Loosening The Iron Grip

Just a short while after reading about Kim’s speech and its remarks, and writing about it, I ran across this, also from 38 North, by Peter Ward:

In the last few years, the seemingly ever more frequent North Korean nuclear and missile tests have been met with intensifying sanctions. Yet, North Korea’s economic recovery post-2000 has continued largely unabated. This is in part because the North Korean government has made radical changes in the management of its state-owned enterprises (SOEs). While the regime seems to be doing everything it can to keep up Stalinist appearances and Kim Jong Un probably believes that he cannot abandon socialist rhetoric without risking his legitimacy, in reality, markets increasingly play a central role in the lives of ordinary North Koreans. As such, the regime has been adapting to this new reality and moving to co-opt market forces by side-lining the Party in economic management. This is most clearly illustrated by the 2014 amended Enterprise Act, which came to light earlier this year [2017], granting SOE managers broad rights to engage in foreign trade and joint ventures and accept investment from domestic private investors. Institutionalizing market forces seems to be helping to create a better investment climate, and thus spurring growth.

I wonder if they’re learning by observing China, carefully opening up on the economic front while keeping the political world ordered to benefit themselves. But what are the limits? That’s unclear, although Peter concludes with this:

These changes to the SOE laws are the first steps on a long road to economic reform. Private property still is illegal, and the regime will need to figure out how to further expand the rights of de facto private business in order to ensure that recent economic growth is sustainable. Removing the Party, a bastion of the old socialist order, from daily economic life is clearly a step in the right direction, as it allows enterprise management and entrepreneurs to worry less about ideology. At the same time, the nuclear and missile programs mean that the foreign investment the country needs to grow and reconstruct its shattered infrastructure will likely not be forthcoming. These limited but real changes will likely run up against the hard realities that the regime’s foreign policy has created.

Will they be a miniature powerhouse? What about their human rights record? The future of North Korea remains obscure.

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About Hue White

Former BBS operator; software engineer; cat lackey.

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