Ugh…I really don’t know what to say at this point. Depressing.
According to the Associated Press (via Forbes):
“In the early days immediately after the currency change, market prices were not fixed, so markets were closed for some days,” Ri Ki Song, a professor at the Institute of Economy at North Korea’s Academy of Social Sciences, told APTN. “But now all markets are open, and people are buying daily necessities in the markets.”
Ri was provided by the North’s government in response to a request to talk to an official who could explain its economic situation. It is very rare for North Korean officials to discuss such policies with foreign media.
Impoverished yet nuclear-armed North Korea has in recent years allowed some free markets for food and consumer items, while others not sanctioned by the state have also sprung up as the public copes with declining living standards and food shortages.
“Outside Korea, many people have been talking loudly about problems that occurred during the change of currency in our country, but there wasn’t any of the social disorder that they have been talking about,” Ri said. “Now the situation is being stabilized overall, and the economy is functioning well, thanks to some of the measures that have been taken.”
Ri insisted the government’s objective is to phase out markets completely and rely on a state-controlled network of outlets to supply its citizens.
There is no shortage of posts on the DPRK government’s growing antagonism towards markets in the last several years.
The Heritage Foundation reminds us all that the DPRK has languished at the bottom of the international Index of Economic Freedom for years and asks, “how low can you go?”
The Daily NK tells us that times are pretty tough for many in the DPRK right now:
A source from North Hamkyung Province confirmed as much yesterday in a telephone interview with The Daily NK, saying, “Lower class people, who live from hand to mouth through the markets, have been suffering from the most serious difficulties since the redenomination.”
This is because for around two months the markets were shut down completely, and even after the markets reopened market price ceilings were adopted, so small traders and those who lived by relying on the markets were among those hit hardest, according to the source.
“Those running street-stands, alley market traders, porters and others who live by clinging to the markets mostly lost their money in the redenomination. Although markets have started to get animated again, these people are still facing difficulties due to a lack of seed money.”
The source added, “The food situation is actually dire. Despite the authorities’ program of releasing relief rice to poor households, in reality real distribution for them is not that helpful.” This is because any such state relief program is temporary, and cannot address the poorer classes’ fundamental problems.
He emphasized, “Now, people have started worrying about spring poverty, which comes every year in around May or June. In Onsung, Hoiryeong and Musan in North Hamkyung Province, the rice price has dropped to around 400 won per kilogram, but there are still so many people who cannot even afford to eat corn.”
The source gave the example of one of his acquaintances, whom he called Mr. Lee. He used to live by trading secondhand products in Musan.
Pre-redenomination, Mr. Lee managed around 200,000~300,000 won (in old value) of assets, dealing parts and used bicycle tires with his wife. However, following the currency redenomination of November 30, 2009, he was left with 1,900 won of new currency.
To make matters worse, he had only 100 kilograms of corn, which he had obtained in October. His family has been eking out that corn over the last few months.
Since February, the Musan Market resumed operations, but since prices have been unstable, not many people have wanted to buy. Recently Mr. Lee was forced to sell his one-room house to realize some capital.
As the source concluded, “The most terrible victims of the currency redenomination, market closures and inflation are lower class people in the cities. Nowadays, city residents feel lucky when they have just coarse corn.”
“In May or June, when the spring poverty period begins, the situation of the urban poor class will become even more terrible.”
Here is a satellite image of the Musan Market.
It is not difficult to tell what is the intention of DPRK’s leaders. They have never been the fan of free market economy. They introduced partially free market (it is called secondary or supplementary economy/market) as a necessity. When the market started to be independent from the state they intervened toward closing them. This is not surprising to me. The question is whether or not they’ll have enough power to fix supply with demand via the state distribution system. If they cannot do, they will leave markets open.
Perhaps the declarations that markets are temporary and will eventually be closed one day are just a way of giving ideological cover to the continued existence of markets.