The New Consumerism of North Korea

The famine came fast, but it had been quietly building for years. Leeching off their Soviet big brother, and pushing through a series of fast-gain agricultural policies worked… until it suddenly didn’t. As the Soviet Union began to collapse, so did North Korea. By 1994, it was all over, nothing could be done; a famine so deep and wide-reaching that it needed its own moniker — the ‘Arduous March’ — had settled over the country.

This was the same year when the Great Leader, Kim Il-sung, the only ruler that North Korea had ever known, died. He left the country, as a death-bed gift, to his son, soon to be the Dear Leader, Kim Jong-il. The young man was not his father. He lacked any form of charisma, and was so nervous around large crowds that he only ever spoke in public once. And he had a problem. Maybe the famine could be ridden-out, maybe he could avoid dangling from a light pole in downtown Pyongyang, but a fundamental change was on its way.

Hardship is always a catalyst for social change. American napalming of the peninsula during the Korean War had helped bring post-war North Korea to accept a dictator, someone who promised to protect them, to manage every aspect of their lives. The same people, now no longer able to rely on their government for food and assistance, would have to either die or innovate. North Korea — after the famine years — would never be the same.

It naturally took some time. But as desperation grew, everyday North Koreans began to try something new. A starving population just didn’t have the luxury of attempting to wait things out. Market stools began to pop-up, and employees, unpaid for months, stopped attending their state allocated jobs. The tentative steps of a few were followed by everyone with the capacity to do so, once they realised that the state no longer had the will to stop them.

After enough people had died, the famine came to an end; and the North Korea that survived was, to an important degree, a market economy. The rules are still there, but no-one follows them. A residual fear still hovers, and people still pay lip-service to their assigned jobs and laws against buying and selling property. But today there is no part of the North Korean economy that sits free from market forces.

A fairly new phenomenon in North Korea, bribery, breaks down the best laid plans of all governments. Previously, anyone bold and enterprising enough to elicit kickbacks, had a very hard time finding anything to do with it. Anything worth having, in a material sense, was not available for purchase. It took the collapse of society, and its rebuilding, to change things. The empty hole once occupied by the government, was quickly filled by consumerism. And soon police, supervisors and officials were walking past criminally capitalist scenes, with an indifference that only comes from knowing they have a share in the profits.

Soon enough consumer choice was in, and everything was available for a price. The early market stalls started small, with families selling vegetables, rice cakes and personal possessions. And still shadowing an impoverished society, the most common items are cigarettes, chocolate, soda drinks, beer and other alcohol, non-government issue clothes, low grade-electronics, and meat (though this is still hard to come by). In this mix are (once contraband) foreign products — available at a premium, but there nonetheless for anyone with enough disposable income.

As these new markets began popping-up at busy intersections, or occasionally in constructed-for-purpose buildings, a new piece of terminology came with them. Language dies when it’s not used. So the Korean word ‘jangmadang’, literally translating to ‘marketplace’ — and with an ancestry reaching back to the farmers’ markets of ancient Korea — found itself without a purpose in the state controlled economy of North Korea. Now it’s back, and echoing freely across the country.

The further away from Pyongyang, and other city centres, the sooner these markets began to emerge. Proximity is the friend of a domineering tyrant. The further from the heart of government, the longer it takes to get designated rations and clothes, and the easier it is to be forgotten about when things get hard. As the first to feel the full bite of the famine, the distant, isolated regions of North Korea were also the first to ignore previous word-of-god regulations. Totalitarianism breaks, from its edges, inwards.

So it goes with the new North Korean fad — Special Economic Zones. Cities such as Rason, on the outer-most edge of the border with China and Russia, are now burning as signal fires to the rest of the country. Watching wealth move north, thriving at the fringes of Pyongyang’s control, the regime — pushed along by the neighbouring super-powers — surrendered what they could not win. The streets of Rason, rich with international investment, and governed by foreign currencies, are now increasingly unrecognisable as North Korean.

As rich and important as the northern border with China has become, there is now also a resilience to the economy. As the private sector has moved into export-heavy commodities such as coal and seafood, they have also had to bear the costs of new, strict international sanctions. But monitoring individual traders is hard, if not impossible. Up-and-down the Chinese border, North Koreans, with government issued permits, or after bribing the soldiers on guard, move easily between countries. These individual border-jumping operations are small, but also high in volume and frequency. Through them, the North Korean economy has a growing immunity to international pressure.

This has all been very uncomfortable for the North Korean elite. For a time, the privilege of entrepreneurialism had been fenced-off for themselves — it was ‘collectivisation’ for the masses, and individual enterprise for the elite. And as long as the economic order was written by them, and in their favour, they could remain ‘elite’. Open markets mean open competition; a challenge to the life they know. But it also means something more frightening.

As markets open, so do minds. To compete people need to be creative, independent, and willing to take risks; seeking out new opportunities also means questioning the world around them. This is the dilemma that has kept all manner of dictators awake, sweating in their beds at night. There are only bad choices — let the markets continue to open so that people can feed themselves, or crack down and risk another famine. Either way, if you play the game badly, the cost of losing is uprising and public execution.

