Even Hermits Can Get Rich

Jon is the son of a former North Korean ambassador to China—which shows, among other things, that it still helps to know the right people. Still, says Yoon, the new class of North Korean entrepreneurs can no longer count on the cash-strapped Communist Party to provide them with their livelihoods. Rampant corruption at virtually all levels of the North Korean state ensures that money increasingly trumps ideology—in ways that could potentially threaten the system. "From the standpoint of the state, people in the army and party are getting rich," says Noland. "On the other hand, they may be getting rich in ways you can't control." Experts caution that no one should expect North Korea's cautious flirtation with capitalism to topple the system overnight. By all appearances Kim retains iron control over the hearts and minds of ordinary North Koreans. And many of those getting rich—in the secret police or the army—are precisely the people he relies on to keep him in power.

The long-term problems, however, are obvious. Several foreigners with regular access to North Korea say the influx of consumer goods has brought with it a sharp increase in North Koreans' knowledge of the outside world. Meanwhile, says Yoon, the Kim regime's reluctance to commit itself to a comprehensive program of Chinese-style economic reform will create problems down the road. In South Korea in the 1960s, he points out, a rising economy afforded the underprivileged a justified hope that they too might one day be able to get rich—a sense of opportunity denied to ordinary North Koreans under present conditions. Among their other effects the 2002 reforms have also spurred hyperinflation, one more crushing blow to people who depend solely on salaries in the worthless North Korean won. (The wealthy, by contrast, enjoy access to the Chinese yuan, which circulates widely inside the North, or other foreign currencies.) Just to compound the problem, Yoon says, Kim's government has yet to provide a proper social safety net for its people. "The income gap itself is not a problem," he argues. "The problem is that the North Korean government doesn't have the capacity to save the people who are in the poorest class."

Socialism, anyone?

With B. J. Lee in Seoul and Akiko Kashiwagi in Tokyo

© 2007