Capitalism Class Warfare

North Korea: Dispatches from a class struggle

When you devote so substantial a part of your life to a topic as depressing as the humanitarian situation in North Korea, you have to find your rewards where you can. One small polemic reward of watching North Korea is observing it as a laboratory for Marxist dialectics and theories of class struggle as the country’s rich grow richer, and the poor are trapped in poverty.

We begin our examination, appropriately, with the most plausible analysis of North Korea’s food situation I’ve seen in recent months, via Benjamin Katzleff Silberstein:

The FAO also asserts that there was a “drastic” reduction in food rations distributed in the lean-season months of July and August, when rations are already typically low. Individual daily rations were cut twice; first to 310 grams in early July (down from the 410 grams distributed throughout the first half of the year), and then to 250 grams in the second half of July. These lean-season figures are very low, as the FAO points out, but they have been worse in the past. (Ration sizes have presumably increased since September, when the agency made its estimates.)

It is important to remember that Public Distribution System (PDS) food rations do not represent the whole story, as most North Koreans probably rely on markets for a very significant part of their food consumption. Most survey studies indicate that the majority of food people consume comes from the markets and from other private sources, like kitchen gardens. In addition, there are likely to be disparities in food access between populations in different regions and in urban and rural areas. For example, the FAO recently estimated that the proportion of underweight children is twice as large in the countryside as it is in the cities. Vulnerable segments of the population are more dependent on the PDS, and thus more likely than the average citizen to be adversely impacted when harvests decline.

This year’s malnutrition figures are indeed dire, even though malnutrition has been improving since the late 1990s. The absolute number of undernourished people is expected to increase in the 2014-2016 period, though they would represent a slightly smaller portion of the overall population than in 2010-2012. As the FAO notes in its yearly report: “The only major exception to overall favourable progress in the region is the Democratic People’s Republic of Korea, which is burdened by continuously high levels of undernourishment and shows little prospect of addressing its problems any time soon.” However, the proportion of undernourishment appears to be going down, so the trend still seems possible even though the situation is not stable. [38 North, Benjamin Katzeff Silberstein]

To put that conclusion into some statistical context, the U.N. FAO and WFP have recently estimated that between 70 and 84 percent of North Korean people are eating near the subsistence level during the lean season. Meanwhile, North Korea continues to ask for foreign aid, but donors are contributing less and less. Pyongyang itself has also cut back on commercial grain imports from China.

The small bright spot in this picture is private agriculture, which — like South Korean agriculture — appears to have had a good harvest last year.

Silberstein’s piece is well worth reading in full, if only for his argument that “neither the extent nor the content” of the much-ballyhooed agricultural reforms in North Korea “is fully known,” and that the basis for the alleged reforms “remains anecdotal at best.” Also worth reading is this analysis by Marcus Noland, questioning how much we really know about the food situation in the North.

Now, for a look at how the other half eats:

“While Party cadres and the donju spend hundreds of dollars per meal at fancy restaurants, ordinary citizens scrape by day to day on what they can earn at the market,” she asserted.

“On Independence Road, near the gym (Pyongyang Gymnasium),” she said that the donju and the elite can be seen frequenting such upscale restaurants like “The Golden Cup,” known for its high end cuisine; another popular eatery is a nearby bistro specializing in smoked duck.  A single meal at either of these establishments starts at $50, generally running a customer far more.

“A group of four can easily consume at least $200 worth of food at one meal,” she noted.

$200 is the equivalent of 1,600,000 KPW, which, at the current market price of 5000 KPW per 1 kg of rice, can purchase approximately 320 kg worth of rice, the staple of the North Korean diet.

Although the number of Pyongyang citizens earning decent money as markets flourish appears to be on the rise, the disparity in wealth is also growing owing to the monopoly market power of the authorities. Their grip on the market allows them to enjoy a lifestyle that our source compared to “heaven on earth”, while the “rest of the people are left out in the cold.” [Daily NK]

At least some of the poor might accept this rising inequality more easily if they believed that they, too, had a chance to rise. For most, their songbun is a barrier to economic mobility.

[T]he donju (or new moneyed class) are flocking to Pyongyang before the year’s end in order to compete with one another by patronizing elite restaurants and buying extravagant gifts.

In a telephone conversation with the Daily NK on December 4th, an inside source from Pyongyang said, “In downtown Pyongyang, fancy restaurants, famous hotels, and foreign currency stores, are thronging with donju who have come from the countryside. It seems that they’ve all come here after completing their winter preparations and other end-of-year year tasks in order to spend money like there is no tomorrow.”

An additional source in the capital corroborated this news.

Moreover, he noted, “The end of November is the time when the State Planning Commission issues import/export licenses, so during this time central state agencies call those heading up local foreign-currency earning units (i.e. donju) up to Pyongyang. Under the pretense of hosting criticism sessions for foreign-currency earning or production, cadres with central state organs gather for a luxurious reception and donju present them with elaborate bribes in order to secure the licenses required to run their operations.”

