FAMINES APPEAR A THING of the past—at least outside Africa. Indeed, modern technology makes it possible to feed crowded cities almost effortlessly. Thus, most famines are now the result of mismanagement and deliberate political decisions. The North Korean famine of 1996–2000 demonstrates this fact.
For decades, North Korea was probably the world’s most perfect specimen of Stalinism, in many regards more representative than Stalin’s Russia itself. Thus, its agricultural policy followed the old Soviet pattern, with the same sad results. Stalinist agriculture has never been very efficient. Lack of incentives usually makes it sluggish and wasteful. However, in some cases heavy investment in machinery and fertilizers has helped to overcome deficiencies created by the inept social system.
This was the case in North Korea. In the late 1950s, all North Korean farmers were herded into so-called agricultural co-operatives. While less restrictive than people’s communes in Mao’s China, they imposed harsher control than even Stalin’s infamous kolkhozes.
However, in spite of all the pitfalls of collective farming, the North Korean government invested heavily in agriculture. Its efforts produced a remarkably energy-intensive agricultural system. Electric pumps ran huge irrigation projects and chemical fertilizers and tractors were used on a grand scale. In an attempt to reclaim arable land, steep hills were made into terrace fields. These fields, endorsed by Kim Il Sung himself, remained the poster image of North Korea’s agriculture until the mid–1990s.
In the 1990s, all mechanization disappeared from North Korean fields. Photograph by Christopher Morris.
Initially these efforts seemingly paid off. In the 1980s North Korea produced some 5–6 million tons of grain (largely, rice and maize) every year. The population never enjoyed a real abundance of quality food: meat and fruit were rare delicacies, and fresh vegetables were largely consumed as kimch’i, Korea’s spicy fermented cabbage. Nonetheless, the 6 million tons of grain was sufficient to meet the basic nutritional needs of the country, and provide the 20-odd million North Koreans with enough calories to go about their daily lives. All food was rationed, and depending on a person’s position in the complicated hierarchy of social groups, the daily rations varied from 300 to 800 grams per adult, with 700 g being the most typical amount.
For decades, Pyongyang propaganda presented North Korea as the embodiment of economic self-sufficiency, completely independent from any other country. This image sold well, especially in the more credulous parts of the Third World and among the ever-credulous leftist academics. The real secret of its supposed self-sufficiency was simple: the country actually received large amounts of direct and indirect aid from the Soviet Union and China, but never admitted this in public. Though frequently annoyed by such “ingratitude,” neither Moscow nor Beijing made much noise since both communist giants wished to maintain, at least superficially, friendly relations with this small yet capricious ally.
Bikes and people’s backs are major means of transportation in the North Korean countryside. Photograph by Bernd Seiler.
But in 1991 the situation changed. The much-trumpeted “self-reliance” of North Korea proved to be a complete fake. The Soviet decision to discontinue sales of oil and other goods at hugely discounted prices to the North wrought havoc with the country’s economy. Agriculture was especially vulnerable, since without a heavy input of energy and resources it stood no chance of survival. Tractors required diesel oil which was no longer in plentiful supply and electric pumps could not operate when power stations stood idle due to a shortage of spare parts.
In 1992-1993 the North Korean media began to argue that for better health one should have only two meals per day (the traditional three meals were seen as excessive and unhealthy). By 1994, people in some remote areas were not able to get food for days at a time. They were issued the usual ration coupons, but no foodstuff was available in the shops or distribution centers. The rations themselves were also reduced—this was a sign of things to come.
And then the real catastrophe struck. In July and August 1995, unusually heavy rains led to disastrous floods. The North Korean authorities placed all the blame for the subsequent developments on these floods. Pyongyang stated that some 5.4 million people had been displaced by the 1995 floods while a subsequent UN survey indicated that the actual figure was much smaller. Politically, these statements were understandable: if the country had been hit by a natural disaster of unprecedented proportions, the authorities did not want to be held responsible.
There is, however, good reason to doubt their statements. Of course, the contribution of the flood to the disaster is undeniable. The already strained power grid was destroyed and the entire irrigation system was wiped out. Most of the terrace fields, the pride of “Juche agriculture,” were simply washed away.
However, none of these can be seen as the major reason behind the 1996–1999 disaster. The crisis in North Korea’s agriculture was evident at a much earlier date, and a possible solution was clearly demonstrated by China. In the 1970s, China was dealing with chronic food shortages. Just one decade later, its population was fed better than at any other time in its long history. And the reason? The switch from huge state-run and state-owned farms to individual household production. This switch was engineered by Deng Xiao-ping in the late 1970s and within a few years completely changed the situation in Chinese agriculture. Similar reforms were implemented in Vietnam—and with equal success.
Why was this experience not applied then in North Korea? The North Korean leaders believed that only absolute control over the population would be conducive to the regime’s survival. Independent farmers were seen as politically dangerous. Sure, this scheme worked well in other fellow Communist countries. But neither China nor Vietnam had a prosperous and democratic capitalist “other half.” In other words, there is no South China whose existence could create problems for the Beijing leaders (Taiwan is far too small to be taken seriously).
