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February 2, 2012


North Korean Capitalists … and Our Response

by Mike M

It’s tempting to see North Korea as a land frozen in time.  From the outside, the image persists, and now the aftermath of Kim Jong-il’s death would seem to reinforce the notion, with so little apparent perturbation:  The Great Leader Dies, Long Live the Great Leader … and everything trudges along as if the long-awaited regime-shattering event hadn’t happened at all.

But under the surface, as much as it seems nothing is changing—everything is changing.  And this ought to mean something as far as US strategy is concerned.

Two recent reports add to the stack of evidence about the burgeoning trading class in the North, the dominance of a market mentality, the obsession with cash, the universality of corruption.  North Korean society is evolving into something different than it has been, though to be fair we don’t yet know what that is.

The North Korea-watcher site Daily NK describes the “unlikely Big 3” power groups in North Korean society:  Party cadres, fishermen and widows.  Fishermen get wealthy because they have access to one of the most tradeable goods in society.  Party officials would seem powerful for obvious reasons—but their power today stems not from their official position, but rather its relationship to markets.  As the report explains,

Ordinary citizens’ ability to make money from business depends on how much direct influence government officials wield over their lives.  According to defectors, it is practically impossible in modern day North Korea for ordinary citizens to survive and participate in the economy without taking part in illegal activities, such as smuggling or secret trade.  For this reason, people find it necessary to cultivate close relationships with cadres in the legal system, who become the recipients of bribes in return.

And widows?  Well, attractive ones can date and marry those same party powerful, and thus get access to market-related influence.

A separate story, based on recent travel to the North, at the site 38 North examines “commercial life in North Korea.”  Fast-food places are hopping in Pyongyang, the author reports:  “Pyongyang consumers have cash and they are happy to spend it.”  Interviews with elite young North Koreans showed that careers in business—business, this in the “communist” North—ranked among the most popular ambitions.  One graduate student asked the author of the piece for some good readings on finance.

As I suggested in an earlier post, economics increasingly dominates North Korean life, a focus evident even in the regime’s Near Year’s message this year.  Sooner or later we are going to have to answer the obvious question:  What are we going to do about it?  North Koreans are demonstrably concerned about overwhelming Chinese influence.  There might be an angle for US, South Korean and international foreign direct investment, business training and other avenues of highly targeted involvement as an alternative, designed in part to spur social change.  The hurdles are intense—the regime will be hugely suspicious; the political barriers in the US and South Korea are just as substantial.  A friendly North Korean who wants to open a computer repair shop is one thing; his regime is a proliferator that forges bank notes, cooperates with Iran on nukes, traffics in drugs.

Nonetheless:  Do we feel our interests will be better served by an acceleration of these trends, or their punishment?  What does the evidence of economic activity say about the effectiveness of the sanctions regime’s goal of “isolating” the North?  Do we have any reason to think Kim Jong-un might want to change a few things?

It’s been long past time for a serious review of our strategy toward the North.  It ought to begin with a clear-eyed assessment of what exactly is going on there.

1 Comment Post a comment
  1. lipsf16
    Feb 11 2012

    We’ve been trying unsuccessfully for years to deal with the nK problem from the outside; are you suggesting we consider shifting–at least in part–to an inside-out strategy. That seems like a very attractive and logical idea but we will need leadership with the guts to look past the nuclear issue. As long as we place all relations with nK contigent on a roll back of their nuclear program, I see little hope for creating a strategy that might actually have an affect on nK society. I do not mean to suggest that the nK nuclear problem is something we should ignore, but at this point I wonder if we are better off just working to freeze their nascent nuclear capabilites and shift a portion of our efforts to a different approach as suggested here.


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