North Korea and Its Political-Economic Management System

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Roughly spoken, one half of humanity starkly warns about taking North Korea’s leader Kim Jong-un at his word. These people argue that we have seen this movie of alluring promises before. The other half of humanity hopes Kim means it when he says he wants to end the Korean War, forego nuclear weapons and sign a non-aggression pact with the United States.
The United States and North Korea offered conflicting accounts and traded blame after a second summit meeting between President Trump and the North’s leader, Kim Jong-un, ended abruptly without any agreement on nuclear disarmament or easing tensions on the Korean Peninsula. “Sometimes you have to walk,” President Trump said at the news conference in Hanoi, the capital of Vietnam. He said Mr. Kim had offered to dismantle the North’s most important nuclear facility if the United States lifted the harsh sanctions imposed on his nation, but would not commit to do the same for other elements of its weapons program.
But North Korea’s Foreign Minister, Ri Yong-ho, contradicted President Trump, saying the North had asked only for some sanctions to be lifted in exchange for “permanently and completely” dismantling the main facility in the presence of American experts. “Given the current level of trust between North Korea and the United States, this was the maximum step for denuclearization we could offer,” Mr. Ri told reporters.
Politicians as well as Scholars assertively argued that President Kim Jong Un’s primary objective is surely the survival of his regime, and of himself as leader, preferably for several decades, given his youth. Subbiah Lakshmanan, Finance Director with a media company based in Singapore stated that securing foreign currency is critical to the political management of North Korean society. It is the key element in buttressing loyalty for Kim Jong Un. That aside, Subbiah Lakshmanan noted that both carrots and sticks are used to run the system of managing North Korea’s society politically. They can be categorized as follows.
In a society where there is very limited access to personal or career growth, the main form of recognition is non-monetary, being recognized by the Great Leader or the party directly. According to Subbiah Lakshmanan, this usually comes in a package consisting of public recognition and the showering of “gifts.” Gifts are usually luxury goods from the West which includes cars, clothes, perfumes, cosmetics, alcohol, electronics goods. Receiving them usually is a strong emotional moment, turning the gift into the proudest possession for the recipients.
It also creates a very intense and personal loyalty to the Great Leader. Accordingly, entire departments are organized around buying gifts, big and small, from Switzerland, Singapore, Macau, Hong Kong and China. Vast amounts of foreign currency are needed to keep this patronage system running and shortages of foreign currency cut into the very core of this system. This is the single greatest threat to regime survival.
Talented, influential and capable members from all segments of North Korean society who have shown loyalty to the regime are given the privilege to live in Pyongyang. The quality of life in Pyongyang is equivalent to a second-tier city in Europe. Alon Ben-Meir, Senior Fellow at New York University’s Center for Global Affairs stated that this becomes readily apparent in the style of apartment housing, beautiful wide boulevards, clean air, safe streets, good infrastructure, good schools, good medical facilities and entertainment.
Pyongyang has a population of about 3.2 million people, who account for about 13% of the national population of 25.5 million. These people represent the indispensable elite that is most loyal to the party. Alon Ben-Meir further noted that this permanent co-optation system also ensures a constant flow of elite outreach and intake from the outer regions that are in touch with the grassroots in their regions and are able to manage them. Since there is no free travel within the country, there is no other way to migrate into “heaven-like” Pyongyang except by selection by the party. This is a privilege no one would take for granted.
It is indeed true that families descended from the inner circle of Kim, the founder of North Korea, are especially trusted and given elite status with all the plum jobs. Within this circle, obviously those directed to supporting Kim himself have special advantages. Subbiah Lakshmanan explained that this inner core is given the most trusted positions in all sectors of government and the army. They ensure loyalty within the system and watch over each other. They form a tight band, but are in intense competition between themselves for favours from the Great Leader and at the same time united in managing North Korea’s polity.
With 5.5 million army reserves which is the largest such pool in the world, and an estimated 25% of the economy, the military’s might is critical to enforcing the fear element within North Korean society. According to Martin Hutchinson, the co-author of “Alchemists of Loss: How modern finance and government intervention crashed the financial system”, the army itself is fairly low tech, poorly paid and runs on a subsistence level. The crown jewel is the nuclear program, though this is run by the Great Leader personally. The nuclear program is the core area of pride for the army elite and one that affects their and the Great Leader’s “face” and enigma of invincibility.
For those who are critical or disobedient, there are “sticks” in place to enforce their compliance. Subbiah Lakshmanan stated that North Korea operates a “gulag” system of concentration camps. They exist in order to contain the most dissident political and criminal elements. Public execution is a form of public “terror,” designed to keep those who are discontented to be fearful.
Taking hostages is also used as a stick. According to Martin Hutchinson, this system is primarily used to keep those who must have contact with the external world in service of the country, as well as loyal to the country. Embassy staff, delegations, air crew and other state servants fall into this category. Their family members are likely to live in Pyongyang and be under surveillance there. If they show themselves to be untrustworthy or disloyal, their families will receive punitive treatment. This “hostage” system provides a powerful grip to keep those going abroad to remain loyal and to return back to the country.
It is this robust political-economic management system – delivering basic needs, co-option, spreading fear and offering some opportunities within the country – that has enabled the regime to survive the many ups and downs over 66 years. All told, there have been three intra-family power successions, each time from father to son, the collapse of the Soviet Union, natural disasters, shortages of food and fuel, immense prosperity in neighboring Japan and South Korea, the rise of China and economic boycotts.
The North Korean people’s capacity to withstand hardship, their virulent patriotism and the difficulties to build alternative organizations within the country are factors not to be underestimated when gauging the strength and longevity of the Kim regime. The system’s greatest weak point is being seen to be weak and to have the aura of invincibility dented. It is in this domestic context that the nuclear program becomes non-negotiable under any and all circumstances.