WaPo: North Korea Lifts Market Restrictions

In Part Three of my capitalist manifesto, I’d documented North Korea’s efforts throughout 2009 to destroy the markets on which most of the North Korean people had come to rely on for their survival.

The efforts included with bans on imported goods, the closure of large markets, the imposition of restrictions on who could sell in others, and finally, the Great Confiscation, which wiped out the savings of millions of families, along with the working capital of the traders who supplied those markets with food, clothing, and consumer goods.

But now, those anti-market measures are said to have resulted in more than the ordinary, acceptable level of starvation, so the regime is backing off:

Bowing to reality, the North Korean government has lifted all restrictions on private markets — a last-resort option for a leadership desperate to prevent its people from starving.

In recent weeks, according to North Korea observers and defector groups with sources in the country, Kim Jong Il’s government admitted its inability to solve the current food shortage and encouraged its people to rely on private markets for the purchase of goods. Though the policy reversal will not alter daily patterns — North Koreans have depended on such markets for more than 15 years — the latest order from Pyongyang abandons a key pillar of a central, planned economy. [Washington Post, Chico Harlan]

This is not the first report that the regime was backing off in its restrictions on markets. While these images suggest that the original crackdown on markets emptied the shelves, since then, there have been reports that local authorities in Ryanggang and Hamgyeong Provinces had already quit enforcing restrictions and that at least some of the markets had recovered quickly. This may be little more than a case of the central government, or local authorities closer to the capital, acknowledging what local authorities had already done in North Korea’s more remote regions:

As of May 26, the government no longer forces markets to close at 6 or 7 p.m., has dropped the rule restricting customers to women older than 40 and has lifted a ban on certain goods being sold. An official in the city of Pyungsung informed the Good Friends humanitarian group that the living standard had “drastically decreased since the currency exchange, and the government cannot provide distribution so they have to bring the market back up.”

The regime obviously saw markets as a threat to its control, and for once, I agree. Markets circumvented the regime’s control over the food supply and delivered such subversive goods as DVD players, DVD’s, radios, and even MP4 players. In fact, I believe that the full subversive potential of markets remains untapped. And they have now proven to be the one structure within North Korean society that the regime cannot destroy, and can only partially control.

With November’s currency revaluation, Kim wiped out his citizens’ personal savings and struck a blow against the private food distribution system sustaining his country. The latest policy switch, though, stands as an acknowledgment that the currency move was a failure and that only capitalist-style trading can prevent widespread famine.

“The North Korean government has tried all possible ways [for a planned economy] and failed, and it now has to resort to the last option,” said Koh Yu-hwan, professor of North Korean studies at Dongguk University in Seoul. “There’s been lots of back and forth in what the government has been willing to tolerate, and I cannot rule out the possibility of them trying to bring back restrictions on the markets. But it is hard for the government to reverse it now.”

In other times, the regime might have simply tolerated the outbreak of another famine and a few million more dead, but this time was different. Why did the regime sacrifice control for the sake of avoiding famine? You might choose to believe that this is motivated by sincere concern for the welfare of the people, and despite the overwhelming evidence that compassion for starving kids is a matter of little consequence for the central authorities in Pyongyang, I’ve seen fragmentary evidence over the years that at the local level, some officials really do strive to provide for the people as much as they can. Unfortunately, it’s doubtful that these officials have much influence in the making of national policy. Consequently, the more likely explanation, at least to me, is that the regime is afraid of unrest, like the unrest we saw after the Great Confiscation.

That would mean that the regime has finally seen the limits of its absolute power, and that it finds itself in a losing power struggle against its own people. And at a time when the regime is purging its own leadership and trying to transfer power to a new emperor, this is a struggle it can ill afford. Still, I have to suspect that the regime sees this as nothing more than a temporary pause to complete the transfer of power, assure the stability of its power structure, and accumulate the resources needed to restore its control at some future date.