Bottom-up Marketization

After the state-socialist economy collapsed in the 1990s, the regime was no longer able to provide for the people, and up to a million North Koreans lost their lives in the resultant famine. Through this great adversity the North Korean people had to survive by their own strength, so they abandoned defunct work units, got creative, and engaged in illegal market activities and foraging to get food. This led to a process known as “marketization from below.”


North Korean women in particular emerged from more traditional roles to play a key role in this process, and to this day many market activities continue to be female-dominated. The market became the primary source of food for ordinary North Koreans outside the ruling elite, and as food markets gradually grew to encompass a broader range of goods and services, the market mindset and profit motive spread throughout North Korean society.


Over the past decade the regime has vacillated between grudging tolerance and active crackdowns on the markets, but the people have proven their resilience. After the 2009 currency reform debacle the regime must now realize that the markets are a fact of life that they must learn to live with.

Cross-border Movement

The famine and grassroots marketization triggered unprecedented levels of internal and cross-border movement–much of it illegal–and trade with the outside world. The influx of foreign consumer goods, primarily from China, and their spread through North Korea’s markets is giving the people tangible evidence of the advancement of their neighboring countries.


The North Korean regime has few things apart from natural resources and obsolete weapons to sell to the outside world, but they are desperate for foreign currency. So they are increasingly selling cheap North Korean labor to foreign countries, and this is exposing growing numbers of North Koreans to the prosperity and advancement of other countries that use more efficient systems of economic governance. The regime takes the majority of these workers’ wages, but jobs at foreign companies, whether based in North Korea or abroad, are still keenly sought after by North Koreans.


For instance, the Kaesong Industrial Complex (an economic cooperation zone where South Korean companies hire North Korean workers) is helping to spread awareness of South Korea’s economic and technological progress through North Korean society. North Korean refugees have reported to us that they heard about the KIC through word of mouth, even though they lived at the opposite end of the country. North Korean workers were known to be paid well to work with South Koreans, producing goods that were far superior to anything produced by North Korean factories.

An Explosion of Corruption

In North Korea, where the laws are designed to protect an authoritarian regime, there are a lot of potential benefits to ordinary people when the rule of law breaks down. Nowadays, according to our refugee friends, corruption is rampant and “in North Korea there isn’t anything you can’t do if you have money.”


As many of the new economic activities are technically illegal, and because many regime officials rely on the markets and bribes for their livelihoods since they receive so little resources from the central government, corruption is inevitable. Restrictions and crackdowns push more market activity into the illegal/informal sector, so crackdowns become part political intimidation and part economic predation, exacerbated by the high levels of discretion practiced by security officials in arrest and sentencing. Fear of harsher punishments just allows security officials to extract higher bribes, which basically makes it impossible for the central regime to effectively crack down on private business. Corruption is therefore increasing anti-regime frustration while opening up space for those with some money to operate more freely from regime restrictions.


Since regime institutions are the only agencies that have legal rights to do many things in North Korea, it is inevitable that entrepreneurs will bribe regime officials to obtain their licenses, and also that officials will run their own private side-businesses to build wealth, causing a breakdown in government authority. Driven by the profit-motive and enabled by corruption, a variety of businesses have therefore emerged such as restaurants, karaoke bars, bathhouses and even private coal mines, all taking advantage of the new increasingly permissive (but still precarious) business environment. The prevalence of corruption corrodes regime control and authority and enables and accelerates many of North Korea’s other social change phenomena.

Information: Grassroots Glasnost

The regime has invested a lot of effort into making North Korea the most closed media environment in the world, but compared to two decades ago North Koreans have significantly more access to outside information. This is having a real impact on their views and attitudes.


The regime’s information blockade is being broken down by cross-border movement, trade, and new technologies. Marketization is increasing the proliferation of mobile phones, televisions, radios, DVD players, and South Korean dramas and Chinese films to watch on them. It is possible to buy cheap Chinese DVD players for around $20, and DVDs themselves are available for less than a dollar and are commonly shared or even rented. USB drives are also growing in popularity, and are used with computers and the newer DVD players that have a USB input port. This makes it easier to share and watch foreign media without being detected, because USB drives are so easy to conceal. The markets also provide a rare gathering space that can act as a forum for news, rumors, ideas and even low-level or implied criticism of the regime.


North Koreans are learning more about the reality of life in in the outside world and the reasons for their own poverty, and they cannot unlearn these things. All signs indicate that this ‘education in reality’ will only continue, and will further empower the North Korean people to think independently from the regime.

Ideological Erosion

A growing segment of the North Korean population have exited the state socialist system to engage in market activities – representing acts of ‘mass disobedience’ or ‘everyday forms of resistance’ – and they find their interests and needs in opposition to the regime’s economic policy, restrictions and crackdowns. Events such as the 2009 currency revaluation and restrictions on trade directly make people’s life more difficult and mean it is increasingly obvious that the country’s difficulties are not caused by external hostile forces, but by the regime.


Revolutionary ideology naturally erodes over time but economic and informational changes have accelerated the growth of cynicism about the regime, although communication of discontent is still risky and is therefore limited. The markets have no place in North Korean socialist ideology, and increasing awareness of the outside world contradicts the regime’s national narrative. The regime currently depends on ideology for its legitimacy, so they are rationally concerned about the role of marketization in breaking the people away from the state both physically and psychologically. Kim Jong-il himself referred to the markets as “a birthplace of all sorts of non-socialist practices.”


With the eroding state system and loss of control, combined with marketization and corruption, there is both the motivation to increase repressive efforts and a never-ending stream of people falling afoul of the law. But as fear becomes a more important factor in maintaining the system, increasing repression only further alienates the public.


