중앙데일리

Can Kim become Deng?

June 21,2018
Kim Byung-yeon
*The author is a professor of economics at Seoul National University.

What kind of future does Kim Jong-un envision for North Korea? The young leader has dramatically remade his image from a ruthless nemesis into a daring visionary ushering a secluded nation into the world.

Now, pundits are busy debating the intentions of the young leader and the possibility of an opening of the economy. They suggest the models of China, Vietnam, Singapore and even South Korea under Park Chung Hee, the strongman credited for the country’s staggering industrialization after postwar devastation. Optimists bet liberalization is on course now that North Korea has declared an end to nuclear weapons development. Skeptics are unsure the notoriously closed Pyongyang regime will easily change. So, the question is, can Kim be a reformist in the likes of Deng Xiaoping?

In a historical context, the odds are very low. Seven socialist states attempted large-scale economic reforms, but only two succeeded — China and Vietnam. Others, including the Soviet Union, Hungary and former Yugoslavia, did not pull off the transition well.

What determined the results was the flexibility in the dictatorship. China took a dramatic turn toward opening and reform in 1978 thanks to the flexible and open-minded Deng, who took the leadership from omnipotent czar Mao Zedong. In 1986, Vietnam could launch economic reforms dubbed Doi Moi to pursue a market economy, albeit socialist-oriented, because its leadership was reform-minded. Moreover, as Hanoi was under a collective leadership structure — instead of a single despot like in North Korea — it had more room to be responsive to public demands. China and Vietnam might not have succeeded in their transformation to a market economy if their leadership had been under an autocrat.

Having the will does not necessarily lead to opening and reform. Kim Jong-un has been more progressive on the economy than his father. Under his rule, there has not been a clampdown on market activities, and certain collective farms are now believed to be run by small groups of individuals instead of the state. But these changes do not mean a transformation into a market-oriented economy. Like China and Vietnam, private enterprises should be allowed, the market system should be legitimate and collective farms must fall entirely under individual ownership. Only then, the North Korean economy will have crossed the Rubicon to never return to the socialist system and instead see economic growth of more than 4 percent annually.

North Korea has maintained a deity-like dictatorship across three generations, a legacy unprecedented in the history of socialism. A transformation to a market-oriented economy waters down omnipotent, totalitarian power. The market builds self-identity in individuals under the command of Juche ideology (North Korea’s ideology on political, economic and military self-reliance), which demands absolute obedience to the state.

Private enterprises and farms can make individuals rich. Once individuals get a taste of personal wealth, they would want to defend their properties from oppressive forces. They are bound to clash with the state dictatorship. Deng and Vietnam’s collective leadership were ready to back market activities and capitalists. Their bold decision of placing the economy ahead of politics had saved their countries and future. Can Kim make the same radical decision on his own?

Kim will choose the market-oriented growth models of China or Vietnam only when he is required to by pressure from commerce and the markets. Before sanctions took full force, the share of trade in North Korean economic growth neared the global average. Market activities have become commonplace. If North Korean commerce and markets become more active, Kim would face greater challenges to his power. He may have to seek compromise with market forces, and his authority will be significantly cut down by collusion between capitalist forces and corrupt bureaucrats.

Kim may opt for a reign of terror to suppress market-led forces, but erratic and brute force can kill the economy. The rich won’t put their money in a legitimate manufacturing enterprise to avoid categorization as a capitalist. They will instead circulate money in retail or merchant businesses, but the economy cannot grow without manufacturing. Kim would ease his political clampdown and vow to make economics a priority only when he sees the power of those who built wealth through trade at home and abroad. He would become a more relaxed ruler if he comes to believe he could lose everything if he fights them.

Our policy direction also must become clear. Kim stands at a crossroad. He has the choice to enter the uncharted path of opening and reform. Despite hopes, his instinct could tell him to stay the familiar course of the state-controlled system. The worst scenario could take place when benefits from economic cooperation and aid from South Korea help reinforce the socialist system. Seoul must amend or throw away any projects that can only help cement Kim’s personal power.

South Korea’s designs for economic ventures in North Korea must be focused to make it more oriented toward external trade and market activities. If not, we would be just helping Kim rebuild his monstrous dictatorship. We must make sure that any of our future aid and economic enterprises directly benefit the North Korean people, not a select group of elites.

Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, June 20, Page 31


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