Capitalism & Free Market Comes Marching Into… North Korea?

Online shopping with 24-hour delivery. On-demand transportation. Streaming movies through smartphone.

Those may be described as life in New York. Or San Francisco. Or Sydney. Or Singapore.

(A poster promotes the store’s 24-hour delivery and price competitiveness. Image from Arirang-Meari)

Except that it’s what life like in Pyongyang, the capital city of Hermit Kingdom. Or at least what life like to elite, wealthy & middle-class of North Koreans in Pyongyang.

Though under constant reminder from the regime that North Koreans can be executed for i.e watching South Korean programs, this doesn’t deter them to enjoy a bit of newly-found world called free market & capitalism, although DPRK was quick to clarify that they’re not actually embracing free market (only ‘certain rights to engage in business activities autonomously and elevate the will to labor through appropriately implementing the socialist distribution system’).

But what’s in a name? That which we call a rose, by any other name, would smell as sweet.

 

A rough road from famine to (relatively) free market.

(North Korean working on farm. Image from Reuters)

DPRK has come a long way from the great famine in mid 90s that killed about 2-3 millions of North Koreans (actual figures unknown, as DPRK is a highly isolated country). The economic mismanagement, the collapse of USSR (DPRK’s main backer since the end of Korean War) in 1991 & China’s closer relationship to South Korea during that period, obviously didn’t help. A series of floods and droughts amplified the already bad crisis into worse. It was during this period of time that some North Koreans took matter to their own hand and started something that once considered as blasphemy within communism. 

A (relative) freedom for trading & selling.

Basically, with approximately 20 millions North Koreans who were born or grew up during this era are forced to forget about state subsidies & handouts and need to make a living without much of government program & rations. 

Well, as the old adage said, hardship breeds creativity.

(Jangmadang, or private market in North Korea. Image from National Endowment for Democary)

Apparently, desperate North Koreans found their ways to get out of the crisis by growing their own food supply & sell it to others, relieving them from their current crisis. And suddenly, activities that considered as illegal in communist philosophy blossomed, refused to die, and keep growing (although still in relatively small scale compared to the real free market economy).

That paved way to the birth and rise of marketplace in North Korea, or Jangmadang. But just because Kim Jong Il or Kim II (or Dear Leader) formally approved some activity of bartering & trading, doesn’t mean that he & the government not skeptical about it (even though it’s tilted more towards socialist-type market economic than liberal, free market). After all, marketplace is considered as DNA of capitalism, the sworn enemy of communism. And free market economy in North Korea is considered as a threats to the communist government,  which may weaken their power & strengthening the ordinary people.

Jangmadang continues to survive through millennium and thriving when Kim Jong Il passed away in 2011. 

 

A communist leader who grew up in a free world

(Kim Jong-Un or Kim III)

Enter the new (and relatively young) Supreme Leader of DPRK, Kim Jong-Un or Kim III (or The Great Successor, whatever works for you). The youngest son of Kim III, he was schooled abroad (at two different schools apparently, as he reportedly didn’t perform well at first, so Kim II sent him to public school after that instead) and only known as ‘Un Pak’, son of DPRK’s diplomat in Switzerland.

Although not much known about his teen life & schooling in Europe, it’s fair to say that since his early teen, he was already exposed to the notion of free market, capitalism, market demand & supply and the benefits of having a choice in life. Or at least how life’s like in a free country.

Taking the reign of DPRK in 2011, Kim III spent much his schooling & teen years not in Pyongyang, but in Bern, Switzerland (1993 – 2000). Not among the smartest bunch, he’s really into music, video games, skiing and of course, basketball (he’s a big fan of Michael Jordan). Not to mention living within the realm of cafes, banks and a supermarket. Surely he learnt a thing or two of how free market economy works.

Whether or not he managed to get a taste of Internet was another matter, as he left Switzerland around 2000, where Internet were still relatively new.

Kim III understands that in order to prove his legitimacy & maintain his power, he needs to ensure his underlings are loyal & happy. That includes his generals, his scientist, his military personnel and of course, the ordinary North Koreans. But he’s walking a tight rope. After all, this is not his father’s or grandfather’s DPRK. And purging his own generals can only go so far. Otherwise he’ll running out of people to run his country.

The good news is, to some extent, he seems to have nice template on how to pull it.

China.

 

State-controlled capitalism 

(North Korea’s phone, Jindallae-3. Image from DPRK Today)

(A man in North Korea using his phone. Image from NK News)

China, the sleeping dragon for much of the last century, has finally managed to awaken. With some fiery breath. And ass-kicking strength, to become the next superpower, no longer leaving America (and the resurgence of Russia under Vladimir Putin) to dominate the next millennium. 

