…and the reforms stalled

According to reports from DailyNK, the North Korean state has decided to put a hold on implementing the reforms until next year. Sources from Hyesan and Shinuiju corroborate each other’s reports. As some analysts have predicted, Pyongyang does not have enough grain to circulate while simultaneously allowing collective farms to collect 30% of the production.

The official reasoning for the delay in implementation of the June 28 Reforms notes that the military must be given priority and the reforms prevent the armed forces from receiving adequate resources. This move corresponds with North Korea’s sudden escalation of war rhetoric in the last two weeks – feeding the military may not be the key reason; I, for one, believe that it is a convenient narrative that allows the continued extraction of resources from the rural periphery to Pyongyang.

Regardless of the cause, the effect of the delay has further hampered productivity in the country. It will be interesting to see whether the state will continue the enforcement of the ban on private plots and force people to work on the collective farms – if thoroughly enforced, this will constitute a severe burden on the agrarian communities. On the other hand, if the rule is neither enforced nor legally sanctioned, state legitimacy will continue to corrode.

Prices continue to climb in the country and efforts to curb this inflation by allowing individual farmers to supply the market with privately held grain has failed before it even took off. Wage inflation is also impossible without adding more goods into the system (unless the Korean Workers’ Party wants to experiment with uber-hyperinflation). Pyongyang will probably attempt (at the least announce and contemplate) some sort of price control in the near future, but that too will be futile.

On a side note, it will be interesting to see whether other parts of the June 28 policy, such as the reforms in the retail sector, will be pushed through. But this too will be fruitless in yielding productivity without first establishing proper rule of law guiding business practices in the country.

In any case, the agrarian reform remains the most crucial task. To improve the overall standard of living, North Korea must first and foremost tackle the issue of the food deficit. Alternatively, the state must find means to control the inflation of prices, which is caused not solely by the deficiency in the market (which North Korea has always suffered – and since prices do fall time to time, the cause lies elsewhere) but by the lack of trust in the national tender.

So boost productivity or stabilize prices – both are difficult tasks for even the most capable state institutions. It is certainly a tall order for the nation’s shortcoming leaders.


About Yong Kwon

I develop trade advocacy strategies for a DC-based consulting firm. Studied economic history at the London School of Economics, and can be found on twitter at @ykwon88
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5 Responses to …and the reforms stalled

  1. Pingback: Brief thoughts on North Korea’s stalled reforms and future prospects | DPRK Food Policy Blog

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  3. Pingback: Is there or Is there not reform in the DPRK? And some recommendations | DPRK Food Policy Blog

  4. Pingback: Reintroducing the Blog | Rice and Iron

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