As a cold, wet winter was settling-in over North Korea in 2009, the regime went in for the jugular. With the new markets came unofficial and uncontrollable currency exchange rates. The North Korean state, unable to set even the most basic of commodity prices, decided it would make a move and revalue the currency. Old denominations of the North Korean Won would be cancelled, and replaced with new notes, minus two zeroes. 100 won became 1 won overnight.

But the real kicker was the imposition of a trade-in limit for old notes. Each person, after years of stashing private wealth from the grey economy, could suddenly convert no more than 100,000 won. It was a clumsy way to reclaim market control, and to transfer some of those vast private fortunes back to the elite. What actually happened was that savings were wiped out across the country, but prices didn’t follow as businesses thought they could ride things out. Panic set in.

A humming economy crashed in a heap, and the North Korean Won, never the most trustworthy of currencies, fell into the hole that the government had just opened-up before it. Inflation exploded, and the Chinese Yuan became the only currency of any use. Then something new happened, something predictable, yet that no one saw coming. Unrest gripped the streets. And, in a panic of their own, the government quickly reversed policy, and calmed the angry crowds with 100-fold increases in their wages — bringing things back to even, but only after significant skin had been lost, and the regime itself risked.

What had been missed by the North Korean regime, was just how fundamental the new capitalism had become. And indeed, just how sophisticated the traders were. After years of fierce competition, North Korea was highly tuned-in to even the slightest of market indicators. It is now possible to predict the future arrival of aid shipments, and their contents, simply by watching sudden falls in domestic prices, as traders try to sell out their stocks before the market is flooded.

In some ways, the safest place to be in this new North Korea, is out in the open, at the heart of market-life; in technical violation of the law. Private wealth holds a precarious place in this society. It was needed to escape the famine, and it is needed for even the most minor steps in social mobility. But surviving like this, around people who are trained and encouraged to snoop into your life, comes at a cost. A new found prosperity often attracts the suspicion of the existence of defector family members, sending money back to the country they escaped. Traders can be tolerated, defectors cannot.

With the average income reaching 15–20 times higher than official salaries, North Korea now has the semblance of a middle class. And these people are naturally seeking ways to invest their excess earnings. Small market stalls selling personal items, ill-gotten aid, and Chinese imports, are quickly becoming private restaurants and large scale shops manufacturing their own merchandise. In part, North Korea’s Industrial Revolution has finally arrived.

Official permission to start such a business is never asked for and never granted. Instead partnerships form — unofficial agreements with local bureaucrats and authorities — and private enterprise is registered as state enterprise. Nothing actually changes here, but the businesses have legal protection, and the local authorities involved receive significant enough bribes to make it all worth their while.

This bleeds through the larger economy, with quasi-state, or semi-state, businesses replacing the ‘State’ wherever it is inefficient, unresponsive or unwilling to produce central funding. The government-owned construction industry, once run on little more than an oversupply of free labour from the military and work units, has been forced to turn to private partners for more complex tasks. And the aging transportation system is being superseded by private buses and mail services, to keep up with the needs of a growing merchant class; there are now five or six taxi companies in Pyongyang alone.

All this new wealth brings with it a new, locally sourced, consumerism. Beyond the growing product ranges flowing in from abroad, North Korean companies are expanding into the early stages of conglomerates. Air Koryo, the state airline, now produces alcohol and energy drinks; the cigarette company, Naegohyang, has expanded into fashion apparel and electronic goods; and the Masikryong ski-resort offers a rare taste of luxury to everyday North Koreans who should, by all accounts, not be able to afford it.

With the new café culture and expanding shopping centres, a similarly recognisable consumer phenomenon has walked through the door slightly less noticed — post-code envy. All housing in North Korea is still allocated by the government, and only one residence is assigned to each family. Which leaves open a niche real estate market, where wealthy families can trade-up to more desirable neighbourhoods (the Mansudae district of Pyongyang is the most prized) by swapping apartments — along with a very large one-off payment — with another family who is conversely looking to downsize, and could do with the money.

But all this choice and opportunity comes at a cost. Behind the property boom in Pyongyang, the designer clothes and conspicuous consumption, is a growing gap within society. North Korean inequality used to only mean the space between the regime and the rest. Now as the average employee walks to work or takes their family shopping, they are bombarded with the luxury of other citizens. Constantly reminded about what they are missing, there is a growing risk of resentment within the new market-orientated North Korea. Though be it in a different direction, the regime has found itself slow-walking toward another tripwire.

Through all the discomfort of a rapidly opening society, one group of people have undoubtedly been the biggest winners — women. In the early days of the famine, when people were still fearful of leaving their allocated job sites, the only people in a position to test the waters of capitalism, were the mothers, wives, sisters and daughters, who after their schooling, and after marriage, were largely forbidden from joining the work force; their place was in the home. So, as the men of North Korea were still forced to clock-in for work that they were no longer being paid for, it was the women of North Korea that ventured out, set-up the first market stalls, and saved their families from starvation. Long-held ideas die slowly — but the old misogyny is unmistakably fading-away.

The memory of the famine still haunts North Korea — the hills of every town, including Pyongyang, are littered with the graves of those who starved to death. At the same time, the regime looks no more likely to collapse than it has before. Across the country monuments to the Kim dynasty still stand, and are being added to daily. Even though state ideology has not yet caught-up, North Korea is a changed society. This has been said before — and been wrong — but a corner seems to have been turned. And things cannot go back to how they were.