Beijing could accommodate a little capitalism in its grand scheme, but in North Korea, similar reforms were likely to make people ask the simple question: “If the market economy is good, why is our system superior to that of the capitalist South?”
Thus, the decision was made in the final years of Kim Il Sung’s long rule not to tamper with the system. No reforms were going to happen in the North. No dissent was going to be tolerated. This was seen as an essential condition of the regime’s stability—and perhaps this indeed was the case. While other Communist governments went down one after the other, Pyongyang survived.
The policy was rational and efficient—as far as the regime’s interests were concerned. But it had its price, and that price was paid by the commoners, by the untold numbers of people who perished in 1996–1999 to keep Kim Jong Il in power. The largest estimate of the victims’ number is “over two millions,” but perhaps the lowest figure of 600–900,000 “excessive deaths” (to use demographers’ jargon) is closer to the truth. It is still a very large number—some 3–4% of the entire population.
The famine was a result of a political decision. This does not mean that the government wanted the famine to occur—it did not—but when it was faced with a choice between maintaining the status quo and running the risk of famine, or attempting reform and running the risk of revolution, it opted for the former.
Nonetheless, the famine initiated a raft of opportunities which in due course led to the dramatic transformation of North Korea. The North entered the 1990s as the world’s last truly Stalinist society but by the early 21st century it had changed dramatically. The old system was dead, and a new system was emerging. The Stalinist dictatorship changed into a more conventional type of tyranny, even if some trappings of the old system and its rhetoric still remained in place.
*****
IN EARLY 2005, I WAS TALKING to a Westerner who had been working in Pyongyang for a long time. Describing the recent changes, he commented: “Once upon a time, one had to return from an overseas trip carrying a trunk full of cigarettes. Now my North Korean colleagues want me to bring back movies, especially tapes of South Korean TV dramas.” Indeed, North Korea is in the middle of a video revolution which is likely to have a deep impact on its future. The information blockade, which has been maintained for decades, is crumbling under the pressure of new technologies and increasing inefficiency in the old economy.
What did kill Soviet-style state socialism? In the final analysis, it was its innate economic inefficiency. The state is a bad entrepreneur, as the entire economic history of the 20th century bears witness. The capitalist West outproduced and outperformed the communist East, whose nations lagged behind in many respects, including the living standards of other peoples.
Thus, the Communist governments had to enforce strict control over information flows from overseas. There were manifold reasons for this, but largely it was done because the rulers did not want the commoners to learn how vastly more prosperous were the people of similar social standing in the supposedly “exploited” West. But people learned the truth eventually, and once that occurred, the fate of state socialism was sealed.
A South Korean manager and North Korean soldiers turned unskilled workers. Is it a sign of the future? Photograph by Byeon Young-wook.
In the USSR and other countries of the once Communist Eastern Europe, uncensored information was largely provided by the short-wave radio broadcast. BBC, Voice of America and Radio Liberty were especially popular. The USSR was a more liberal society than North Korea and Soviet citizens could easily buy radio sets in the shops. As far as I am aware, Moscow never considered a ban on short-wave radio sets in peacetime—perhaps because in such a vast country such a measure would cut off a large part of the population from any form of communication. The government occasionally resorted to jamming, but this was not always efficient, since it could work only near major cities.
The first breaches in the wall of isolation were unwittingly made by the North Korean official media itself. In the 1980s, North Korean TV briefly showed footage of the Kwangju uprising of 1980, and the great labor strikes of 1987-1988. These images perplexed North Koreans. The South Koreans did not appear to be starving, and they were not dressed in rags. Indeed, the attire of these “desperate struggling masses” was decisively better than that of the average North Korean, and none of them showed signs of malnutrition!
But the real collapse of the self-isolation began in the mid–1990s, when a large number of North Korean refugees moved across the border to find food and employment in northeast China. Many refugees eventually returned home, bringing new ideas, new information, and new tunes.
The Yanbian area in northeast China is home to two million ethnic Koreans, most of whom are Chinese citizens. When, in 1992, Beijing and Seoul established formal diplomatic relations, these areas also began to attract a growing number of South Koreans. Tourists, missionaries, educators, spies and, of course, businessmen rushed here and soon created an environment eerily reminiscent of the gold rush boom towns of the American West. Things South Korean were everywhere. The karaoke bars played the latest hits from Seoul, the Internet cafes provided access to South Korean websites, and Seoul periodicals—largely of the more salacious type, in tune with the tastes of the local lowbrow audience—were to be found everywhere.
Some half a million North Korean refugees have crossed into China between 1995 and 2005, and most of them eventually returned to North Korea bringing home stories of China’s success and the almost unbelievable prosperity of South Korea. In a nutshell, they followed a pattern mentioned by one of the refugees: “China is a paradise when compared to our country, but the Chinese say that they are very poor when compared to South Korea!” Retelling these stories is dangerous, but it is done nonetheless.
