We Must Move Toward the Age of Knowledge Again

There are always reasons why nations prosper. Why do some countries grow while others fail to do so? The one who answered this question was Adam Smith. He traveled across many countries and analyzed the patterns that appeared in growing nations. He then explained the reasons in *The Wealth of Nations*.

Adam Smith’s wisdom is simple: you can consume only as much as you produce. In prosperous countries, each person produces more, and their income rises accordingly, making them more affluent. Then how can people produce more? In *The Wealth of Nations*, he explains that the answer lies in the division of labor and specialization. Rather than working alone like a self-employed person, people can produce more by breaking work into parts, sharing those tasks, and having each person specialize in a particular role. Using a pin factory as an example, he argued that if one person makes pins alone, that person can produce 10 pins a day, but if several people divide the work, each person can produce 4,800 pins.

Adam Smith’s lesson is that as people voluntarily expand economic cooperation and help one another, production increases and the economy grows. No one needs to issue orders or devise a master plan. Individuals simply participate in the market, making their own choices and acting on them in deciding what to produce and what to consume. Through that process, private knowledge accumulates, and people discover better ways of doing things. A virtuous cycle of growth continues.

Why, then, have so many countries failed to achieve such simple economic growth? Even now, hundreds of years after the Industrial Revolution, why do countries still exist that have not even begun economic growth? The reason is simple. In those countries, individuals are not allowed the freedom to engage in economic activity, the freedom to choose. Why do they not have such freedom? It is a matter of ideology. In countries that believe in socialism, the government makes those decisions instead. Because the government plans and directs what to produce, what prices should be, and who should produce, it is difficult for the economy to grow.

In countries where the economy cannot grow, knowledge is useless. Matters that should be decided in the market are instead decided by politicians or civic groups. Rather than being put to use, knowledge degenerates into something meaningless that does not help our lives. As that continues, knowledge becomes merely an object of hatred and ridicule, and valuable knowledge is no longer created. In growing countries, valuable knowledge is produced and circulated. Even when a country does not possess such knowledge itself, it may borrow or purchase knowledge from other countries and put it to use. Countries that make good use of knowledge in economic activity continue to grow.

During our country’s process of economic growth, we rapidly caught up with advanced countries under slogans such as “building the nation through science,” “an internet powerhouse,” and “a knowledge powerhouse.” But now we are lagging behind advanced countries in the production and use of knowledge. The knowledge gap with advanced countries continues to widen. If we are to enjoy economic growth again, we must exercise the wisdom to produce and use knowledge. Producing and using knowledge also means respecting experts and entrusting work to them. If matters that were politically decided by political groups and civic organizations and controlled by the government are once again allowed to be decided independently by the private sector, knowledge will begin to accumulate and be utilized again.

Our society must once again move toward an age of knowledge. Knowledge must be used to create value, to support production, and to help enrich the lives of more people. For that to happen, the production and use of knowledge must be transformed so that they contribute to reality. Knowledge in and of itself has no meaning.

The realism and productivity of the knowledge system must be strengthened so that the value created by those who produce knowledge is evaluated through the market. This is an area in which the government must make an effort. Education and government-led knowledge production must be improved so that they are not carried out while ignoring their contribution to the real world.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 다시 지식의 시대로 나아가야

Author: Sung-no Choi

Date: 2022-03-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24670