North Korea's Uncomfortable Acceptance of Markets

A commentary by Andrei Lankov
korea-markets-09022016.jpg File photo of North Korean government bonds.

The time of Kim Jong-il's and Kim Jong Un's rule over North Korea can be described as the era of markets. For decades, since the late 1950s and until the late 1980s, the North Korean government was remarkably tough on the markets and at times nearly drove them to extinction. All basic foodstuff and consumer goods were rationed and distributed by the government, with cash meaning little or nothing in such a hyper-state economy.

However, this is ancient history by now. While the North Korean media continues to talk about the greatness of socialism, for all practical reasons, it is the thriving markets which are driving the North Korean economy. Without markets, even the physical survival of the majority of the North Koreans would be impossible.

The impact of the markets has changed the country beyond recognition. Some observers believe that in the long run, markets might become a breeding ground for the revolutionaries who will eventually challenge the current regime. The present author is a bit skeptical about such estimates, but there is little doubt that markets have contributed greatly to the tremendous social change that is unrolling in North Korea.

The major difference with the old hyper socialist (or, rather, hyper-Stalinist) North Korean society is that markets have become a place where common North Koreans can talk, establish horizontal connections, and meet more or less freely. In the past, they spent most of their lives in state-owned and state-run enterprises where they seldom could establish contacts with people other than their family members and relatives.

This is not the case anymore.

Markets require people to work together to establish and maintain connections. Needless to say, people use these connections to exchange information –and not only information about, say, prices of their major merchandise, but also politically far more dangerous and explosive information, including rumors about life overseas and some political views which are not reported by the government media.

The growth of the market has greatly undermined the surveillance system which once was the world’s most sophisticated and most efficient. Theoretically, North Koreans are still subjected to a number of restrictions. On paper, they cannot travel outside their city or county of residence without prior permission issued by the police, and their private houses are supposed to be randomly searched by the police every few months (in order to find radio sets, banned books, and other prohibited media, as well as people who stay on the premises without registration).

However, these and other regulations are now routinely ignored by the officials who much prefer to extract bribes from people who break the rules. A small bribe now can work wonders. There have been cases when people accused of listening to foreign radio broadcasts (a really grave crime in North Korea for decades) are released after they or their family pays a sufficient bribe to the secret police investigators. Interestingly, in some cases, they can even get their unregistered free-tuning radio sets back, even though radio sets with free tuning have been banned in North Korea for half a century.

The market is an area where dangerous knowledge about the outside world is spreading. The government still controls the media, but it is incapable of controlling the markets. Therefore people discuss the economic affluence China enjoys now, after a few decades of the reform and openness policy (China, indeed, is seen by the majority of North Koreans as a highly attractive example). Some of them even dare to talk about South Korea’s success. After all, they or their relatives and friends have heard in China that South Korea is far more prosperous than China, whose affluence is beyond the dreams of the majority of North Koreans.

The government understands that markets are politically dangerous; however, it can do little about them. There have been attempted crackdowns, but such campaigns invariably resulted in serious economic problems for the city or area where markets were completely or partially closed. Through their experience, the North Korean officials have learned that markets are better left untouched and this seems to be the policy which they are not going to change in the foreseeable future. So markets are a force of change, even though only time will tell whether these changes will be of an evolutionary or revolutionary nature.


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