An assessment of the factors behind the growth of a capitalist market economy in North Korea

  1. Reasons why North Korea has been unable to bring about reform like China and Vietnam

Eastern European states, China, Vietnam, and Cuba all gave up Socialist economy and opted for a capitalist market economy. But the North Korean leadership has yet to welcome the market system.

The main reason for this is because of South Korea.

For a long time the North Korean leadership portrayed South Korea as a country that had fallen behind politically, militarily, and of course economically, having been thrown into debt after being colonized by the United States.

In the early 2000s, however, South Korea’s pop culture began to be smuggled into North Korea, and North Korean citizens began to learn the truth-that the reality of South Korea was different than what their government’s propaganda had been telling them. The people of North Korea began to realize that the standard of living in South Korea was so much higher that it was beyond comparison to that of North Korea. If North Koreans learn of South Korea’s development, their dissatisfaction with the leadership will grow even more, with questions like “Why are South Koreans so well-off while we live in poverty?”

Based on the suryeong theory of North Korea, the leader plays a decisive role in both revolution and construction. Therefore it has been said it is because of the leader’s wise guidance that North Korea was able to continually be triumphant in the past. However, following that same theory, it can be concluded that North Korea’s present-day poverty and low standard of living compared to South Korea are also because of the leader. As a result, the North Korean system which has been built around the leader loses its legitimacy. Thus the North Korean leadership has been extremely cautious of the things which may expose the realities of South Korea to the North Korean people.

North Koreans are forgiven, to an extent, if they are caught watching Chinese or American TV shows, but the crime for watching a South Korean one is twice as severe. Additionally, when North Koreans go abroad, the thing they must be most cautious about is not interacting with Americans or Japanese, but rather South Koreans. Then it is routine for the Ministry of State Security to investigate whether they have had any encounters with South Koreans during their time abroad.North Koreans can receive money from their relatives in America and Japan, but not from those in South Korea.

  1. Differences in the jangmadang under Kim Jong-il and Kim Jong-un

Of course markets also existed under Kim Jong-il, but the government cast a blind eye and chose to ignore them. However, after Kim Jong-un came into power, he made the decision to not crack down on jangmadang activities. This would not have been possible 10-15 years earlier. Although Kim Jong-il did not oppose marketization, he believed it was something that must be done away with, as he viewed it as anti-socialist. And so, at the time, the jangmadang was regulated by the “Anti-socialist Group.” During Kim Jong-un, however, the regulation on jangmadang completely disappeared. Nonetheless, the Kim Jong-un regime has been unable to officially acknowledge the fact that North Korea is moving towards a market economy out of concern for the security of the internal system.

North Korea’s economic situation has improved greatly, and the food situation is much better than in the past. But ironically, the North Korea regime is unable to attribute these improvements to the market economy. If they were to officially do so, it would shake up the Kim Jong-un regime.

  1. The effect of increasing capitalist economic factors on the future of North Korea

a. The growth of the jangmadang and its contribution to the increased awareness of human rights among North Korean people

After Kim Jong-un came into power, the number of general markets has greatly risen throughout North Korea. Although the North Korean people are still not able to fully enjoy their civil rights under the Kim Jong-un regime’s contradicting policies, an individual’s right to sell as well as other economic rights have begun to gradually increase.

More and more North Koreans are becoming aware of various rights as they take part in market activities. If these rights are violated, North Koreans will even fight to the death for them, and will take on the Ministry of People’s Security.

At a recent foreign press conference a foreign reporter raised the question of whether there was any passive resistance in North Korea.

It was then that we learned “grasshopper markets”were now being called “tick markets.”

b. Developments in freedom of movement

In addition, there has been improvement in the peoples’ freedom of movement which had been largely limited by North Korea’s markets. As general markets have popped up across the country, a bus system connecting North Korea’s major cities was made as the government turned a blind eye. Now it is even possible to take buses from smaller towns and local administrative districts (gun) and easily go to major cities. For the most part, North Koreans can take a bus and travel the entire country, except for the Demilitarized Zone and the border area near China. Ultimately, the jangmadang economy has expanded the North Korean peoples’ mindset and way of living.

c. Dissemination of Information and Increased Movement

The increased movement across the country has created a gradual flow of free information. With the introduction of mobile phones, information on the prices and demand of goods can now be traded in real time throughout North Korea.

Naturally, North Korea’s marketization is the result of the peoples’ own will to survive, and the people’s struggle for the right to live is gradually changing their own mindset.

  1. Proper Assessment of North Korea’s Economic Growth


We should not be confused by the fact that North Korea’s economy is developing the heavy sanctions on the country.  Rather, we must have courage and hope for the increased ability of the North Korean people to bring about the collapse of the North Korean system and the successful promotion of democracy.


Although there are nearly 200 clauses in North Korean law in relation to market activity that can be used against the North Korean people, the markets have defied these laws and continue to run. It is estimated that there are at least one million people that conduct trade not in North Korea’s socialist economic system but rather in its capitalist market economy. The majority of these people are women.

If the mother engages in the market, a whole family is now able to survive. According to North Korean demographics, the average North Korean household is made up of 4.1 persons. That means four million people are reaping the benefits of a capitalist market economy.

Whether it’s the people delivering goods, providing services, manpower, goods, or agricultural products, many people are somehow involved with people who trade. With the party officials and soldiers in the Ministry of State Security and People’s Security who accepts a bribe to secure his livelihood, the reality is that the majority of people in North Korea have close ties with people in the markets.

In as little as ten years ago, there were many people in North Korea that died from starvation, whereas now there are more and more well-off families. Apartments costing $10,000 USD are continuing to pop up in Pyeongyang.

Marketization, however, has also created a gap between the rich and the poor, and there is a growing disparity amongst citizens and those in government that regard this as unfair. Through marketization, state officials have increasingly become well-off, and the possibility that an average, everyday person can become rich has slightly diminished. A gap between the rich and the poor is forming. I believe that in the future more North Koreans will view this as unfair and demand change. If this happens, tensions may increase through marketization between the North Korean government and its people.

Kim Jong-un’s personal funds to maintain the regime or the military will inevitably be subject to difficulties. However it is too early to judge whether there is a shortage of foreign currency in the market or if North Korea’s currency value has fallen.

I believe there is a need to separate the effects of the growing capitalist markets on the regime and the North Korean people and analyze them separately.

I also believe that the average North Koreans will not be able to entirely escape the effects of the sanctions. In order to mitigate the economic difficulties that arise from a drop in foreign currency imports, the Kim Jong-un regime will have to assert its own efforts and strength- restricting its people even more, and increasing the likelihood that they will be exploited.

Restriction is not possible in a market economy and it cannot coincide with North Korea’s unique ruling system. Ultimately, this market economy’s connivance and growth will lead to the collapse of the Kim Jong-un regime.

As a result, the Kim Jong-un regime is heading down a path that is intensifying its reign of terror and exploitation of its citizens. The government has further alienated the public by frequently demanding taxes, increasing mobilization efforts in order to make up for a loss in foreign currency imports, and exploiting its citizens.

An outburst of dissatisfaction and discontent from the public is inevitable as the government reaches the limit to which they can demand funds, resources, and manpower for construction. Moreover, as the government tries to ease these grievances, they will no longer be able to turn a blind eye to the anti-socialist demands of the working masses and their actions that run counter to the law.

With state security officials and authorities taking advantage of the anti-socialist activities and demanding bribes in exchange for turning a blind eye, and those bribes are in turn paid to higher officials, corruption can be seen in all aspects of North Korean life. The phenomenon that there is nothing that cannot be solved by a bribe in North Korea has become normalized in society.