South Korean pop songs began to spread throughout the North from the late 1980s, especially once tape recorders became commonplace in more affluent households. The Korean penchant for singing is well known, and the catchy tunes of the modern Seoul hits attracted a lot of attention in the North. For a while, the authorities tried to hold back the tide, and people were sometimes arrested for singing South Korean songs in public. These days the authorities prefer to turn a blind eye to such minor transgressions. South Korean pop songs are euphemistically called “Yanbian songs” as if they were created by the ethnic Koreans of China. Finally, in 2001, Pyongyang even included a few South Korean oldies on the list of songs officially approved by the authorities.
However, the real breakthrough came only recently, and largely thanks to videotape. If the Soviet Union was brought down by the short-wave radio, in North Korea a similar role is likely to be played by the VCR.
Just like many other great social changes, this one began from a minor technological revolution. DVD players have been around for quite a while, but around 2001 their price dropped dramatically. Northeast China was no exception. Local Chinese households began to purchase new DVD players, and this made their old VCRs obsolete. The Chinese market was instantly flooded with very cheap used VCRs which could be bought for $10 or $20. Many of these used machines were bought by smugglers who transport goods across the porous border between Korea and China. They were resold in North Korea at a huge premium, but still only cost some $40 to $60.
This made the VCR affordable to a large number of North Korean households. In the 1990s they would have had to pay some $200 for a VCR—a prohibitive sum in a country with an average monthly salary of $5. A $50 VCR is within the reach of many North Korean households, even if they have to save desperately to afford one. No reliable data are available, but according to recent estimates it seems that some 5–10% of all Pyongyang households have a VCR, and this is a political fact of great importance.
Against the dull background of the official arts, the VCR provides good entertainment. Needless to say, people do not buy these expensive machines to watch “Star of Korea,” a lengthy biopic about the youth of the Great Leader! Since the world’s only major producer of Korean-language shows is South Korea, it is only natural that most programs come from Seoul via China. The South Korean soaps are a major hit. In a sense, the much-talked-about hanliu or “Korean wave,” a recent craze for Korean pop culture across East Asia, is a part of North Korean life as well. Young North Koreans enthusiastically imitate the fashion and idiom they see in South Korean movies. And this does not bode well for the regime’s future.
The gap between the two Koreas and the corresponding difference in living standards is huge, far exceeding the difference which once existed between East and West Germany. The per capita GDP of the South is approximately U.S. $10,000, while in the North it is estimated to be between U.S $500 and U.S. $1,000. Obesity is a serious health problem in the South while in the North the ability to dine on rice every day is a sign of unusual affluence. South Korea, the world’s fifth largest automobile manufacturer, has one car for every two adults, while in the North a private car is less accessible to the average citizen than a private jet would be to the average American. South Korea is the world’s leader in broadband Internet access while in the North only major cities have automatic telephone exchanges and private phones are still a privilege reserved largely for cadres. This South Korean reality represents a remarkable difference from the North Korean propagandists’ picture of long queues of exhausted people standing in front of employment offices in the vain hope of landing a job, or of innocent schoolchildren severely beaten because of their parents’ inability to pay their tuition fees, or of crowds of women prostituting themselves to “sadistic Yankee soldiers.”
The South Korean life of crowded streets, an occasional lunch in a street corner eatery, easily available cars and annual overseas vacations is reproduced in the serials quite faithfully.
Of course, the South Korean movie-makers did not deliberately pursue a political agenda, and their movies are usually melodramatic stories of love, family relations and escapist adventure. They are not produced with the North Korean audience in mind. But the movies reflect life in South Korea quite faithfully, and this image is vastly different from what the official North Korean media claims it to be.
I do not think that the North Koreans take what they see in the movies at face value. They know that their movies grossly exaggerate the living standards in their own country, so they would expect movie-makers from other countries, including South Korea, to do the same. Thus, they scarcely believe that in the South everybody can eat meat on a daily basis or that every Seoul household has a car. Such improbable affluence is beyond their wildest dreams. But there are things which cannot be faked—like Seoul’s cityscape, dotted with high-rise buildings and impressive bridges.
Thus it is gradually dawning on the North Koreans that the South is not exactly the land of hunger and destitution depicted by their propaganda. This is certain to have political consequences in the not too distant future, since the myth of South Korean poverty has been fundamental to the survival of the North Korean state.
Pyongyang has always based its claims for legitimacy on being a better type of Korean government, supposedly delivering a quality of life that would be unavailable in the “exploited” and “impoverished” South. If the North Korean populace learns about South Korean prosperity, then the Pyongyang government is in deep trouble, as the fate of the much more successful East German government demonstrated: the economic gap between North and South Korea is much greater than was once the case in Germany. According to current estimates, the per capita gross national product (GNP) in the South is 10 to 20 times higher than in the North.
The video revolution is very important, but many more cracks are opening in the self-imposed information blockade so painstakingly constructed and maintained by Pyongyang for decades. This blockade has proven to be rather expensive to run and maintain, and the regime is short of money.
