A mere mention of North Korea brings to mind the repressive regime of Dear Leader Kim Jong-il. Although Kim has been satirized in the West as an impish consumer of cognac and NBA paraphernalia, his grip on society is both chilling and inescapable. The country frequently receives news coverage for its nuclear aspirations, unjust penal system, and horrendous human rights record. However, a recent academic study by Stephan Haggard and Marcus Noland uncovers yet another facet of the North Korean case: the power and inevitability of markets in the face of economic despair.
Since the reclusive nature of North Korea precludes any serious study of public opinion and social change, Haggard and Noland pursued the next best sample: North Korean defectors. In Witness to Transformation: Refugee Insights into North Korea, the authors describe the results and implications of two surveys, conducted between 2004 and 2008, completed by approximately 1,600 refugees living in China and South Korea. While the study sample is not random, multivariate regression demonstrates that most of the findings are generally applicable to the North Korean population at large. Simply put, this study gives us a unique look into the collective heart and mind of an otherwise impenetrable nation.
Before delving into the surveys, the authors provide a brief history of the North Korean economy. Due to rapid mobilization of its labor base, as well as generous support from China and the Soviet Union, North Korea registered strong growth for the first several years of its existence. But in the late 1980s, as famines set in and the Soviet Union disbanded, the North experienced profound economic pangs. With famine at its peak in the 1990s, households came to rely on a range of coping strategies—limited consumption, barter, foraging, and purchasing food from emerging markets. Though marketization was catalyzed by the need for food, it eventually became instrumental vis-à-vis a wide range of consumer goods, as well. Indeed, the unofficial market became so significant during this time period that in 1994, it equaled 25 percent of the official output. Military and state functionaries became covert distributors, and the government even decriminalized certain market activities.
Haggard and Noland offer, however, that even when the government seemed to pursue pro-market reform, those measures were accompanied by simultaneous efforts to “reassert state control,” including an administered price structure and higher wage levels for certain groups. Such bipolar policymaking was unfortunately short-lived, as North Korea has since reversed a number of reforms that had been conducive to market activity.
It is difficult to imagine a situation more disquieting than the North Korea of today, where citizens continue to die of starvation and malnutrition due to dwindling supplies of food and insufficient work. But just as they did during the 1990s, North Koreans continue to turn to the market in their times of serious need. Instances abound: nearly half of South Korean respondents reported that all their income came from private business activities, while 69 percent said half or more of their income came from such activities. More than 70 percent of respondents in that group were involved in trading. In the China sample, 62 percent reported the market as their primary source of food, while 95 percent of non-farm respondents obtained some amount of food through the market. Haggard and Noland call this phenomenon ‘marketization from below’—also seen in Eastern Europe—in which market growth is “primarily a function of state failure rather than a proactive reform process.”
It is important to note that, unlike many of us, who come to embrace free enterprise after starting a business or reading Hayek, North Korean engagement of the market is borne of extreme desperation. After spending years under the yoke of a totalitarian regime that regulates almost every aspect of market and man, courageous Koreans have come to regard the market as a natural elixir to the malady of severe economic deprivation.
Unsurprisingly, involvement in the market often corresponds with other sorts of taboo activities, signifying a deep desire for personal autonomy. “Taken together,” write the authors, “these results point to a kind of ‘market syndrome’ in which participation in market activities is associated with higher arrest rates, more consumption of foreign news, more negative assessments of the regime, a greater willingness to communicate those views to one’s peers, and a greater propensity to cite political motives for emigration. On its own terms, the regime is right to fear the market.”
Given the persistence of harsh food shortages, as well as the delicate transfer of power to Kim’s youngest son, Jong-un, North Korea will attract increased attention and interest over the coming years. Against this backdrop, Witness to Transformation uses refugee testimony to paint a helpful picture of this infamously opaque, but increasingly important country.