Lankov on bribery

Below I have posted some excerpts from a recent Andrei Lankov article on bribery in the DPRK along with the economic bullet points:

Bribery has little to do with ethics or honesty but relative costs and benefits:

The incorruptibility of the old bureaucracy has a rather simple and rational explanation: Most of the time, it did not pay to be a corrupt official under Kim Il-sung. Money was of surprisingly little use in the 1960s and 1970s, when pretty much everything was rationed and distributed by the state according to predetermined quotas and norms.

In those days officials lived significantly better than the average North Korean, no doubt. But they were affluent not because they had significantly more money (the wage differential between a top official and a humble worker was remarkably low), but rather because they had access to higher-quality goods and services that were not available to the common people. One of my North Korean interlocutors said: “Back in the 1980s, I did not care about money. Nobody did, since money did not buy much in those days.” In those days, in the 1970s or 1980s, one had to be an official to drink beer every week, to smoke cigarettes with filters, or feast on pork a few times a month. But officials did not buy these goods at market; rather they received them from the state as part of their special (very special) rations.

In this situation, it did not make sense for an official to accept bribes as a reward for overlooking some misbehavior or violations of some rules. Money would not be particularly useful and at the same time there was a significant risk of being caught. If caught, an unlucky official would at best lose his or her job and at worst even freedom, and no amount of money would compensate for this disaster.

In highly regulated economies, bribery and growth are positively correlated:

We are conditioned to see official corruption as an evil, but in present-day North Korea, corruption might be a life-saver. The average North Korean gets most of his or her income (about 75%, if recent estimates are to be believed) from private economic activities – these include private agriculture, trade and small-scale household production, and myriad other things. Nonetheless, nearly all of these activities remain technically illegal. Unlike China, North Korea has never undertaken serious economic reform, so private economic activities are still considered crimes, even though they have long become, in practice, a universal norm (and without such activities many would be unable to stay alive).

The only reason these activities are able to exist is corruption. Without widespread corruption, many more North Koreans would probably have perished in the great famine because there would have been no way to have private agriculture, and it would have been nearly impossible for private traders to move food across the country, delivering it to areas where the food situation was especially dire. After all, trade in grain and long-distance travel for commercial purposes are both technically crimes. No markets would be possible had the local bureaucracy been serious about enforcing a multitude of bans and restrictions on commercial activities.

Although corruption will lead to low levels of growth, it will impede overall development in the long-term:

Even when the Kim family regime meets its eventual demise, when a new North Korea emerges, the culture of corruption may remain as part of its heritage. And perhaps eventually it will become a serious burden to a resurgent North Korean economy.

Regarding this last point, see this post.

Read the full story here:
North Korea’s culture of bribery
Asia Times
Andrei Lankov
2012-7-13

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