The Process of Marketisation and Economic Realities in the DPRK

Abstract

ABSTRACTThis article analyses the pattern and degree of marketisation in the DPRK by drawing on sources from within that society. In doing so it creates a point of departure from most conventional analyses of the DPRK economy, which prioritise defector accounts. The conventional view, informed by these accounts, is that jangmadang (quasi-free markets) have been created by ordinary people to meet their basic needs. In this view, ‘marketisation from below’ started when the Public Distribution System broke down due to the collapse of the Soviet Union, upon which the DPRK economy had depended. It is also claimed that as the economy has failed to recover from its prolonged crisis, the State has become dependent upon these markets. However, a careful review of materials produced inside the DPRK indicates that marketisation started ‘from above’ in the early 1980s, with Kim Il Sung’s directives to assuage the chronic shortages of consumer goods. As such, this article contends that marketisation in the DPRK began and has proceeded in accordance with the State’s control and influence. The country’s complete closure of its borders to prevent COVID-19 in the early 2020s confirmed that markets play only a limited role in DPRK society.KEYWORDS: Marketisation‘Arduous March’jangmadang (quasi-free markets)jonghap (general) marketsnormalisation of productionDemocratic People’s Republic of Korea (DPRK, North Korea)donju (money masters) AcknowledgementsThe author gratefully acknowledges the constructive comments of the anonymous reviewers on an earlier draft of this article.Disclosure StatementNo potential conflict of interest was reported by the author.Notes1. Numerous allegations exist that the DPRK has violated the economic sanctions imposed upon it. Notwithstanding these allegations, it was reported in December 2022 that only Kwe Kee Seng, a Singaporean businessman, was wanted by the United States on suspicion of sanctions violations. The US accuses him of multiple fuel deliveries to the DPRK, ship-to-ship transfers, and money laundering through front companies (VoA News, Citation2022).2. The Complete Works of Kim Il Sung (CWK, Gimilseongjeonjip) 1–100 contains Kim Il Sung’s words and deeds from October 1926 to July 1994, and The Selected Works of Kim Jong Il (SWK, Gimjeongilseonjip) 1–24 contains Kim Jong Il’s words and deeds from 1964 to 2011. Each volume of these Works contains approximately 82,500 words.3. Under the self-supporting accounting system, each enterprise receives, in addition to fixed capital, only a minimum amount of working capital from the government through the central bank. The enterprise is required to meet the various operating expenses during production, such as those incurred for raw materials, wages, and salaries, and depreciation of machinery and equipment on its own with the funds obtained through the sale of its output. Unlike the practice of turning over all the surplus to the State under the previous system, the enterprise may retain part of the surplus under the new system (P. Park, Citation2016, 69).4. Mr X and Mr Y acknowledged that some people played a similar role to donju, but they first heard the name donju after arriving in the Republic of Korea. Mr Z said that a person who buys food or wine for his friends and colleagues was called the donju of the day.5. As mentioned in the preceding footnote, Mr. Z's description of the donju differs from that provided by other informants; he did not acknowledge the presence of 'donju'. It may be because Mr Z lived in the remote city of Hyesan, where jangmadang was the dominant form of informal market.6. Mr Y, whose family includes high-ranking officials of the KWP’s Organisation and Guidance Department, said that donju could not invest in or finance large-scale construction projects and large factories because no one in the DPRK had amassed enough capital to fund massive investments such as the real estate project on Ryemyung Street in Pyongyang. Moreover, large factories tended to be concentrated in the heavy industries sector in order to produce armaments, and only state officials were allowed to be involved in this sector.7. The exact content of the ‘7·1 Measure’ does not appear in the DPRK materials, but it was briefly mentioned as an ‘Economic Improvement Measure’ in ER. RENK, a Japanese NGO, obtained a copy of the booklet explaining some of the '7·1 Measure' content and publicised it in the Mainichi Shimbun in December 2002. The official title was ‘Let us be aware of the national measures that have revised prices and living expenses as a whole and move forward with constructing a strong and prosperous country’ (Gagyeokgwa saenghwalbireul jeonbanjeogeu-ro gaejeonghan gukgajeokjochireul jal algo, gangseongdaegukgeonseoreul himitge apdanggija). A copy of the booklet appears in the appendix of Lim Su Ho’s book (2008).8. Outside the DPRK, the CCY is available only up to the 2018 version.Additional informationFundingThis work was supported by the 2022 Kyungnam University Foundation Grant [N.A].