“The donju gather in downtown Pyongyang at first-rate hotels such The Yang-gack Do Hotel, The Chang-gwang Hotel, and The Ansan Hotel. They spend the entire day at fancy restaurants, spending buckets of cash without a care in the world. At some of these restaurants, it is normal to spend approximately US $300- $400 on a single meal. That adds up to thousands of dollars for all the people around the table,” he explained.

According to inside sources, US $100 now trades as KPW 860,000, or 172 kg of rice in the North Korean markets. This amount could keep an ordinary person happily fed for a duration of ten months. So that means by spending $400 on a single meal, the donju are essentially spending the equivalent amount that it would take to feed a family of four for ten months. [Daily NK]

The class disparity also extends to how people heat their homes.

[B]y looking at whether residents elect to use coal or wood as their tinder, we can know a lot about their lifestyle and socio-economic class. It’s also possible to know about their work conditions. First of all, those with the means to afford it have a higher probability of selecting firewood to keep their house warm. If you calculate the price of the total amount of wood needed for the winter season, it comes out to about 5 cubic meters or 2 tons of coal. So the total cost of wood would be about 750,000 KPW (about US $90.70), and the total cost of coal would be about 660,000 KPW (about US $79.90). When I break down the prices like this, I think it becomes evident what kind of resident would buy the more expensive option.

Those who use coal are using coal pay 90,000 KPW (~ US $10.90) more than those who pay for wood. This might not sound like a big difference, but for many North Korean residents who are forced to scrimp and save, this is a significant amount. That is why our source has alerted us that, as a generality, the well-off residents tend to use firewood. [Daily NK]

Finally, the Daily NK confirms what we can only assume — that this widening class disparity is driving class resentment:

In order to take care of loyal inner circle, Kim Jong Un is building luxurious apartments and private housing in Pyongyang. However, this is causing serious resentment from those who do not stand to benefit from the exclusive provisions.

In a telephone conversation with the Daily NK on December 1st, an inside source from Pyongyang said, “Lately, people have been using the word ‘economic stratification’ more frequently. This frustration and discontent stems mainly from the high-cost construction projects occurring around Mirae (future) Scientists’ Street. The brunt of this criticism is that the regime has stopped the public food distribution system, yet continues to cater to the rich and politically connected class.”

Daily NK crosschecked this information with an additional source in the capital.

“Residents who live on the outskirts and suburbs of central Pyongyang do not receive electricity in a reliable manner. They are forced to exist in pitch black darkness. Some people are saying things like, ‘The cadres exist in a separate world from us,'” he said, adding that one residents “cursed the regime while lamenting his hard fate.”

“Cadres who are in the Central Party or work in foreign currency-earning companies show off their wealth by blowing through US $1000 in a single meal. An entire family of ordinary people could survive off that amount for a whole year. That’s why people feel animosity towards high-level cadres.” [….]

“The monthly salary for a worker in Pyongyang’s textile factory is anywhere from KPW 300,000(about US $36.00) to KPW 1,000,000(about $121.00). At companies in fringe areas, the going rate is between KPW 3,000 (US 0.36) and KPW 4,000(us 0.48). In this sort of situation, the residents are forced to go to the markets and sell in order to make a living,” he explained.

By the source’s estimation, high-level cadres such those in the Korean Workers’ Party and Ministry of People’s Armed Forces account for 10% of the population but hold most of the country’s wealth. Below them are the donju (masters of money, or new moneyed class), who occupy about 20-40%. The remaining 50% is made up of “normal folks, who really do struggle to get by and provide for their family.”

“A while ago, it was said that even though we were subsisting on corn meal soup and scraping to get by, those in Pyongyang weren’t much better off. But things have changed. Now there are residents who say they’d prefer to farm in the countryside rather than watch the cadres show off their extravagant wealth,” the source concluded. [Daily NK]

For much of the 1990s, Americans watched reports come in of the horrible famine in the North and wondered when the people would finally overthrow this obscene oligarchy. It didn’t happen, because historically, starving people have almost never overthrown governments. They are too preoccupied with survival to take on additional struggles against a repressive state. Instead, it is class inequality that has historically destabilized oligarchies. We in the Outer Earth often assume North Korea to be socialist because it pretends to be when foreigners are watching. The reality increasingly looks like the economic totalitarianism of Stalin-era socialism, combined with the inequality of gilded-age capitalism.

One comment

  1. I first discovered North Korea in the late 1980’s. I was living in Japan and came into contact with North Korean propaganda – which is just so over the top ridiculous that I’ve been hooked ever since. Like many foreign observers, I couldn’t believe that a revolution didn’t break out in the 1990’s, but I think you’ve pegged the reasons why perfectly. It was the same heroic spirit that got the British through the blitz and all those years of extreme rations during World War II. But when one thinks the ends such sacrifice were put to, it is difficult to bear. And so today we have, as you say, a combo of Stalin & gilded-age capitalism. (Gilded-age totalitarianism?) I’ve read critiques of the French Revolution that say the thing that tipped it into existence was that the ruling elites decided to keep all of their money and not pay taxes. Ditto for Chinese dynastic successions -which occurred at roughly 300 year intervals. Now, some 230 years after the American revolution, this is all hitting uncomfortably close to home.




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