Since the start of the Kim Jong Un era, North Korea has introduced elements of a market economy while at the same time sought ways to mitigate the side effects caused by the rapid spread of market mechanisms.
The Choson Sinbo, mouthpiece of the General Association of Korean Residents in Japan (also known as Chongryon), revealed on February 22, 2015 that on a number of cooperative farms there are now ‘purchasing sites’ where farmers can barter and exchange goods. The newspaper explained that “[On the cooperative farms] there are purchasing sites where cheap goods are displayed and farmers are able to trade distributed agricultural products […] Through these sites it can prevent farmers from liquidating their produce and thus prevent funds from flowing into the market.”
Through the introduction of the ‘field responsibility system,’ North Korea has reportedly been able to meet demand for daily necessities at these purchasing sites. The state controls these sites in order to prevent farmers from taking goods to the jangmadang or the market when the surplus, which returns to the farmers, increases. Since entering the Kim Jong Un era, the field responsibility system has been expanded throughout the country and is credited with having contributed to North Korea’s increase in agricultural production. The system divides the bunjo (the small production teams on the cooperative farm) into family-sized units of 3 to 5 people and entrusts these units with the work of cultivating small-sized fields.
A system similar to the purchasing sites of the cooperative farms can be found in the city as well. The Choson Sinbo revealed that “[North Korean factories] are purchasing items like food and basic commodities produced in the country and are distributing them to workers as a portion of their wages.” In the years following Kim Jong Un’s rise to power, wages increased exponentially due to the introduction of incentives and the increase in the autonomy of factories and businesses. But because the threat of inflation becomes significant if those increased wages are paid entirely in cash, it is reported that businesses pay a part of workers’ wages in goods and commodities.
The Choson Sinbo added that the ‘Hwanggumbol Shop,’ a convenience store that has been appearing here and there in Pyongyang since December of last year, is also an effort by the state to prevent the rapid expansion of the market. The newspaper explained that the state-operated store focuses on supplying “cheaper prices than the market” and that the goal of the store is to guarantee “the circulation of money through state-operated stores.”
State-operated stores are an attempt to prevent the market from taking a central place in the circulation of money. This is accomplished by having state-run stores supply goods at a lower price than the market and thereby attract consumers. Different from the past, the current regime intends to utilize the market rather than restrict it. It is believed that North Korea will try to keep the market in a condition in which it can be suitably managed.