From the beginning of the market reform (and subsequent admission into WTO), China managed to let free market & capitalism blossomed during this period, without losing its tight grip of power. China has become more and more embracing a state-controlled capitalism as its economic philosophy, rather than stick to communism-Leninism-Marxist’s closed door.

And Kim III is watching & learning on how to do the very same thing with his DPRK. And by copying China, he’s allowed DPRK to slide into Chinese-style authoritarian or state capitalism. Kim III has apparently decided to do what his father unwilling to do, by embracing (however slightly) the element of market economy but still maintaining his political power.

Kim III pretty much say to North Korean that “OK from now on I allow you to engage in economic activities. But dare not crossing me & my government, for I will swiftly execute not only you, but your whole family”. Kim III practically step aside to let North Korean to provide goods & services to themselves but unwilling to go any further than that, especially in politics & military. It is still a risky move for Kim III because  the rise of market economy in DPRK means moving power away from the government and hand it over to the ordinary North Korean.

But it’s still better than letting few millions die due to famine & poor economic management. Kim III can’t afford another threat to his legitimacy & power. So if this move makes his people happy and eats 3 times a day, so be it. The more ordinary people sees progress, the greater the chance his dictatorship lasted.

(A partial screenschot of Manmulsang, an online shopping platform in North Korea. Image from NK News)

And so the ordinary people starts to enjoy the new freedom. Unlike in the past where the state provides food & the necessities, many citizens now earn wages. Shopping opportunities have arisen for a growing middle class. Factory managers can increase wages & price as long as the revenue target is achieved. Farmers can earn excess of production & sell at profit, as long as achieving their targeted production quota.

Slowly, Kim III seems to pulls DPRK from its status as pariah state of the millennium towards a country of moderate freedom & prosperity, and maybe, paved way for better geopolitical & economic relationship with the rest of the world. But of course, his nuclear ambition is one of the stumbling block. After all, his nuclear arsenal (and other WMD) works great for him as insurance to ensure his ruling power & survival.

 

The third generation who might lose the shirt 

(My Companion 4.0, a Netflix-like service in North Korea. Image from DPRK Today and edited by NK News)

And so we got to the realm of North Koreans no longer living under the rock. They actually enjoy the relative freedom that once considered as unheard of in past. Things like surfing the Internet (more like Intranet, called Kwamyong, monitored around the clock by government) through smartphones, buying foods & clothing from private supermarket and eating at the restaurant (many are state-owned enterprise) has become a norm for them.

More and more, Pyongyang has morphed to resemble Beijing. And San Francisco. And just like China or USA, technology has come to revolutionise & shape the future of DPRK, for better or worse (at least for Kim III & his family). China has Alibaba & USA has Amazon? DPRK has Manmulsang & Okryu. USA has Amazon Prime? DPRK has Abnal. San Francisco got Netflix? Pyongyang has My Companion 4.0. Not to mention Pyongyang also got taxi-hailing service. 

(Taxis in front of Pyongyang’s supermarket. Image from Reuters/Damir Sagoli)

Slowly but surely, the Internet has come to invade the daily lives of North Koreans.

So, what make this to Kim III & his government?

Kim III understands that he’s got little to gain by becoming the one that prevents market reform of DPRK. He understands that the DPRK gets more & more open towards free market, capitalism, technology breakthrough and whatnot. Maybe even it is his intention that he wants to transform the regime & the country that he inherits. No more North Korea of the past, living food-to-mouth, malnourished & living in fear. What if it is he actually well-intentioned (relative term here) to improve the lives of his people, opening door to the rest of the world, and let North Koreans be as prosperous as their cousins  & neighbours in the South?

US (and the world) spent so much resources & effort to ‘neutralise’  & ‘cure’ DPRK. To shift them from communism to liberal, free market North Korea by propaganda, threat, military operations, sanctions and all other actions. Perhaps they can just let free market, global Internet & free information do the job (DPRK does have connection to global Internet through China, albeit only to authorised personnel) and watch from afar. 

After all, even communism in USSR fell not through military operation, but by free market capitalism. 

Will we see Kim III undo (intentionally or not) what Kim II & Kim I did when they founded DPRK? In the US, they say “shirt sleeves to shirt sleeves in three generations.” European expression likens to “clogs to clogs in three generations”. And in Asia, “rice patty to rice patty in three generations”. Will we see “liberal North Korea to liberal North Korea in three generations”? For the security & stability of the planet, let’s hope so.

Either that or DPRK will transformed into another China. And with that, another round of headache at White House & UN.

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