In the News – North Korean Economic Reform: It Could Work Very Well If They’ll Let It
It’s extremely difficult to get hard facts out of North Korea: we’re all peering through a cloudy looking glass dimly at whatever rumour we can find. The latest is that there is going to be some move towards economic reform in thecountry. My belief is that it would work very well: if only they allow it.
Impoverished North Korea is gearing up to experiment with agricultural and economic reforms after young leader Kim Jong-un and his powerful uncle purged the country’s top general for opposing change, a source with ties to both Pyongyang and Beijing said.
The source added that the cabinet had created a special bureau to take control of the decaying economy from the military, one of the world’s largest, which under Kim’s father was given pride of place in running the country.
I say this for two reasons. The first being the obvious one that it’s actually terribly easy to produce economic growth when you’re starting from the low point of economic autarky and rigid communism. As China found when it first started to get rid of the stupidities of Mao’s time, just allowing the peasants a little land and the freedom to market their produce gets things moving very nicely indeed. From the low base at which they’re starting 5% or more economic growth a year isn’t the result of actively doing anything at all. It will come purely from ceasing to stop people doing what they already wish and know how to do.
The second reason comes more from personal experience. When I was living in Russia in the 90s I had some interaction with a number of North Koreans. The most absurd two meetings of my life come from this period. In one I tried to explain to three North Korean Generals why it was necessary for me to have a Letter of Credit before I shipped something to the country. The idea that I did not trust the State was just a concept that couldn’t be got over to them. That I might want a guarantee that I would get paid, over and above well, just trusting that I would, could not be squeezed into their minds. That little attempt at international capitalism by myself ceased when others were convinced about the financing need but Standard Chartered, the country’s bank in Singapore at the time, refused to raise the LoC for the needed $250,000. Imagine: a country not being considered credit worthy for a mere $1/4 million.
The other was going into the North Korean Embassy there in order to hand over a
bribe commission payment over another little adventure. Walking past the mural of Kim Il Sung to hand over $10,000 in cash was just too bizarre. I should perhaps point out that all of this took place back when it was legal to trade with North Korea: also when it was legal for an Englishman to bribe pay a commission to an official of a foreign state.
What I took from that second experience was that, while perhaps a little uninformed about the details of capitalist practice (unlike the Generals, who were entirely ignorant) there were indeed North Koreans in the administration who were entirely competent at the basic idea and indeed eager to take part in it. Which leads me to the conclusion that at least some of them, if given the freedom to do so, will start doing that capitalist and market thing of buying and selling and producing. It’ll be fairly red in tooth and claw I’m sure but absolutely any other economic system would be, will be, better than the abject penury that the country is stuck in now.