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The Economic Future of North Korea: Will the Market Rule?
Region: Asia
Location: Korea, North
Published December 25, 2007
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More than two decades ago, when the USSR still existed and the concept of the world socialist system presumed that all socialist countries were developing as one, I argued (still in the framework of what was permitted in terms of Communist lingo) that in the case of North Korea (Democratic People’s Republic of Korea, or DPRK) we have an example of how the civilizational specifics prevail over the general socialist principles of social-political formations. Country-specific factors behind that phenomenon at that time included:
• Small and isolated territory, historic traditions of “hermitage,” and homogeneity of the population, which helped create a rigid system of control;
• Confucian governance system, which in fact was to a greater degree the basis for the political guidance structure than so-called “socialist democratic centralism”;
• Collectivist traditions accumulated over the centuries of rice growing, which helped limit the reappearance of individualistic aspirations after national liberation (which was also the case of other socialist countries);
• Militarization of society and noneconomic leverage of mass mobilization under the pretext of external threats;
• Korean nationalism, which promoted the primacy of the nation over the individual.
Hence, there existed the stability and resilience of a rigid system “which can survive and even recreate themselves.” Over time, North Korea has succeeded in surprising the world by its resilience, regardless of dire external and internal circumstances.
The factors cited above are still at play. If we speak about North Korea’s possible reforms and transformation, we cannot but wonder how much these national specifics matter. If North Korea would sooner or later move to a market economy (there is really no alternative), will the North Korean way again be a unique one? Anything would be progress in comparison with the traditional Stalinist inefficient economic system (conditionally acceptable only for the production of armaments), but where could this progress be stopped on the way to a fully market economy? Does marketization necessarily mean that the North Korean variant of the economic system would be similar to other, more internationally accepted ones? How should the world react to possible attempts to wrap economic reforms into juche clothing?
The spectacular advancement in the peace process during 2007 (the six-party talks and the U.S.-DPRK talks as well as the increasing North-South cooperation) leads to an analysis of these issues under the presumption of a politically stable DPRK, the sovereignty of which is challenged neither from the outside nor from the inside. Thus, for years to come we still will be dealing with the same—although gradually changing because of the generational shift—ruling elite.
Preservation of leadership means there would be no denial of prior policies, including economic policies. The nomenklatura was brought up in the “bosom of Great Leader” and the juche ideas (which have actually proved to provide quite an effective system of guidance for regime survival, and therefore many North Koreans might sincerely believe in them). After the total economic collapse killed hundreds of thousands but still the control of the economy was largely left in the hands of the same Pyongyang leaders, those leaders probably believe that economic change can be manipulated any way they wish. Pyongyang still regards the economic innovations under way since the 1990s to be an instrument for survival, not a development strategy. Therefore, obvious changes in the economy as yet are not bringing about transformation of the system. Could that happen and in what manner? That would depend on what would best serve the ruling class, and we should carefully separate the propaganda and ideological clich├ęs from the real interests of that ruling class.

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