966 FINANCIAL REFORM AND THE ECONOMY
licensed merchants would become bigger and stronger because their profits
would be guaranteed and the opportunities for accumulating capital increased.
Government would benefit as well because it would be easier to collect taxes
from them than from small merchant subcontractors and itinerant peddlers. It
did not occur to him that expansion of gross national product might be his pri-
mary objective.
He was aware, however, that if the government restricted the sale of each cat-
egory of goods to specific licensed shops, those shops might readily withhold
goods from sale to drive up prices and profits. To counteract this possibility he
advised the government to grant licenses to a number of shops in many areas
of the capital and in district and market towns and allow them to sell the same
product. Under his system of government-sponsored oligopoly, purchasers
would presumably be able to take their business to another shop if the store refused
to sell at a reasonable price.^2
Kang Man'gil has argued that Yu Suwon ultimately felt that unrestrained com-
petition from small-scale merchants and peddlers would threaten the viability
of the larger, licensed merchants by taking away sales and profits, and that only
an oligopolistic system could guarantee sufficient profits for capital accumula-
tion. Yu, however, did not want to drive the small merchants into destitution, but
to organize them into larger and more viable units. He envisioned three differ-
ent types of combination: (I) amalgamation of small merchants into large con-
glomerates; (2) agreements between yangban businessmen who would invest
capital in a licensed main store and subcontracting merchants who would act as
sales agents, or partners and managers of branch shops in provincial towns under
the control of the yangban owner or partner in the capital; and (3) commercial
capitalist enterprises run by wealthy merchants who would cut costs and
increase production and profits by hiring wage labor and rationalizing work pro-
cedures and record-keeping similar to large-scale food processing shops in con-
temporary Ch' ing China. Kang pointed out that Yu's three alternatives were not
random suggestions, but reflections of the historical evolution of evolving cap-
italism itself. Yu was ahead of his own time because he was prescribing reme-
dies for the current reluctance of Korean merchants to invest too much money
in wage labor.3
Yu Suwon also envisioned a growth of commercial cities and towns domi-
nated by the wealthy merchants, but not solely in economic affairs. Even though
these merchants would be guaranteed their profits and wealth by a system of
state licensing, he perceived that they would be capable of running civic affairs
as well, particularly building and supervising walls and moats for local defense,
bridges. schools. charitable estates, and roads. He envisioned this system of
local self-government under merchant-yangban leadership as providing local
initiative by cooperation and capital investment in place of the more commu-
nal cooperation portrayed in the ideal image of the ancient well-field system.
The wealthy merchants would also be expected to establish charitable funds