North Korean Economy Watch

By Benjamin Katzeff Silberstein

It is unfortunate that books published in South Korea are often difficult for reader’s in the United States and Europe to get a hold of without waiting out the very long waiting times for online purchases or library orders. Readers of this blog may well be familiar with Kyungnam University professor Philip H. Park’s work on the institutional side of the North Korean economy. One of professor Park’s books on the North Korean economy was recently translated into English and published under the name of Rebuilding North Korea’s Economy. Sadly I have not yet personally been able to read the book for reasons stated at the beginning of this post, but a review in Daily NK summarizes some of the core arguments:

“Rebuilding North Korea’s Economy” is a detailed history of the evolution of North Korea’s economic institutions. It is a newly published English translation of the original Korean work. The author is a professor of political science and diplomacy at Kyungnam University. The book details how a series of crises stimulated a procession of changes in North Korea’s economic strategy. Each new strategy reacted to and attempted to amend the problems created by its predecessor. However, each policy also sowed the seeds for future crisis by creating new inefficiencies.

The Argument

Phillip Park’s central contribution is to correct a common misconception about marketization and the decentralization of North Korea’s economy. Park argues that North Korea did not begin its process of marketization with the July 1st Measures in 2002 – as is commonly believed. Instead, he presents evidence that North Korea actually started spinning the gears of this process much earlier, most significantly with the adoption of the Ryonhapkiopso System (Complex Industrial System) in 1986. In theory, this economic approach allowed limited market mechanisms and practical planning to replace more ideological economic initiatives. The system’s implementation was largely a response to stagnated growth and the impending collapse of one of North Korea’s key sponsor states, the Soviet Union. Aside from inefficiency, North Korea’s principal economic problem has always been striking a balance between sectors while also pursuing self-sufficiency. The Complex Industrial System aimed to address that problem.

The author uses North Korean economic journals as his primary sources. He admits that separating the useful information from the propaganda was a laborious task. So, while the information does need to be taken with a grain of salt, we can still learn a lot about the state of North Korea’s economy by observing how academic discussions and policy recommendations have evolved over time. The book does a good job contrasting policy dialogues with the results of subsequent implementations (or lack thereof). The book’s sources help dispel the myth that North Korea’s political economy is purely monolithic. Indeed, through the book, we witness key players – academics and officials alike – arguing over milestone policies.

One note of caution: Park dives headfirst into the North Korean understanding of economics. Yes, this means a heavy dose of Marxist concepts and five-syllable jargon. But those with a rudimentary understanding of socialist politics know that seemingly obscure theoretical points are sometimes used to justify sweeping changes. In particular, changes to North Korea’s economic institutions are often motivated by theoretical assumptions about how to best transition to a fully communist state. This is actually one of the book’s major charms. After we digest the dense vocabulary, we are presented with a reasonable framework for understanding the decision making of one of the world’s most opaque and incomprehensible dynasties. That in itself is a laudable achievement.

Let’s address a few downsides. Considering that the original Korean work was published a few years ago, it would have been nice to get an expanded forward with some new observations on Kim Jong Un’s performance as an economic manager. Also, abbreviations and technical jargon are used thoroughly in the book. A glossary of terms would have been a handy reference.

Although Park’s main argument may seem technical at first glance, the repercussions of this work are vast. The most immediate and profound impact is that it forces us to reconsider the history, nature, and trajectory of North Korea’s economic transformation. Marketization is typically described as a bottom-up process of slowly expanding black market activity. But Park gives us a reason to think that the picture is slightly more nuanced. It gives us a view into the thinking of North Korean economic planners. Readers are prompted to think more deeply about how institutions shape incentives in North Korea, and how these institutions have changed over time.