a set of aerial photos that show North Korean investment in infrastructure: new dams, markets, schools, even a ski resort and a tree plantation that grows seedlings to replant the forests cut down for firewood during the crisis years.
How? We're talking about a country crippled by energy shortages, dominated by a bizarre dictatorship, suffused with a siege mentality that leads to enormous investments in missiles, nuclear weapons, and a vast network of artillery and rocket emplacements designed to rain destruction on South Korea in the event of war.
A concerted long-range plan to improve electric supplies has probably helped. But most economists – that is, the ones who believe that this growth is happening – credit the loosening of state economic control that began in the famine. When the government could not feed people or pay their wages at state jobs, they allowed the development of markets and small private farms. Once the famine was over the government of Kim Jong-Il intermittently cracked down on private markets, attempting to keep them within tight limits. But over the past five years Kim Jong-un has, people say, embraced the markets and helped them to flourish.
Since 2010, the number of government-approved markets in North Korea has doubled to 440, and satellite images show them growing in size in most cities. In a country with a population of 25 million, about 1.1 million people are now employed as retailers or managers in these markets. . . .I suspect that the example of China is key here. North Koreans used to follow the Stalinist model, but lately they have seen that China's Communist Party has held onto political power despite the booming market economy. As long as they insist on confrontation with the US, they will never achieve China's spectacular growth, which was jump-started by exports and foreign investment. But they can certainly get improved results domestically.
Unofficial market activity has flourished, too: people making and selling shoes, clothing, sweets and bread from their homes; traditional agricultural markets that appear in rural towns every 10 days; smugglers who peddle black-market goods like Hollywood movies, South Korean television dramas and smartphones that can be used near the Chinese border.
At least 40 percent of the population in North Korea is now engaged in some form of private enterprise, a level comparable to that of Hungary and Poland shortly after the fall of the Soviet bloc, the director of South Korea’s intelligence service, Lee Byung-ho, told lawmakers in a closed-door briefing in February.
But to get back to where I started: North Korea is not exactly thriving, but conditions have improved a lot since 1995. An American strategy of refusing to talk to them and occasionally making ominous noises about war will not force their government to capitulate. They can go on like this pretty much indefinitely. Nor will they be overthrown in some sort of revolution, since their complete control of the media, the military, education, and all other levers of power will keep any alternative power center from developing.
To broaden the picture: the resurgence of markets in North Korea is yet another argument in favor of capitalism and against strict socialism. One thing we have learned from the past century of socialist experiments is that business – markets, exchange, the pursuit of profit – is quite fundamental to human life and aspiration, popping up wherever it is allowed. It takes a Bolshevik or Maoist level of repression to stamp out markets. And as long as there are markets, some people will become successful businessmen and make lots of money. In any large-scale society there will therefore be rich people, and inequality will become an issue. I don't see any way around this. Any society free enough for me to want to live there will have business, and in business there are always winners and losers. Since strict socialism can only be created by grim oppression, and raw capitalism leads to a world of billionaires and paupers that I find deeply unappealing, that leaves a mixed economy with progressive taxation as the only route we know of to a decent world.