The radio sets sold inside Korea are still permanently altered and sealed, but that does not really matter since cheap transistor radios are now smuggled across the Chinese border. The North Koreans are widely listening to the Korean-language programs of Voice of America and Radio Free Asia as well as to the KBS programs which target the North Korean audience.
In 2003, a poll confirmed that 67% of defectors from North Korea had been listening to foreign and South Korean broadcasts before they fled. Of course, this is not very representative: the willingness to defect obviously makes a person more interested in listening to foreign broadcasts. Nonetheless, it is clear that information about the world beyond the Beloved Leader’s tight embrace is spreading inside the North.
The daily controls are crumbling as well—and in the long run this is probably even more important. In earlier times, a worker had to spend several hours every day on ideological indoctrination sessions in which he or she was expected to memorize many speeches of both the Great Leader and his son, the Dear Leader. It is now becoming increasingly difficult to ensure that people attend these boring functions. The same is true with respect to many other public rituals which once defined the daily life of North Koreans, such as tributes to the portraits and statues of the Great Leader, mass rallies, and so on. The more privileged must still attend, since they have positions to lose and careers to make, but the North Koreans at the bottom of the official hierarchy, and those outside the hierarchy entirely, do not care any more.
Under these new circumstances, a worker from a long-defunct factory is aware that the state bureaucracy has neither the means to reward his “politically correct behavior,” nor the means to punish his refusal to participate in a state ritual. If such a person survives economically, it is largely through his own small-scale business activities or handicraft. He or she is independent of the crumbling state-run economy and hence is immune to the subtle threats and incentives of promotion/demotion, increase/decrease in rations, etc., which had ensured daily compliance for decades. In this new situation, many minor transgressions are likely to remain unpunished and even go unnoticed or unheeded by authorities.
The newly emerging market vendors and other employees of the semi-legal private enterprises are especially independent from (or inured to) the subtle government pressures which had ensured compliance for decades. One cannot promote or demote a vendor, transfer him or her to a better or worse job, nor determine his or her type of residence (though admittedly, most people still live in the houses they received when the old system was still operating).
Will North Korea survive such a liberalization? It is commonly assumed that survival is possible—after all, post–Mao Zedong China survived and flourished. But there is a major difference: the Communist Party government of China did not have an affluent and democratic “other China” just across the border (except for Hong Kong and Taiwan, of course—but these two statelets were too small and weak). In the Korean case, the impoverished Northerners are likely to see unification with the South as an easy and quick fix to their manifold problems. Only their ignorance about South Korean prosperity, combined with the fear of persecution, keeps them from following the example of the East Germans. But what will happen when this ignorance and fear are gone? Will the government be able to find a substitute, or at least provide economic growth fast enough and on a sufficient scale to silence the voices of protest? It would appear to be highly unlikely.
*****
WHAT IS THE FOCAL POINT OF North Korean life—or, rather, what has become the focus since the mid–1990s? What is the single most important sector in North Korean cities? A majority of North Koreans would not have to think long and hard before answering the question—is it the city hall, the statue of the Great Leader or perhaps the metro? Given the opportunity, most North Koreans would probably answer: “The market, of course!” Indeed, the last decade has been a boom time for the markets of the North.
Relations between Communist states and markets have never been easy. The market by its very nature is the embodiment of grass-roots capitalism. It is not incidental that another (admittedly, more approving) name for the capitalist system is the “market economy.” Nonetheless, few Communist regimes ever contemplated the abolition of markets. It was clear from the outset that the government-controlled distribution systems were inadequate, and thus markets must be tolerated, albeit subject to restrictions of all kinds.
Perhaps no other Communist state was so anti-market as the North Korea of the 1960s. In August 1958, soon after the abolition of private shops, Cabinet Decree #140 prescribed a complete change in the market system. Markets were allowed only three times a month, and cereals, including rice, could not be sold and bought in a market. The markets were also subjected to strict regulations of all kinds, and in general were looked upon with unease and contempt, as “relics of capitalism.”
By this time all farmers had become state employees in all but name. They tilled land which belonged to the large state-managed cooperative farms and were required to sell their produce to the state at fixed prices. Nonetheless, farmers retained small private plots which could be used as gardens. The produce from these plots—largely vegetables and herbs—were permitted to be sold in the markets.
This system is more or less identical to that of other communist countries. What set North Korea apart was the dearth of privately produced food. The plots of North Korean farmers were much smaller than in other Communist countries—a mere 15–30 square meters per household. This was done on purpose. In many other Communist countries farmers had bigger plots—and made their living from them, safely ignoring their work obligations in the fields of the cooperative farm! However, without their own plots, farmers had no choice but to work more for the state.
In the 1960s, private markets almost disappeared from North Korean cities and were barely tolerated in the countryside. Economic reality, however, turned out to be stronger than the administrative bans. In 1969, Kim Il Sung himself admitted the failure of the anti-market policy and gave the marketplaces his stamp of approval. He also reluctantly admitted that state-run North Korean enterprises were unable to produce everything that the average North Korean really needed. In 1984, new regulations allowed an increase in the number of markets and allowed them to operate daily.
