how to put the brakes on the expanding powers of giant corporations.

Park urges “tough enforcement of the law” for the establishment of a “fair market economy” without touching on the chaebol’s structure of governance. 

In line with Park’s stance, discussions in her election camp are mainly focused on reining in unfair practices and abuses by big conglomerates such as funneling works to their subsidiaries, operating an excessive number of super-supermarkets and granting pardons to chaebol heads.

The conservative candidate is against reintroducing an equity investment ceiling for big conglomerates or severing cross-shareholding which allows chaebol to maintain dominant control over their business empires with a relatively small number of shares.

“Breaking the existing investment chain of the conglomerates has no practical benefit because it takes an enormous amount of money to do that,” said Park. “Banning new investment among affiliates would be enough.”

However, Moon is calling for a crack down on the managerial structure of the chaebol.

“The 10 biggest conglomerates are controlling many subsidiaries worth hundreds of trillion won with a mere 0.94 percent of shares,” said Rep. Lee Yong-sup in charge of economic policies in Moon’s election camp. “Democratizing the economy without reform of the chaebol’s ownership structure is an illusion.” 

The DUP has already issued related bills including reintroducing regulation on total equity investment, banning cross-shareholding and strengthening separation between financial and industrial capital. 

Park recently showed her support for strengthening restrictions on industrial capital from owning financial institutes.

Under a current law, industrial corporations can only own up to 10 percent shares of local lenders. 

Meanwhile, Ahn, the software mogul-turned politician, is known to be on the same track as the DUP on chaebol policies so far, except for regulating the amount of their investment. 

“It is more important to have a consistent policy in the regulation on total equity investment (than strengthening),” he was quoted as saying in the book “Ahn Cheol-soo’s thoughts.” Ahn also takes a similar position on levying taxes on corporations saying what matters is “consistency in policy.”

However, observers say Ahn’s latest naming of Korea University professor Jang Ha-sung to head his campaign on economic democratization indicates a further shift to the left.

Jang, known as a “chaebol sniper,” earned his reputation by raising problems about the governing structure of Korean conglomerates. He previously served as chairman of the economic democratization committee in the civil rights group People’s Solidarity for Participatory Democracy in protecting the rights of minority shareholders. He also established the Korea Corporate Governance Fund in 2006 to experiment a new kind of monitoring system for interfering in the management of chaebol through becoming a shareholder.

 The nation’s business circle expressed anxiety over the possibility that the campaign pledge will become a yoke on the national economy.

They said that the political circle should take a prudent approach to the reform of the country’s family-controlled conglomerates since a drastic change could hurt the economy, a group of business leaders said Wednesday.

The call came as the country’s three main presidential candidates have pledged to overhaul the conglomerates, known here as chaebol, under the motto of “economic democratization.”

“We agree on the need to ease economic polarization, but a drastic shift in economic policies may undermine the base for economic growth, “said the five heads of the Seoul chapter of the Korean Chamber of Commerce and Industry in a meeting in downtown Seoul.

Chaebol reform has emerged as a key campaign issue ahead of the December presidential election, as presidential hopefuls try to tap into the public’s sentiment against conglomerates.

The candidates’ campaign pledges focus on pursuing the co-prosperity of small and big companies, and improving chaebol’s governance structure, which enables owners with small stakes to wield absolute power over their business empires.

The heads said if conglomerates are required to abruptly reorganize their governance, it will have a negative impact on the country’s economic growth as they have to spend a lot of money for that purpose, which will curb their capital expenditures.

They also stressed that exports of big companies should first increase in order to expand those of small and medium enterprises and boost job creation.

The leaders, meanwhile, showed negative reaction to the extension of the retirement age and job security for irregular workers as well as a tax increase for the country’s expanded welfare program.