If a dictator wants to avoid a nationwide revolution, then he should unleash a free enterprise system. This is the message that North Korean supreme leader Kim Jong-un is beginning to understand. Unlike other dictators around the world, like Zimbabwean President Robert Mugabe or Venezuelan President Nicolas Maduro, who have clamped down on free markets, the younger Kim is starting to open them up.
According to The New York Times, a growing number of marketplaces are emerging across the country ever since he took over from his father five years ago. Everything from a construction boom occurring in the nation’s capital of Pyongyang to entrepreneurs launching new businesses, competition is popping up everywhere.
North Korean businesses are producing a wide array of goods: cigarettes, cooking oil, cosmetics, socks, noodles and much more. Solar panels are viewed as middle-class status symbols. Three million people are cellphone subscribers. Domestic industries are thriving so much that they are beginning to take considerable market share from Chinese companies.
Citing a study by the Korea Institute for National Unification in Seoul, the newspaper reported that the number of state-approved markets has doubled since 2010 to 440. This is having an impact on labor markets as approximately 1.1 million people are now working as managers or retailers in these markets.
Economic growth became the government’s top policy objective in 2013, and this so-called gamble paid off in just two years. North Korea now resembles China in the 1980s and 1990s, when the impoverished nation gradually turned to capitalism.
The Economist first touched upon the rising shift in culture two years ago:
This growing segment of the population is already visible on Pyongyang’s streets as young women shrug off dowdy outfits for fitted jackets, bolder colors, and sunglasses (long the mark of female villains in North Korean films). Coats with a discreet Burberry pattern on the lining are popular. One North Korean in her 30s was recently sporting a large diamanté Chanel brooch directly above her obligatory pin of the Kim rulers. A woman was even spotted carrying a tiny pet dog in her designer handbag—a sight common enough in Tokyo or Seoul but improbable in Pyongyang even five years ago. High heels have appeared, some in leopard print or silver.
Kim ostensibly doesn’t want to refer to this increasing success as part of market-oriented reforms. He prefers to call it “economic management in our own style.”
It is believed that Kim being exposed to the West’s wealth at an early age is contributing to the adoption of markets. Reportedly, Kim attended private schools in Switzerland under a different name, and during his time he would see an incredible standard of living for even low-income Swiss residents.
Even without an extensive education into how markets work, he may grasp its success at a basic level.
It doesn’t matter what he calls his economic system or how much he comprehends economics. Kim will soon learn that free market economist Milton Friedman was right when he said:
So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.
The government still rules with an iron fist and maintains a stranglehold on its population. Kim hasn’t deviated from his father’s policies of executions, draconian laws, and prison camps. Citizens are still trying to flee the country and prison conditions remain dreadful. Torture, beatings, and rape are commonplace, oftentimes just for consuming mice, worms or wastewater if inmates’ meals were eliminated for breaking a rule. It remains unclear if Kim will ever minimize these horrific measures imposed by leaders of the past.
At a time when there is heightened hostility between North Korea and the rest of the world, President Donald Trump could help the young dictator steer the country in the right direction. Trump could begin by removing sanctions and encouraging a better relationship between the North and the South.
An economic miracle happened soon after the fall of Nazi Germany. An economic miracle unfolded in Vietnam following the fall of communism. An economic miracle propelled China into having the second-largest economy in the world.
Could the same ensue in North Korea? If Coca-Cola can thrive on the side streets of Pyongyang, then anything is possible.
Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of "The War on Cash." You can learn more at AndrewMoran.net.
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