North Korea: in case of economic collapse, what’s plan B?

I’ve just finished Nothing to Envy: Ordinary Lives in North Korea by Barbara Demrick. This was on a reading list for people interested in the country as the best starting point. And it totally is. Rather than reading like a more detailed version of the Wikipedia entry, it uses first-person accounts of people living in and around the northern industrial city of Chongjin to both flesh out the character of the country, as well as counter a couple of stereotypes most people have. The opening chapter- about how this famous juxtaposition:

(credit: PlantetObserver/Science Photo Library)

isn’t just about the economic collapse of North Korea after the Berlin Wall fell. To some, the darkness was liberating, a veil of privacy in a society where every other person is an informant. It has romance, despair, hope, idealism. Definitely read it, even if you’re not much interested in the country.

The story of North Korea in the 1990s is remarkable. Never has an industrialized country deteriorated so fast without a war rolling through. Lack of subsidized fuel from the Soviets led to factory slowdown and closure, rationing and eventual end to electrical service in most parts of the country, and a famine that killed perhaps two million people. No one’s really sure- one reason for the famine was that some international aid organizations did not provide much aid (being unable to verify if it got to the right people), and others saw their bags of food snatched up by the military. What the story does paint is that in places like Chongjin (an industrial city with very little agricultural land), it eventually devolved into an everyone-for-themselves society, where people were unable to help the starving because they had nothing to give.

What did happen in the 1990s was capitalism. Not a top-down Deng Xiaoping style of capitalism, but the grassroots kind that emerges when things get desperate. North Korea’s system has traditionally been like Cuba’s- people make very small salaries, but going to work gets you food coupons and there’s a state-run system to redeem them and keep people fed. Due to the deindustrialization of the 90s (which also applies to agriculture as well as industry), the jobs stopped paying salaries, and the state-run stores ran out of food. This was the case starting in 1994, the year Kim il-Sung died, and persisted for several years. Thus a parallel system to get people food sprang up- markets. People would forage for food, make their own, or smuggle stuff from across the border with China. Then there would be farmer’s markets where people bartered or used what hard currency they had.

Once things got better (not good, but better), the leadership used a heavy hand on these markets, and people engaging in capitalist activity often found themselves in labor camps. A currency reform that prevented people from transferring their savings to the new currency ruined a lot of the entrepreneurs that had succeeded. Capitalism managed to take this in stride, as this move wrecked confidence in the new North Korean won, and now foreign currency is more prevalent than ever.

It’s interesting to see a form of socialism collapse in function if not in name or politics. Yes, a government allocation system may actually be a pretty good idea in some cases- I’m at least somewhat a socialist, and it can have its benefits. But what if the allocation system goes beyond inefficient or corrupt, to gone altogether? The last 15 years has been North Korea trying to reestablish central planning without having the money to back it up. Capitalism is like ivy- it creeps into a country with an economic vacuum.

North Korea isn’t just a place of appalling human rights violations, silly propaganda, and antiquated military hardware- it’s also a story of how people adapt and survive. And how economic policies can have life or death consequences. The permitting of local markets, the shuttering of local markets, the punishment of smugglers and entrepreneurs, and the attempt to assert state control through currency confiscation- people have suffered or prospered because of it.

In our economy, local or otherwise, how do we get necessities? And if that doesn’t work, what’s plan B? If parts of the system collapse, what would we do?

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3 thoughts on “North Korea: in case of economic collapse, what’s plan B?

    1. Well the thing is that the plan B was an ad-hoc movement from the citizens, rather than a government realizing that their current policy was failing and moving to a different one.

      I guess that you could think of two plan Bs- what would the people do if the economic system failed on them, and what governments would do in response to such a failure.

      Like

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