For most of these people the emerging market economy is the only way to survive and, with some luck, make money. Photograph by Byeon Young-wook.
However, as recent as the late 1980s, markets were still seen as inappropriate for the capital of a “socialist paradise.” They were something to be ashamed of and were thus pushed to the margins of the city. Until the early 1990s, most markets were located in places more or less hidden from view, inside residential blocks or on small side streets. In Pyongyang, the main city market was set up under a huge viaduct at the easternmost part of the North Korean capital, as far from the city center as was physically possible.
Until the early 1990s, North Korean markets were very small, surrounded by high walls and always crowded with people. Many items unavailable in shops could be easily found in these markets; however, the assortment of goods was not impressive. There was not much food for sale—just some apples, meat, ducks and chickens, soybeans, homemade sweets, and occasionally fish and potatoes. Neither rice nor grain could be sold (at least, not openly) in the markets until the 1990s.
And the market prices were exorbitant even well before the food crisis of the mid–1990s: a kilo of pork in 1985 cost some 20 won, or about a third of the then average monthly salary, while a chicken cost some 40 won. Obviously, food at such prices could be bought only by the few and only on special occasions.
From the early 1980s, the markets became major centers of trade in smuggled foreign goods and, sometimes, of goods stolen from government factories. The authorities knew this but could do little to halt the trade. In the 1980s, about two-thirds of the vendors at the average North Korean market were selling consumer goods: clothes, imported medicines, tobacco and so on.
But the slow-motion collapse of the Stalinist economy and public distribution system led to an explosive growth of these private markets. Nowadays, if we can believe a North Korean joke, one can buy “everything but cats’ horns” at a North Korean market. Indeed, the last decade has been a boom time for the North Korean markets—despite the terrible state of the country’s economy.
Around 1992, North Korea lost access to the subsidized commodities which it once purchased from the friendly Soviet Union and China. This led to a deep economic crisis. Soon famine struck the country as well, triggered by the floods of 1995 and 1996.
In 1995-96 the authorities came to realize that it would be impossible to keep the public distribution system working outside major cities. Food rations were not delivered in remote areas any more, and the inhabitants of small towns and villages were left to their own devices.
At the same time, the government relaxed the restrictions on domestic travel. Technically, every North Korean who ventures outside his native county must have a special “travel permit.” However, in the mid–1990s, the authorities began to turn a blind eye to unauthorized travel.
The late 1990s will be remembered in Korean history not only as a time of great humanitarian disaster—a disaster which took between a half million and one million lives. The decade was also a time of unprecedented mobility when people left their native places in huge numbers. Many sought places where food was more readily available while others enthusiastically took up the barter trade.
Women were (and still are) especially prominent in this business. Many North Korean women were full-time housewives or, at the very least, held less demanding jobs. Their husbands continued to go to their factories, which had come to a standstill, and receive ration coupons which were hardly worth the paper on which they were printed. Meanwhile, their women embarked on a bout of frenetic business activity. Soon some of these women began to make sums which far exceeded their husbands’ wages.
A private (or semi-private) food stall in Pyongyang. Photograph by Andrew Graham.
The markets became major centers for these deals. As of 1999, there were some 300–350 markets throughout the country. In addition, many railway stations became centers of large, if unrecognized, markets. This is understandable: the poor road network means that the railway remains the major means of transport in the North. It was estimated that in 1999, the average North Korean bought some 60% of his food on the free market. For consumption goods, the figure was even higher—more than 70%.
A large proportion of these goods is smuggled from overseas. In recent years, the markets have even been found conducting large-scale trade in South Korean goods, of which cosmetics are a particularly popular item. This is a significant departure from the recent past when the possession of a single South Korean item could easily land a person in jail.
Nor are markets simply a place for shopping. In recent years, private food stalls have begun to appear in large numbers on market squares. In spite of the food shortages, anyone with ready cash can enjoy a delicious—if not necessarily clean and safe—meal at such stalls.
South Koreans often compare the North Korean marketplaces with the Seoul markets of the 1950s, displaying the same raw energy, the adventurism, and the ever-present danger of violence. It might sound surprising, but a teenage defector remarked that the present-day South Korean markets, like Tongdaemun or Namdaemun, failed to impress him: they did not look as lively as their North Korean counterparts! They say that you can now even buy pineapples and bananas at the markets—as long as you have the money.
But money is a problem. The market price has always been several times the price of the same product in government shops where these products could be obtained only with rationing coupons, if at all. The official price of rice has always been 0.08 won per kilo, while on the market it was sold in early 2002 at 40–50 won and after the “July reforms” this price increased even more. Only a minority of North Koreans can afford to buy anything but the most basic food, and many cannot afford even that.
Nevertheless, the sudden resurgence of markets has once again demonstrated the resilience of capitalism. Is this good or bad? Only time will tell....
