While North Korea draws world attention with spectacular and seemingly bizarre actions like the hacking of Sony’s computers or outbursts of bellicose rhetoric, Pyongyang has quietly initiated a round of reforms aimed at liberalizing the economy.
It’s unlikely that Kim Jong-un, the young North Korean leader who inherited power in December 2011, will allow economic liberalization to lead the way for political and social change. The repressive regime will continue to be a thorn in the side of world leaders who want to dismantle Pyongyang’s nuclear program.
But the economic changes hold great promise for improving the lives of millions of North Koreans who have suffered in deep poverty for decades. The new policies should be welcomed and supported by the outside world.
The impoverished countryside is the site of a major effort to open up the farming economy. My talks with North Korean refugees and migrant workers in China, as well as nongovernmental organization personnel on the ground, confirm what has been reported in South Korean media over the last few years: An agricultural system apparently implemented in 2013 allows farmers — who have always worked for a token payment and fixed rations — to register their households as “work teams.” Such teams are now allowed to keep a larger portion of their harvest, some reports say more than 30 percent. Moreover, for the foreseeable future these family-based groups will toil in the same fields, year after year, giving them an incentive to take better care of the land. Before the change, farmers had worked on land that belonged to state-managed farms and were often moved from one field to another.
A new set of market-oriented reforms adopted by the Central Committee of the Workers’ Party and by the cabinet of ministers on May 30, 2014, appears to aim to liberalize the economy as a whole. The content of this classified economic policy document was first partially leaked to the South Korean daily Segye Ilbo in June. Later it was confirmed by many sources and is now widely discussed by Pyongyang watchers.
The “May 30 Measures,” as they’ve come to be known, envision the significant reduction of state control of the economy and a dismantling of central planning. Managers of state enterprises will be allowed to purchase items on a free market, making deals with other enterprises or even private businesses. They will be given the right to fire and hire workers, and pay them as much as they want.
At coal mines near the border with China, where the new “system of managerial responsibility” has been tested since late 2013, the best miners may now receive up to $70 a month, an exorbitant wage for the North.
Mr. Kim has also left untouched the unofficial private economy, which began to grow in the 1990s and now contributes significantly to North Korea’s tiny G.D.P., as much as 50 percent by some estimates. This economy of small businesses like food stalls, bicycle repair shops and truck deliveries, as well as larger ones like small coal mines and fishing companies, has never been explicitly accepted by the government. But since Mr. Kim’s ascension, officials have left this gray market alone.
The agricultural reforms are already bearing fruit. In 2013, the country enjoyed the best harvest in decades when — in a first since the 1980s — it produced nearly enough food to feed its population on a subsistence level.
People on the ground are not surprised. Once farmers were turned from serfs to sharecroppers, the labor input increased dramatically, and it was enough to make a quick difference in an economy where wooden plows and oxen still reign supreme.
The 2014 harvest was also impressive, in spite of severe drought. European workers from nongovernmental organizations and groups of visiting Chinese experts whom I recently met say that the efficiency of the farmers who now work for a share of crops, instead of fixed rations, increased dramatically. Indeed, as one migrant worker in China told me: “Farmers take care of the fields, they now believe that the more they produce, the better they eat.”
The full impact of the reforms in industry will not be felt for a while, but it is likely to be strong: The Hyundai Research Institute even predicts that in 2015 North Korea’s gross domestic product will increase 7 percent.
From Mr. Kim’s point of view, it makes sense to usher in economic changes: The old system was slowly falling apart, eroding from within by the development of an unofficial economy and growing disappointment in the official ideology. The reforms are risky, but without reforms the regime is certainly doomed.
While the changes are positive for regular North Koreans, one should harbor no illusions: North Korea will remain a problematic place.
The regime will never surrender its nuclear weapons. The leaders firmly believe that they need them as a diplomatic tool and as a deterrent, and their worries have not been ameliorated by the fate of Saddam Hussein and Col. Muammar el-Qaddafi, the only dictator in history who swapped his nuclear weapons program for the promise of economic benefits from the West.
North Korea will remain a human rights abuser. In China, economic reforms led to social liberalization; many Chinese can now do things that would have gotten them killed in the days of Mao. This is not going to happen in North Korea — because of South Korea.
Thanks to strict information control in the North, rumors abound about the economic success of the South, but the true scope of that success remains unknown. If ordinary North Koreans were to become less fearful of the authorities, while also learning about the affluence of the South, they might do what the East Germans did: get rid of the regime and pave the way for a unified Korean Peninsula. From the regime’s viewpoint, this means that only by keeping the populace terrified (but better fed) do they have some chance of maintaining authority.
Nevertheless, a reforming North Korea will be an unstable place, with the specter of implosion always looming. The regime’s implosion could mean a civil war in a nuclear state in a region where interests of the United States and China clash.
Still, a prospering North Korea will be less inclined to deliberately destabilize the environment: Its leaders will need stability in their neighborhood to make money. Even if North Korea remains repressive, the lives of citizens will improve. And few people would argue that living in a starving dictatorship is better than living in a modestly affluent one.
Andrei Lankov, a historian of North Korea and a professor at Kookmin University in Seoul, is the author of The Real North Korea.