Prospects of an Open Economy in North Korea

One of thousands of statues of Kim Il Sung in North Korea? Nope, this is a statue of Mao Zedong in Chengdu, China (photo from ArianZwegers)

Since Kim Jong Il’s death many articles have explored the likelihood of an open North Korea. Everyone hopes that the recent change in person in North Korea’s leadership might be synonymous with a change in governance. The media attention might also be the result of attempts to capitalize on more exciting angles on North Korea, but let us explore the possibility that maybe we are sensing something about to happen; maybe the change in leadership might herald a new day for North Korea.

The Atlantic has an interesting piece on the historical precedent in China of movement from Communist dictatorship to economic opening. China in 1976 was in a similar position to North Korea’s in 2012, coming off of the death of Mao Zedong to his hand picked successor, revealed only just before his death: Hua Guofeng. The thought is that Kim Jong Un is a near-perfect analogue to Hua Guofeng

So we can’t expect North Korea to reform immediately in this analogy, because China didn’t reform under Hua. Hua was handpicked for the explicit purpose of extending Mao’s legacy; he offered nothing new for the country. In fact, he explicitly formulated a “Two Whatevers” policy: “We will resolutely uphold whatever policy decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave.”

The similarity to Kim Jong Un’s absolute adherence to the rule established by Kim Jong Il is striking; we don’t know a lot about the younger Kim’s leadership of North Korea yet, but the most widely-proclaimed element is his determination to uphold his father’s military-first policy of seongun.

Back to China: soon other powerful leaders in China, breaking out from under the charisma of Mao’s communism, realized that this Hua fellow was not so much leading China as binding it to a failed historical legacy. They abandoned Hua, and paved the way for a reformer named Deng Xiaoping. He led China’s reorganization into a market economy, retaining the political trappings of Communism but opening the country to foreign ideas and investment, modeling its growth off of the success of Singapore and Japan, and setting the foundation for a rapid climb through the world’s economies.

The rapid rise of China’s GDP after market-based economic reforms under Deng (from IntsokzenundertheGNUFreeDocumentationLicense)

So, the thought is that sooner or later powerful people in North Korea will realize that Kim Jong Un, like Hua in the late ‘70s, has no real power or ideas of his own. The country is already in need of a new economic model, and Kim’s backers in North Korea will recognize this, realize the state cannot flourish, and allow the ascent of someone new: a reformer, someone like Deng Xiaoping.

I hope that a reformer comes soon—whether it’s Kim Jong Un, which seems increasingly unlikely, or one of his successors. But China wasn’t under the same firm ideological grasp as North Korea is; the family dynasty in North Korea has now lasted three generations, whereas Mao never had any biological heirs to continue his power.

Once change happens, it often seems to have been inevitable. And it seems to us now that North Korea cannot go on as it is now for much longer. It is a failed state. It seems inevitable that its leadership will have to change in order for the country to sustain itself.

Here is the most compelling element in the Atlantic’s article: “If North Korea were to engage in a Chinese-style opening, it would have the entire Chinese experience as a road map, as well as an eager mentor and trading partner.” China was paving new territory in 1976, and still managed a very successful economic reform, increasing the wealth of its citizens tremendously. If North Korea attempts economic reform, they will be retreading a well-marked path.

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