*****
RECENTLY, FOREIGN NEWSPAPERS BEGAN publishing photos of North Koreans talking over mobile phones and driving luxury cars. Such scenes are correctly perceived as yet another confirmation of the serious changes which have taken place in the North over recent years. Mobile phones, classy private restaurants and advertising billboards for automobiles indicate that capitalism is quietly making inroads in what used to be the world’s last Stalinist stronghold. But if there is capitalism, there must be capitalists. So who are these new rich in North Korea?
The last decade has turned out to be an era of the quiet collapse of Stalinism in North Korea. While the country’s political structure still remains largely Stalinist, its economy has changed profoundly and perhaps irreversibly. This was not a result of some planned reforms; rather, North Korea’s economic Stalinism died a natural death, being eaten away by the grass-root capitalism which began to grow around 1990. But can there be a capitalist economy without capitalists?
Of course the North Korea of the 1960s or 1980s also had its rich and poor. But the affluent were that way either because the party-state bureaucracy chose them (i.e., officials and individuals who were allowed to work overseas and were paid in hard currency) or at least allowed them to be affluent (this was the case for the repatriates from Japan who received hard-currency remittances). But this is not the case any more. People get rich, well, because they can get rich....
A street in Kaesong, the second largest city in the country. The economic crisis meant that traffic, never heavy, is almost non-existent outside Pyongyang. Photograph by Christopher Morris.
The private market trade began to grow explosively around 1990, and this was the time when North Korea’s “black capitalism” was well and truly born. In order to succeed, one had to have a competitive edge, since the competition was tough. In the late 1990s, the North Koreans would say: “There are only three types of people in [North] Korea: those who starve, those who beg, and those who trade.”
These early successful entrepreneurs usually had some background which gave them an advantage over others. Most of them were officials or managers of state-run enterprises who had manifold if not strictly legal ways to make an extra won. For example, in the 1990s a person who could command a truck easily made a fortune by moving merchandise around the country and taking advantage of the large differences in prices between the regions.
Managers of state enterprises often sold the product of their factories on the market. This was technically stealing, but in an increasingly corrupt and disorganized society, there was a fairly good chance of remaining uncaught. Retail personnel at all levels channeled the goods through the “back doors” of their shops, independent of the disintegrating public distribution system. The military and security personnel also had their advantages, since for decades they operated in what can be described as “states-within-a-state,” beyond even the most nominal control of outsiders.
Finally, the “hard-currency earning” officials made a lot of money: they had been running quasi-market operations since the 1970s and had both the necessary expertise and the resources. After 1990, they began to use these resources for their own ends.
Even some humbler professions found themselves in a relatively better position, especially if they could exploit the huge differences in commodities’ prices between various regions. Truck or car drivers, for example, could take money for moving passengers and merchandise—especially after the quiet breakdown of the travel restriction system around 1997. Train conductors augmented their salary by selling and buying goods themselves, and by taking bribes for allowing passengers into certain carriages. Of course, they had to share some of their profits with their supervisors....
We have seen similar developments in the former Soviet Union and China. However, in North Korea, it appears that the involvement of the party and state cadres in the new capitalist enterprise has remained relatively limited. Perhaps the government itself remains indecisive on whether to allow the officials to engage in private commerce on a large scale. Recent years have witnessed some experiments of this kind. But so far the major role in the emerging North Korean capitalism has been played by people who came from outside the state bureaucracy and, in many cases, from groups hitherto discriminated against.
Access to investment capital, however small, is a key to success in the post–Stalinist North Korea, and the country has three major groups who can boast this access: “Japanese Koreans,” “Chinese Koreans” and “Korean Chinese.” It is remarkable that for decades all these groups were seen as “suspicious” by Pyongyang’s officials.
The Japanese Koreans are people who moved to the North from Japan in the 1960s (there were some 93,000 of these migrants). These people, their children and their spouses have relatives in Japan, and these relatives are usually willing to send some money to the hapless returnees who had come to the “socialist paradise” to discover that there was no way back.
Traditionally, the authorities looked on the Japanese Koreans with great suspicion, and these former repatriates were overrepresented among the inhabitants of prison camps. At the same time, money transfers from Japan have always been a major source of hard currency for Pyongyang, so the antics of the Japanese Koreans were often tolerated and this peculiar group even enjoyed some special rights, so that they were both privileged and discriminated against at the same time.
When the old system of state control and state distribution collapsed, Japanese Koreans began to invest their money in a multitude of trade adventures. It did not hurt that many of them still had first-hand experience of living in a capitalist society.
Another group were people with relatives in China. The economic growth of China meant that the relatives there could also help their poor relations in North Korea. In most cases, this did not consist of money transfers, but assistance in business and trade.
The local ethnic Chinese, the only minority in North Korea, were in an even better position to exploit the new opportunities. After all, the Korean Chinese have been the only group of the country’s inhabitants who could travel overseas as private citizens more or less at will. Even in earlier times, the ethnic Chinese used this unique position to earn extra money by moving merchandise across the border, albeit on a small scale. In the new climate of the 1990s, they simply switched to larger operations.
