Writing in the Daily NK, John Cha offers a brief model of the North Korean economy as envisioned by Kim Jong-il:
According to our former teacher Hwang Jang Yop, the economic model that is in place now is a brainchild created by [Kim Jong-il] based solely on his greed for power and control.
In the mid 1970s, [Kim Jong-il], then a young understudy to the throne, devised a three-tiered economy: the Party; the military; and third, the general masses. These units are separate, independent and don’t interact with each other.
The Party economy is operated and managed by the Chosun Workers’ Party. It consists of the most lucrative enterprises in mining, shiitake mushrooms, light manufacturing, fisheries, and other industries that produce foreign currency. Kim the 2nd kept his hand in the Party economy and amassed his personal fortune, which he used to reward his loyal followers, through it. As a result, Party elites enjoy the ‘life of Riley’; the best food, housing, clothing and education for their children. They are able to accumulate wealth.
The military economy consists of production and the sale of arms and munitions, as well as heavy construction projects like roads, railroads, tunnels and power plants. The military sector manages these enterprises, generates its own revenue and feeds a huge army. Military elites do fine as well. They live in fine houses, drive nice cars and so on.
Finally, the general public ends up with whatever is left over. There is no trickling down of any sort. Average workers and farmers scrap for what’s left and barely manage to subsist on their own with no help forthcoming from the Party or the military. The latest typhoons and floods shrank their food supply to a dangerous level, and people worry about the second coming of the famine, not to mention perennial shortages of fuel and electricity.
This anecdote is third hand by its own admission, but if true it is an interesting insight into the mental model under which the former North Korean leader was making policy decisions. I wonder what economic models, if any, have been taught to the new leader.
You can read the full article here:
Who Can Kill the 3-Tiered Economy?