By Andrei Lankov
North Korea is often described as the ``world’s last Stalinist country.” This description has become a cliché but it is misleading: North Korea might keep up outward appearances as a Stalinist regime, but for all practical purposes its society and economy have moved far away from the patterns once pioneered by Joseph Stalin and his henchmen.
The last two decades can be best described as the slow-motion collapse of North Korean Stalinism. The North Korean economic model once could be described as an extreme example of the Soviet-style Stalinist economy. Virtually everything was controlled and managed by the state.
But the hyper-Stalinist economy could survive in its original form only as long as the Soviet Union and the China were willing to provide it with a steady stream of donations. This support was withdrawn in the early 1990s and the North Korean economy nosedived. Most state-owned industrial enterprises ceased operation, and total industrial output more than halved between 1990 and 2000.
For decades, North Koreans lived on rations provided at token prices. In the early 1990s they discovered that rations were no longer being given and rationing tickets became useless pieces of paper. At the same time, the average monthly salary would barely buy two kilos of rice.
An estimated 500,000-900,000 people perished in the famine which followed the disaster (the oft-repeated figure of ``two million famine deaths” is an exaggeration). But the majority of North Koreans survived the disaster and even eventually managed to return to the pre-crisis levels of consumption. How did they manage to do it? In one word: by rediscovering the capitalist market economy.
Indeed the market, not the state, has long since become the source of livelihood for the vast majority of North Koreans. People buy and sell, they are engaged in many different kinds of household business, they smuggle and they till their own private land.
The poorest North Koreans, those with no money to start even a humble food stall usually make a living by engaging in subsistence farming. As any traveler to the North Korean countryside can testify, the steep slopes of the North Korean mountains are now covered with small fields of all shapes and sizes. These plots are known as ``sotoji” (literally small land) and this is where a significant part of North Korea’s food supply is now produced, privately and illegally.
Those who had some money are engaged in small scale commercial activity. They buy, sell and are also engaged in small scale household production. North Korean women sew garments, make shoes and prepare food for sale.
Some of the former workers and farmers manage to earn good money and become rich, earning hundreds and sometimes even thousands of dollars every month. This is a large amount of money in a country where the average official salary is equivalent to $2 while the actual monthly income seems to be around $15 (the average monthly income is much higher because virtually every North Korean makes money on the side).
However, successful black-market operators are very few in number. Some of them are those who began to do private business in the early 1990s, when there was little competition, and little money would go a long way. Others are lucky to have relatives overseas, usually in China. In many cases, these relatives lent or presented them with money which became their startup capital. Whilst in other cases, relatives are willing to act as their partners, agents and advisers in the Chinese market (and this is very important since China dominates the North Korean economy, official and unofficial alike).
One must keep in mind that success stories are relatively rare, as is normally the case with success stories in any capitalist society (and frankly in any human society). Most North Koreans survive through small business, subsistence farming and handicrafts – or frequently through a combination of the above.
It is remarkable that the North Korean private economy, especially its lower levels, is dominated by women. The authorities expect every able bodied male to have a job at some government-owned enterprise. And they put pressure on men to ensure that they attend their places of work even though most of these factories are non-functioning. Married women are different though, since they can be officially recognized as full-time housewives, which give them the freedom to trade. In many cases males often have the official right to not show up for work, but this privilege costs money, to be paid to the factory management.
For all practical purposes, North Korea has long since become a society with a market economy. The only thing the government can still do is to maintain the old Stalinist façade, of militant slogans, goose-stepping soldiers, and inflammatory rhetoric about ‘revolution’, greatness the leadership and the ‘imperialist’ threat. But all this rhetoric is increasingly unrelated to the life of real North Koreans.
Professor Andrei Lankov was born in St. Petersburg, Russia, and now teaches at Kookmin University in Seoul. He can be reached at email@example.com.