Confucian business ethics in Korea: pre-modern welfare state

From the start, the Choseon state had vigorously engaged in relieving people’s famine by establishing a granary system dedicated to that purpose. The reason was its allegiance to the Confucian minben ideal. As the granary system proved ineffective, however, it adopted a new taxation/granary system that relied much on market exchange. Paradoxically, the new system greatly enhanced the importance of state granary system as a means of implementing its redistributive policies, the role of market exchange in that process remaining subordinate. The reinforced state granary system was to perform multiple, potentially conflicting, functions and was allowed to develop a strong tendency towards path dependence and to incur high transaction costs behind such a development lay ideological and institutional factors. The Choseon state’s commitment to a physiocratic ideal and to Confucianism called for the creation and maintenance of the prodigious granary system. However, the institutional shortcomings built into the organization that was supposed to manage the system finally led the people to question the legitimacy not only of the system but even of the state itself.