Prices and exchange rates rose out of control. Factories which had been operating at around 20% of capacity for more than a decade stopped altogether. Deaths from starvation are said to have occurred in some regions. Incidents of popular anger directed at agents of the security services increased. Rumors of live ammunition being provided to the People’s Safety Agency circulated, and it is said that Park Nam Ki, Director of the Planning and Financial Department of the Central Committee of the Party, Kim Dong Woon, the Chief of the No. 39 Department of the Central Committee of the Party, and Choi Ik Gyu, Director of the Central Committee of the Party were all dismissed from their posts.
The failure of North Korea’s currency redenomination and subsequent reactivation of the market is very different from previous failed attempts to regulate the market. This time, the phenomenon looks like nothing less than the prelude to the collapse of the 60-year old North Korean absolutist system.
If we call the period of famine (1995~1998) in North Korea following the collapse of communism in Eastern Europe the first stage of the process, this failed redenomination can be seen as the initiation of the second stage. Also, the period between the second stage and the final third stage, the stage in which the system finally changes, has been shortened by the redenomination failure.
On what basis can we make such a bold assertion?
Well, the North Korean system of dictatorship was established at the end of the 1950s, while the system of Su-Ryeong (Great Leader) absolutism began in the late 1960s, as Kim Il Sung molded an unrestrained system of totalitarian political control. His words became the policies of both Party and regime, a situation which changed not a bit under Dear Leader Kim Jong Il.
Of course, the Su-Ryeong absolutist system undoubtedly existed during the period of “The March of Tribulation,” when as many as three million people starved to death in the wake of Kim Il Sung’s passing. In order to shift blame away from himself, Kim Jong Il ordered the public execution of Seo Kwan Hee, Secretary for Agricultural Affairs, in 1997, and embarked on a reign of terror within the elite, for example the Shimhwajo Case, to maintain the Su-Ryeong absolutist system. At the time, citizens were starving to death, but most did not realize it was Kim Jong Il’s responsibility.
Many people ask why North Korea did not collapse in that dire situation. Well, Su-Ryeong absolutism is the crucial reason, although a second reason is that China did not want the collapse of North Korea, and was willing to prop it up, while a third reason is the Clinton administration’s engagement policy and the Sunshine Policy of South Korea. In any event, the citizens of North Korea were forced to spontaneously create the market system to avoid starvation, whereupon the authorities, who had lost their distributive capacity, introduced the July 1st Economic Management Reform Measure in 2002 to “allow” a restricted type of market oriented around the capital, Pyongyang.
Thereafter, while harsh enforcement and subsequent relaxation of market regulations became a pattern, the people’s reliance on the market continually increased. Throughout, the status of the market rose and the number of persons getting wealthy beyond state control rapidly increased. As a result, the authorities lost their absolute control over the supply of money in the country.
However, the Su-Ryeong absolutist system can only be maintained when the vertical relationship of instruction and obedience exists between Su-Ryeong, Party and public. The critical instrument in maintaining this vertical relationship is the regime’s control over the provision of food and money. However, the number of those who trust in money more than the instructions of the Su-Ryeong, in other words the number of individuals placing faith in their own abilities and willfully disobeying the instructions of the Su-Ryeong, has increased as the market has grown into the main mechanism of survival for the people. Thus, the vertical system faces destruction.
The purpose of the November 30 currency redenomination was, in a nutshell, to tell the people that accumulation of wealth would not be tolerated, and that the only thing in which to trust should be the words of Kim Jong Il.
That the November 30 currency redenomination has failed was widely predicted both in South Korea and internationally, including here on The Daily NK. However, no one anticipated such rapid failure.
There is more to this than the simple failure of a currency redenomination attempt, though. The more important thing is that the failed currency redenomination attempt has been absorbed as a fact by the North Korean people. Thus, people who depend on the market for their very survival have accepted the fact as a symbol of the regime and Kim Jong Il’s failure. From the fact that the market has been reactivated, this belief will be strengthened.
Before the November 30 redenomination, the North Korean authorities had no choice but to allow the market to exist, but had control over it. However, due to this failure, the regime has lost much of that ability. In future, it will be much more difficult for the regime to regulate the market, and the number of situations in which the regime will be led by the market will increase. In a nutshell, the breakaway from Su-Ryeong absolutism has begun.
Since the mid-1990s and following the July 1st Economic Management Reform Measure, the gap between the market and Su-Ryeong absolutism widened, and now Kim Jong Il’s latest incompetent economic measure appears to have slit the throat of the Su-Ryeong absolutist system. Looking through the 60-year history of North Korea for guidance, it becomes clear that the failure of this currency redenomination and the rapid reactivation of the market system represent a definite breakaway from the North Korean system of old.
We cannot be sure where this breakaway will lead, of course, but as time goes by the leaching away of Kim Jong Il’s power will accelerate and, in the end, he will be riding in a carriage without any reins. Kim Jong Il doesn’t have the ability to control this ‘carriage,’ and more innocent horsemen will be needed as scapegoats. The first scapegoat seems to have been Park Nam Ki.
Even bigger problems remain. As mentioned previously, Kim Jong Il lives mostly unaware of the problems in the control tower of North Korean sovereignty. Thus, his impractical measures will continue to be handed down to the people. Such impractical measures can only be enforced on the back of repressive violence by the National Security Agency and People’s Safety Agency.
The time has come for the governments, politicians, NGOs, reporters and people of all countries to see North Korea from a realistic perspective.
Nations and international organizations need to pay closer attention to any changes within North Korean society which take place in future. Also, South Korea and international society should develop bolder North Korea policies. A firm message should be delivered to Kim Jong Il; reform and open North Korea quickly, or watch it collapse whether it has nuclear weapons or not.