There is an irony in the sudden economic advance of these groups. For decades, their overseas connections have made them suspicious and led to systematic discrimination against them. In the 1990s, however, these very same connections became the source of their prosperity.
Fortunes are made in trade, but not in manufacturing, which remains controlled by the state. Money lending also provides good profit. In the 1990s the private lenders charged their borrowers a monthly interest of some 30–40%. The associated risks are high, too: these lenders had virtually no protection against the state, criminals or above all, bad debtors. They have to choose their clients carefully, largely from prominent officials who are engaged in private commerce.
Thus, by the late 1990s some businessmen (and, surprisingly, for such a patriarchal society, businesswomen) have amassed large fortunes, often reaching a hundred thousand U.S. dollars. This symbolically important mark seems to be the line between the rich and the filthy rich in the North. Thus a sudden turn of fate has made the pariahs of the past into the elite of the present.
But what about future? Does the future of North Korea belong to these new capitalists? I doubt it, frankly. If the North continues to exist as a separate entity, these market adventurers will eventually have to compete with the heavyweights from the state oligarchy who will sooner or later join the capitalist game (and some of them have probably done so already). If the entire state collapses, and the country is swiftly united with the South, most of them will be pushed aside by the capital from Seoul. In this regard, perhaps North Korea will be different from China or Russia.
*****
A DEFECTOR FROM THE NORTH, a typical tough Korean auntie with trademark permed hair, smiled when asked about a “man’s role” in North Korean families: “Well, in 1997-98 men became useless. They went to their workplaces, but there was nothing to be done there, so they came home. Meanwhile their wives traveled to distant places to trade and kept the families going.”
Indeed, the sudden increase in the economic strength and status of women is one of the changes which have taken place in North Korea over the past decade. The old Stalinist society has died a slow but natural death and, despite Pyongyang’s frequent and loud protestations to the contrary, capitalism has been reborn in North Korea.
But the new North Korean capitalism of dirty marketplaces, charcoal trucks and badly dressed vendors with huge sacks of merchandise on their backs displays one surprising feature: it has a distinctly female face. Women are overrepresented among the leaders of the growing post–Stalinist economy at least at the lower level, among the market traders and small-time entrepreneurs.
This partially reflects a growth pattern in North Korean neo-capitalism. Unlike the restoration of capitalism in the former Soviet Union or China, the “post-socialist capitalism” of North Korea is not an affair planned and encouraged by people from the top tiers of the late communist hierarchy. Rather, it is capitalism from below, which is growing despite the government’s occasional attempts to reverse the process and turn the clock back.
Until around 1990, markets and private trade played a very moderate role in North Korean society. Most people were content with what they were officially allocated through the elaborate public distribution system, and did not care to look for any further opportunities. The government also did its best to suppress the capitalist spirit. The rations were not overly generous, but were still adequate for one’s survival.
And then things began to fall apart. The collapse of the Soviet Union brought a sudden end to the flow of Soviet aid which was, incidentally, happily accepted but never publicly admitted by the North Korean side. This triggered an implosion of the North Korean economy, and in 1995-96 the public distribution system ceased to function in most parts of the country.
Like the authorities of most other Communist countries, the North Koreans expected that every able-bodied male would be employed by some state enterprise. It was illegal to remain unemployed—for males, that is. For married women, however, the approach was different. All Communist countries have admitted that a woman has the right to remain a full-time housewife, but this was not seen as a “socially healthy” or terribly responsible career choice. In the North, the number of stay-at-home housewives was unusually high. No precise data are available, but it appears that some 30% of the married women of working age stayed at home.
When the crisis began and the old system began to fall apart, the men still felt bound to their jobs by their obligations and rations which were distributed through their workplaces. The rations by this time were not forthcoming, but this did not matter. Accustomed to the stability of the previous decades, North Koreans saw the situation as merely a temporary crisis which would soon be overcome somehow. No doubt they reasoned that one day everything would return to the “normal” (that is, Stalinist) state of affairs. So men believed that it would be wise to keep their jobs in order to resume their careers after the eventual normalization of the situation. The ubiquitous “organizational life” also played its role: a North Korean adult was required to attend endless indoctrination sessions and meetings, and these requirements were more demanding on males than females.
Women enjoyed more freedom. Thus when the economic crisis began, women were first to engage in market activities of all kinds. It came very naturally. In some cases they began by selling those household items they could do without, or by selling homemade food. Eventually it developed into larger businesses. While the men continued to go to their plants, the women threw themselves into their market activities with gusto. In North Korea their trade involved long journeys in open trucks, and nights spent on concrete floors or under the open skies. They often bribed predatory local officials, and of course, women had the ability to move heavy material, with the vendor’s back being her major mode of transport.
