Why Capitalism Won’t Change North Korea’s Regime

Andrei Lankov is a professor of history at Kookmin University in Seoul and the author of "The Real North Korea: Life and Politics in the Failed Stalinist Utopia."
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To an outside observer, the behavior of the North Korean leadership often appears short-sighted and irrational. There seems to be a tested and easy way out of their predicament -- the path of Chinese-style economic reforms. While such gradual capitalist reforms might be good for the country, however, they would be far too dangerous for the current North Korean elite. As a consequence, they’re unlikely to be implemented anytime soon.

The history of East Asia after World War II has been, above all, one of spectacular economic growth. From 1960 to 2000, average per-capita gross-domestic-product growth in East Asia reached 4.6 percent, while the same indicator for the world was 2.8 percent. In 1960, in terms of per-capita GDP, South Korea ranked slightly below Somalia, while Taiwan lagged behind Senegal.

The remarkable economic transformation of those two Asian economies was overseen by governments that were decisively illiberal and undemocratic. These regimes are often described as “developmental dictatorships” -- largely because they combined authoritarian politics with an obsessive focus on economic growth. The military regime in South Korea, and a hereditary dictatorship in Taiwan, spouted anti-Communist rhetoric and paid lip service to the principles of the “free world,” while pushing a market-driven but government-controlled development strategy. Lacking natural resources, they emphasized cheap labor and economic efficiency, and they were successful beyond anybody’s wildest expectations.

Perfect Machiavellians

After the mid-1980s, this “first generation” of developmental dictatorships was emulated by Communist regimes in mainland China and Vietnam. In both countries, the party elite kept up the old slogans and quasi-Leninist decorum for the sake of domestic stability but for all practical purposes switched to the growth strategies pioneered by Taiwan and South Korea. If anything, their version of capitalism was even more unabashed and brutal -- the regimes in Beijing and Hanoi treated workers with greater harshness and demonstrated even greater indifference to the yawning gap between rich and poor. Regardless, the model worked again: The “second generation” of developmental dictatorships also achieved spectacular results. Vietnam, which experienced a famine in the mid-1980s, had by the mid-1990s become the world’s third-largest exporter of rice.

A similar course has failed to inspire the North Korean elite. And unfortunately for common citizens, this unwillingness to emulate China is neither irrational, nor ideological. On the contrary, North Korea’s leaders are rational to the extreme, being perhaps the most perfect bunch of Machiavellians currently in power anywhere. They do not want to pursue reforms because they realize that in the specific conditions produced by the division of their country, such reforms constitute the surest way of political (and, perhaps, physical) suicide.

The existence of a rich and free South Korea makes North Korea’s situation vastly different from that of China or Vietnam. The regime lives next to a country whose people speak the same language and are officially

One can only imagine the mind-blowing effect upon ordinary North Koreans that would be caused by the sight of the average Seoul street, a typical South Korean department store, or, for that matter, the flat of a humble, semiskilled manual worker in the South. Perhaps 15 years of flourishing market activities have accustomed some North Koreans to visions of consumerist abundance (after all, one can buy a lot in Pyongyang now if money is available). But picture what a previously isolated North Korean might think after he or she discovers that a South Korean worker -- supposedly a slave of American neocolonialism -- enjoys amenities and a lifestyle that in North Korea would be available only to successful drug smugglers or Central Committee officials.

Foreign investment and technology are necessary preconditions for any successful reform program. If such changes were to be instigated, a large number of North Koreans would quickly be exposed to dangerous knowledge of the outside world, and above all of South Korea. A considerable relaxation of surveillance would be unavoidable, as well: Efficient market reforms cannot work in a country where a business trip to the capital city requires a weeks-long wait for travel permits and where promotion is determined not so much by labor efficiency as by demonstrated political loyalty (including the ability to memorize the lengthy speeches of the Dear Leader). Information would begin to flow into the country, and the dissemination of this information, as well as of the dangerous conclusions drawn from it, would become much easier.

No Future

It is doubtful the North Korean population would be prepared to endure a further decade of destitution followed by a couple of decades of relative poverty and backbreaking work after they learned about another Korea -- affluent, free, glamorous and attractive. Would they tolerate a reforming, but still authoritarian and repressive regime on the assumption that this regime will on some distant day deliver a prosperity comparable to that of their Southern brothers and sisters? North Koreans are much more likely to toss out their current rulers and seek to reunify the peninsula in order to partake in the South’s fabulous prosperity.

It is an open secret that many Chinese party officials have used their country’s reforms to enrich themselves: The new Chinese entrepreneurial class, to a significant extent, consists of former officials, as well as their relations and buddies. However, the situation of the North Korean elites is different. They stand little chance of becoming successful capitalists if the system is overthrown. In all probability, the important positions in any new economy would be taken by people from South Korea -- executives and entrepreneurs with capital, education, experience and perhaps political support.

This fact is understood by at least some North Korean bureaucrats, but

A few years ago, a high-level North Korean bureaucrat told a top Western diplomat: “Human rights and the like might be a great idea, but if we start explaining it to our people, we will be killed in no time.” Perhaps one of the reasons behind the remarkable resilience of the North Korean regime is this universal assumption of its bureaucrats (including those who are quite low in the pecking order) that they would have no future in case of regime collapse. This makes North Korea different from many other dictatorships. A clerk in Hosni Mubarak’s Egypt, for instance, could assume that, democrats or not, Islamists or not, under a new regime he would still sit at his desk and continue the old routine of, say, issuing permits for house construction. Ditto a high-ranking military officer, who also would expect that under a new government in Cairo he would still command his battalion. Consequently, they did not see the revolution as a personal threat, and might have even been supportive of the movement.

1984 Again

In North Korea, the elite -- pretty much everybody who is somebody -- believe that they have nothing to gain and much to lose through unification with the South. These fears might be -- and, indeed, are -- exaggerated, but they are by no means groundless. It is important that the elite’s predicament stems from the existence of a successful South, not from particular policies followed by a specific Seoul administration. Even if the most pro-North Korean administration imaginable came to power in Seoul, it would not make South Korea any less dangerous to the current regime.

In such a case, what is the best strategy for the North Korean elite? Domestically, the regime’s policy aim has been to keep the North Korean population under control, compartmentalized and, above all, isolated from the outside world. Internationally, the safest solution is to squeeze more aid from outside countries through diplomacy and blackmail. This foreign aid helps to keep the inherently inefficient economy afloat, prevents another major famine and allows the country’s tiny elite to live a reasonably luxurious lifestyle while buying at least some support from “strategically important” social groups, such as the military, the police and the populations of major urban centers.

In effect, what the mainstream North Korean elite want is to return to the Orwellian year 1984 -- the last year when Kim Il Sung’s system was still functioning properly. The regime’s economic policies are largely focused on reviving the hyper-Stalinist model of the past. It is possible that many people on the top sincerely believe that this model might somehow be made to work. But even if they do not succumb to such fantasies, they still have no choice: the alternative, for them, is too grim to contemplate.

(Andrei Lankov is a professor of history at Kookmin University in Seoul, and the author of “North of the DMZ: Essays on Daily Life in North Korea” and “From Stalin to Kim Il Sung: The Formation of North Korea, 1945-1960.” This is the first of three excerpts from his new book, “The Real North Korea: Life and Politics in the Failed Stalinist Utopia,” which will be published May 8 by Oxford University Press. The opinions expressed are his own.)

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To contact the author of this story:
Andrei Lankov at andreilankov@gmail.com

To contact the editor responsible for this story:
Nisid Hajari at nhajari@bloomberg.net