As the chasm between traditional propaganda and the people’s understanding of their reality continues to widen, and the bottom-up forces empowering the North Korean people continue to increase, the regime will be forced to adapt its propaganda to align more with reality and actually allow a better standard of living in order to maintain long-term power and control, or else see its propaganda become increasingly irrelevant or even counter-productive.

Jangmadang Generation

North Koreans who are now in their 20s and early 30s came of age after the collapse of the state-socialist economy–an era of marketization and eroding state relevance–and that is the only North Korea they remember. They are the Jangmadang Generation (jangmadang is North Korean for ‘market’) and their attitudes, values and even behaviors are significantly different from their parents’ and grandparents’ generations.


The Jangmadang Generation grew up in an era where people had to fend for themselves. Many of them never relied on the state for work, food, wealth, status, protection or information. Traditional ideology seems hollow and irrelevant to them, and they are more influenced by foreign media. It is no surprise then that many of these young North Koreans show more interest in foreign films, fashions and music, and feel little attachment to the regime or the leadership, seeing regime officials as takers rather than providers and as the source of problems inside the country. They have less respect for the regime compared to previous generations, and this demographic is only going to grow with time. They will be crucial in pushing for change in the future.

Outflow of People

Since the famine, North Koreans who have been able to have been fleeing the country in their thousands, even risking their lives to do so. Over 28,000 North Korean refugees have made it all the way to South Korea, with an unknown number still in limbo in China.

These refugees play a crucial role as a bridge between the outside world and North Korea:

1. Many of them maintain contact with family members still in North Korea, sending information back in and increasing the North Korean people’s awareness of the outside world.


2. They also send money back to their relatives through brokers. These remittances amount to 10-15 million dollars per year, which is used to buy human security as well as funding smuggling operations and building up trade activities, thereby accelerating marketization and creating more space between the people and the regime.


3. They have provided much of the information we know about North Korea today. Most of the insight you read in these pages has come from refugee interviews conducted by LiNK and others.
In addition, because it is illegal to leave the country without state permission, crossing the border is an act of defiance against the repressive government. As more North Koreans become aware of the rising numbers of their fellow countrymen ‘voting with their feet’ and leading better lives in more affluent neighboring countries, this presents a growing challenge to the legitimacy of the North Korean regime.


The regime is therefore particularly concerned about the effects of the growth of illegal cross-border movement and contact, and has stepped up security and punishments in an attempt to regain control over the border. But until North Koreans are able to live the kinds of lives they deserve, people will always find ways to overcome these challenges and break through the walls of the system.

Polarization & Hot-spots of Social Change

The effects of these change phenomena are not distributed equally throughout North Korea. The markets and explosion of corruption has led to the emergence of a minority group of mid-elite entrepreneurs and regime officials who are getting comparatively richer by taking advantage of these changes.


This wealth is concentrated in Pyongyang and a few other cities – confounding the regime’s concentration of resources to these locations – while many in the countryside are left struggling to meet their basic needs.


The new economic elites typically live in or have access to Pyongyang and have access to better information and consumer goods. The next generation of elites increasingly want to study business, finance and economics at university, and are focused on making money. The new mid-elites are also economically-literate and are likely to be pro-reform (as far as it is in their self-interest), and are well aware of the regimes stop-start efforts to restrain the markets.


Elements could constitute a political challenge to the regime if they feel their interests diverging from the leadership. However as long as they feel their fate is tied up with the fate of the leadership they will only push change within the system, rather than threaten the system itself.


The markets do provide ways for enterprising North Koreans to mitigate some of the limitations set on them by the songbun class system. If you succeed in the markets you can buy some of those opportunities that would otherwise be denied to you. However if you start off in a position of more privilege and opportunity, you are naturally better placed to succeed in the markets in the first place.


Polarization also means that as well as a ‘new rich’, there is also a vulnerable ‘new poor’, as the markets take the role of the state as the de facto provider of food. This would include those most reliant on the state but unable to participate in market activities, for instance lower ranking soldiers, who reportedly do suffer from malnutrition. These strata will also be disadvantaged by the yuanization of the economy and the massive increase in food prices in North Korean won since the 2009 currency reform.


Whereas in the past nearly all North Koreans were similarly poor, today the growing gap between the haves (typically Pyongyangites) and the have-nots is likely to become another source of social friction and add to the pressures for change.

Bonds between the People

Authoritarian regimes often ensure their power by keeping the people atomized – preventing the formation of bonds between the people as separate from the regime. To achieve this they remove societal mechanisms that might produce a challenge to their authority and utilize a society-wide system of snitches and informants to keep people’s everyday behavior in check, generating a pervading sense of mistrust and fear in the process.


However North Koreans are increasingly engaging in shared illegal activities such as illicit business or gathering with small groups of friends to watch foreign films. They are more reliant on each other for goods and information that the regime is either unwilling or unable to provide. Shared participation in illegal activities such as trading banned products or discussion of “subversive” information leads to mutual dependence, trust building and the normalization of such activities within communities. This in turn encourages further sharing, private discussion and the strengthening of bonds between the people. Ultimately this could result in a growing civil space for the people, separate from the regime.


The regime’s repressive security apparatus is still too effective to allow any public challenge to the ruling elite. People may be more open with sharing their views, but they are still very cautious, and anything more than very private criticism of the regime within a trusted group of friends or relatives is still too risky. North Korea’s change phenomena may however be contributing to the emergence of a growing civil space for the people, who are breaking off from the state not just at an individual level but increasingly at a community level.


This may enable people to push back against the regime collectively, on small and localized issues at first. Indeed there is evidence that this is already happening.

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