This tendency was especially pronounced among low- and middle-income families. The elite received rations even through the famine years of 1996–99, so the women of North Korea’s top 5% on the whole continued with their old lifestyle. Nonetheless, some of them also began to use their abilities to acquire goods cheaply. Quite often, the wives of high-level cadres were and still are involved in the resale of merchandise which is first purchased from their husbands’ factories at cheap official prices. It is remarkable that in North Korea such activities are carried out not so much by the cadres themselves, but by their wives. Cadres had to be careful, since it was not clear what the official approach might be to the nascent capitalism. Thus it was assumed that it would be safer for women to engage in such undertakings since they did not, nor do they still, quite belong to the official social hierarchy.
A typical story is that of Ms. Hwang, who has operated in the borderland area since the late 1990s. Many inhabitants of her native Yongch’on County still remember how in 1997, when the North Korean economy began to crumble and the public distribution system ceased to function, they received a special gift from the Dear Leader: everyone in the county was given a pair of nylon socks. Not luxurious goods, of course, but to get something in such trying circumstances was unusual. Few knew that these socks were not actually provided by the government, let alone the Dear Leader himself. The socks were donated by the above-mentioned Ms. Hwang.
Recently, Kwon Chong-hyon, an energetic China-based correspondent of the Daily North Korean paper, interviewed her and got her to relate her life story and exploits.
Ms. Hwang was born in China to a mixed marriage, her father being Han Chinese and her mother an ethnic Korean. Like many other China-based families of Korean origin they fled from Mao’s “Cultural Revolution” in the 1960s and moved to North Korea. These days, when people are escaping from the North in their thousands, it is a little difficult to imagine that just a few decades earlier North Korea was often seen by the Chinese as a land of stability and affluence!
Like many other Koreans with “Chinese connections,” Ms. Hwang began a cross-border trade business in the 1990s, when government control began to wane. Unlike many others, she had no need to resort to smuggling: having immediate relatives in China, she could travel there legally, and in recent years this has become a lot easier. Of course, getting a travel permit might be troublesome, but her money allows her to smooth over this procedure with a few judiciously placed inducements.
And naturally, her “Kim Jong Il’s socks” publicity stunt also worked wonders. She bought 100,000 pairs of socks wholesale and presented them to the local government for distribution. In doing so the local authorities were able to win some praise from above and improve their political standing, and in return Ms. Hwang received powerful political support. And the common people got their socks!
Ms. Hwang frankly explained her survival strategy to Kwon Chong-hyon: “I know a lot of people in the foreign affairs department of the state security police in North Pyongan Province. Since I have a travel permit [to visit China], I can go there without trouble as long as I get it stamped by state security. If you have good relations with state security, it’s easy to get travel permits; if you have good relations with police, it’s easy to fight off the criminals; if you have good relations with the Party, it’s easy to do trade.”
Had the state given its formal approval to the nascent capitalism as had the still formally “communist” state of China, the men would have been far more active. But Pyongyang officialdom still seems to be uncertain what to do with the crumbling system, and it is afraid to give its unconditional approval to capitalism. Thus the men are left further and further behind and capitalism is left to the women.
This has led to a change in the gender roles inside families. On paper, communism appeared very feminist, but real life in the communist states was an altogether different matter, and among these communist states, North Korea was remarkable for the strength of its patriarchal stereotype. Men, especially in the more conservative northeastern part of the country, seldom did anything at home, with all household chores being exclusively the female domain.
But in the new situation, where men had little to do while their wives struggled to keep the family fed and clothed, many men changed their opinion about housework being something beneath their dignity—at least this is what recent research among the defectors seems to suggest. As one female defector put it, “When men had outside jobs and earned something, they were very boastful. But now they cannot boast and have become sort of useless, like a streetlight in the middle of the day. So a man now tries to help his wife in her work as best he can.”
Recently, as it has become increasingly clear that the “old times” are not going to return, some men have been bold enough to risk breaking their ties with official employment. But they often enter the market not as businessmen in their own right but rather as aides to their wives who have amassed great experience over the past decade. Being newcomers, males are relegated to subordinate positions—at least temporarily—in fact, Ms. Hwang’s husband also works as her assistant! Or alternatively, they are involved in more dangerous and stressful kinds of activity, such as smuggling goods across the badly protected border with China. As one woman defector noted: “Men usually do smuggling. Men are better at big things, you know.”
Economic difficulties and the change in money-earning patterns as well as a new lifestyle and related opportunities in some cases have led to family breakdown. In South Korea the economic crisis of 1998 resulted in a mushrooming divorce rate. In the North, the almost simultaneous Great Famine had the same impact, even if in many cases the divorce was not officially recognized.
Of course we are talking about a great disaster here, and a large part of the estimated 600,000–900,000 people who perished in those years were women. And of the survivors, not all women became winners, bold entrepreneurs or successful managers: some were dragged into prostitution, which has made a powerful comeback recently, and many more have had to survive on whatever meager food was available. But still, it seems that for many women, the disaster of the 1990s has offered then an opportunity to display their strength, will and intelligence not just to survive, but also to succeed.