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North Korea’s Quiet Market Reforms

Kim Jong Un, leader of North Korea. Image: Democracy Chronicles/Flickr

This article was originally published by NK News.org on 14 September, 2015.

Not everybody would agree, but it seems increasingly likely that Kim Jong Un and his administration (whatever that means) are executing a careful set of market-oriented reforms. These reforms bear some similarities to what the Chinese leadership did in the 1970s, though they are significantly less radical in many regards.

Starting from 2012, the government began to switch North Korean agriculture to a household responsibility system. This switch, heralded by the “28th June Measures” of 2012, appears to have been completed as of this time, and has produced some quite encouraging results. In 2013, North Korean agriculture produced the best harvest in some 25 years, while in 2014 the harvest was even better – in spite of a serious drought that produced panicky reports in the media.

The situation in industry appears much less certain, but reformist moves are notable to some extent there as well. For example, the North Korean government attempted to introduce an independent accounting system that means that industrial managers are free to buy spare parts and raw materials at market prices within the market economy, as well as sell their produce legally at the market. Under this system, they are also given rights to hire and fire personnel and, significantly, pay their workers a livable salary. This system has been tested on a number of enterprises and was expected to be introduced nationwide, but so far these plans have been shelved for unknown reasons.

If one adds recent efforts to dramatically increase the number of special economic zones for foreign investment (admittedly, such offers have few takers so far), one can say with some certainty: Kim Jong Un’s policy constitutes a notable, even perhaps dramatic break with his father’s strategy.

However, the supporters of this idea, including yours truly, face a major obstacle in justifying their belief that North Korea has finally initiated serious reforms. The North Korean official media has maintained (almost) a complete silence about the ongoing changes. If one reads North Korean newspapers, one gets the impression that the country has not changed at all, and still remains a stronghold of Kimilsungist “national Stalinism.” There have been no attempts to explain or justify ongoing changes, or even mention them.

Change starts at home

Admittedly, the silence is not complete. Open access North Korean media did mention the introduction of the household responsibility system, even though its workings were described in detail on only one occasion, in an article semi-hidden in the back pages of Rodong Sinmun. North Korean diplomats were also mentioning agricultural reforms in some closed-door briefings to foreigners and there have been some events leaks to Chinese experts, probably deliberate. Nonetheless, all such information and leaks are tiny compared to what the North Korean government produces by way of propaganda about its economy.

This silence is often interpreted by many skeptical observers as a sure sign that reforms should not be taken too seriously. In other words, they assume that even if reforms are happening, North Korean decision-makers are ready to backtrack at the first opportunity, seeing the changes merely as a set of emergency measures of dubious practical value. Such doubts might be well-founded, but it is also possible that the silence of the North Korean media on the issue of reforms is due to another reason.

To start with, the North Korean media is not known for its frankness, to put it mildly. It might suffice to remind readers of how the 2009 currency reform was treated by North Korea’s official media. It was a radical confiscatory reform that wiped out a considerable amount of private cash savings that existed in the country, while creating near unprecedented social and economic chaos. Nonetheless, the very fact that the currency reform was taking place was not mentioned in North Korea’s open-access, domestic media.

In the case of the 2009 currency reform, the total media silence seemingly defies all rational explanation. For example, this could surely not have been aimed at hiding the reform from foreigners – NGOs were briefed in some detail. At the same time, they did not want to hide it from their own public – closed information channels provided the North Korean people with precise information about the reforms.

In a similar way, the North Korean media has remained largely or completely silent about major institutions whose existence is an open secret to all those interested. For example, a reader of North Korean newspapers in the 1960s-1990s would never have learnt that food and basic necessities of life were distributed by the state directly through a rationing system, rather than being freely sold in shops. The official media also remained silent about the need to apply for travel permits when wishing to move outside one’s county/city of residence.

Mum’s the word

Given such a background, one should not be excessively surprised that the North Korean media chooses to remain silent about certain sensitive topics. Additionally, there are reasons for North Korean officials to seek to buy time before making reforms so official as to warrant their discussion in the domestic print media. Even if they have decided that market reforms constitute the only realistic way out of their current predicament, they still face significant problems in justifying them theoretically.

The Juche idea is indeed flexible even to the point of being meaningless. Thus, it is quite possible that a future North Korean Dickensian capitalist system can be described as the paragon of Juche socialist virtue. It should not be forgotten that in China, in which ideology was far less shallow, a similar system is now usually described as “socialism with Chinese characteristics.” However, formal changes in the system, in recognition of existing market forces, might have a negative effect on the viability of the Kimist system. Kim Jong Un takes ideological contamination and disruption seriously – note his crackdown on illegal migration to China and the spread of foreign videos. Thus, he has every reason to be cautious before making any decisions that would adversely affect the long-term ideological standing of his regime.

It is also possible that skeptics are partially right. So long as the new policy is not made official, it will be easier for the North Korean government to backtrack, insisting that experiments had failed and the old system was better after all. Even if this is not a part of Kim Jong Un’s current plans, it is understandable that he is not too eager to burn bridges and cut off all possibility of retreat.

Given the very slow pace of current reforms, as well as the peculiar nature of North Korea’s media reporting, one should not be surprised if no ideological justifications for ongoing changes will appear in official media for years to come, even though the changes will advance rather quickly.

However, at the end of the day, it seems that official announcement of changes will be necessary before too long. Before it comes, reformist policies will remain necessarily dubious and insecure, even in the eyes of people whose job it is to implement. One of my colleagues has confided in me on this topic: “I will not completely believe in North Korean reforms, so-called, until I read about them in Rodong Sinmun.” My colleague might be excessively demanding, but he clearly has a point.


Andrei Nikolaevich Lankov is a Russian scholar of Asia and a specialist in Korean studies. Dr. Lankov has a DPRK-themed Livejournal blog in Russian with occasional English posts, where he documents aspects of life in North (and South) Korea, together with his musings and links to his publications. He also writes columns for the English-language daily The Korea Times.

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