Kim's capitalist kingdom of Korea

Kim Jong Un, the absolute dictator of the world’s most repressive regime, now has to be concerned about what the poorest, least powerful North Koreans think. He has, with his new outreach to Washington and Seoul, created expectations of a better life in his otherwise miserable Democratic People’s Republic of Korea. His upcoming summit with President Trump will shed further light on what's what's ahead for the nation's financial households.

Traders and entrepreneurs are now driving parts of the once state-dominated economy. North Korea, as a result, has a “money culture.”

The North did not start out this way. Kim Il Sung, the regime’s founder, adopted the Soviet Union’s forced-mobilization model of economic development. At first, that centrally directed system worked. Kim, leaving China and South Korea in the dust, produced some of the world’s highest rates of growth, from the end of the fighting in the Korean War to the middle of the 1960s.

Eventually, however, the limits inherent in the Stalinist model choked off growth. At the same time, atrocious agricultural practices laid the groundwork for the great famine of the mid-1990s, when perhaps 2 million perished. The famine was so devastating that the all-pervasive state stopped providing food rations, and people who did not learn to adapt died.

Those who did adapt created their own informal economy, then the freest on earth because there was no government. Today, even after all the reforms intended to corral change, unauthorized—“black market”—activities produce almost 30 percent of the North’s gross domestic product. At least 40 percent of the people make money outside the official economy.

And now that the regime no longer provides for the livelihoods of many, people are changing their society. Wealthy entrepreneurs have replaced soldiers as the most eligible husbands, and wedding guests can be served different grades of food depending on the size of their presents.

Money culture, the crass obsession with cash, has also brought hope. As Kathi Zellweger, once a Catholic aid worker in the North, told me in the middle of last decade, the new outlook permitted North Koreans to dream — and dreaming is something they had never done before. When the state receded from daily life, people learned that with money almost everything became possible. As Zellweger noted, North Koreans for the first time were saying, “I can do things now.” 

And doing things they are. When North Koreans flee the regime these days, they often do so not because they are desperate but because they want to enjoy the wealth they have accumulated.

However, the “donju,” traders and business owners, have not accumulated political power. The North is still a one-man system, and as Greg Scarlatoiu of the Committee for Human Rights in North Korea tells FOX Business, the regime “thrives on control, surveillance, punishment.”

The newly rich, despite everything, are able to work inside that hostile system. These “money masters” are forcing Kim to deploy the regime’s resources in ways that benefit them. Kim’s accelerated construction of apartments in the capital of Pyongyang and the development of the port of Wonsan as a retreat, for instance, are intended to keep the rich happy.

And that is where summitry comes in. The regime has kept control of information about Kim’s historic summits, but North Koreans have a good idea of what is happening. Slivers of information are creating optimism that their lives will get better soon.

“Therein lies the danger,” David Maxwell, who served five tours of duty with the U.S. Army in Korea, told FOX Business. “If Kim has created high expectations and they are not realized, it could undermine the legitimacy of the regime. We are unlikely to see large-scale political resistance or an uprising, but this will contribute to the erosion of legitimacy. Sometime in the future, we might see rising political resistance if the regime-suppression mechanisms are not effectively functioning.”

As Maxwell, now a scholar at the Institute for Corean-American Studies, suggests, Kim needs to produce “substantial outcomes from the summits and subsequent negotiations.” He has promised North Koreans they would never again have to “tighten their belts,” and although that vow was made in similar form by his father and grandfather, now people are hoping the pledge is real.

Kim, in short, has to deliver. After all, as the Washington Post tells us, the “Jangmadang Generation”  or “market generation” is “the greatest force for change that North Korea has ever seen.”

Gordon G. Chang is the author of “Nuclear Showdown: North Korea Takes On the World.”  Follow him on Twitter @GordonGChang.

This article was first published on May 5, 2018.