[EDITORIALS] North's economic surprises

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[EDITORIALS] North's economic surprises

A change is taking shape in the North Korean economy. It is a change entailing reform of pricing and wages, setting the foundation for a monetary economy and injecting a stronger sense of responsibility to individual economic agents, with a view to reviving the devastated economy by bringing in the spirit of competition across the board to North Korean society.

Since last year North Korea has pursued an upgraded economic blueprint, mixing the principles of "guaranteed gains," "wages according to the quality and quantity of labor" and "declining from equality" within the framework of a planned economy. Thus, the recent changes follow the specific implementations to the blueprint. Pyeongyang is denying outside-watchers, dubbing the change as "signs of adopting the market economy." But there is no doubt that the new plans are "bold and innovative," as the Chosen Shinbo, the organ paper of the pro-Pyeongyang group in Japan, wrote.

Primarily, the new reforms entrust to individuals a large portion of the responsibility of guaranteeing economic livelihood, once a responsibility carried by the state. The old prices under the state distribution system have been corrected to the market level price. In the case of rice, that brought about a 550-fold increase. With prices hiked, the state had to raise the wage level. The mean wage of laborers working in manufacturing rose 18-fold; while the wage of miners rose to 6,000 won ($30, real rate) per month, a sum three times larger than the average wage of 2,000 won for the ordinary North Korean workers. The 500-won bill that had rarely been seen in circulation has increased, and the authorities have issued a new 1,000-won bill. The state got rid of the parallel currency used in North Korea's imported goods stores, and adjusted their currency realistically in a value against foreign currencies. These are measures amounting to laying a stepping stone toward a currency-based economic system.

The bedrock principle of these reforms is that the autonomy of the economic agents-individual or groups is greatly guaranteed. That means the 1984 "independent accounting system" should be fully implemented. Be it factories or state-based companies, the revenues they make should rate their performance. Farmers should not be an exception. In sum, it means the adoption in earnest of the free competition of a capitalistic society, and maximizes output.

State companies or farms are all without an environment to manage the production-sales flow of their products. Pyeongyang needs Seoul's help in clearing these hurdles as they carry on with reforms. Pyeongyang's regret over the naval clash in the Yellow Sea seems to be related to its internal situation. For North Korea's economic reform to succeed, the country should reform its policy on South Korea.
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