You know its funny, you follow a country obsessively, so much so that you move to its arch-enemy's Capital to learn the language in order to understand the country well enough that one day you can become a specialist. This is my relationship to North Korea, I listen to North Korean music, I watch North Korean TV (I don't understand 70%), I clap as a greeting in the style of Kim Jong Il (I am not a supporter, his clap however in its pomposity and flamboyancity, as well as its ubiquity at the high occasions of state make it too tempting to impersonate), and last but not least I sing North Korean music.
Yet with all my enthusiasm I am not all together that much better informed than someone living in America or Europe with an interest. That is because although I dedicate a great deal of time (though not as much as close confidants and uncles) the fact is that much of what is said about official state policy outside of the top ruling class itself is speculation, reports from the ground, conducting literary analysis on pornographically vulgar propaganda etc. Thus the true intentions of the state and its policy are usually divided into pragmatic and ideological explanations. It doesn't help that the core defenders of the North Korean ideology have the most to gain materially from its continuance and that concurrently they have also been socialised in an environment that values ideological conformity (presenting a closed world view, like a cult).
Thus we are left with a seemingly intractable circle. North Korean functionaries want to protect their privileges which they get from the North Korean mobster state (this is the interpretation which I have much time for by a name I am sure you know if you read about North Korea). And/or they do what they do because they believe in the core principles of the regime's militant, ethno-nationalist line. So it seems either way that the currency reform itself had the ideological component of strengthing the nationalist state, for the personal and pragmatic gain of the true-believing ideological pure and concurrently rather chubby, enriched functionaries.
Forgive me, am I the only one who sees the cognitive dissonance in this? I would bet that there are some extraordinarily arrogant functionaries who see themselves and their policies as the destiny of the nation; these people exist. Personally when I wake up in the morning and write a blog before memorising a bunch of Korean words I don't see myself as a national saviour, but I do see myself (in a small, but significant way) as a force for good in the world. If I can labour under such illusions, you can imagine how a high-level functionary in the North Korean state or its big brother the army feels.
Which brings us to the currency reform. The policy has been analysed in a number of ways. There are not enough scholars in English who write on the topic for me to say its been 'analysed to death' but it has certainly been well covered. Nonetheless a few contradiction have emerged. There are scholars who see purges in the North Korean state, or just elite-level adjustments as a sign of policy changes, ideological-factionalism (between so called 'reformers' and 'hard-liners'). Yet this analysis doesn't seem to fit the currency reform; those charged with the implementation of this hard-line policy (I will explain why it is later) were allegedly technocrats (Kim Yong-il the former premier springs to mind). Factionalism in the ideological sense has been dismissed by everyone who does not favour a policy of naive engagement. Sielieg Harrison, Han S. Park etc. favour such a policy, so they trumpet such a line that says we must empower the moderates with engagement. Yet so-called 'moderates' are the leaders of such hardline policies. When the policy failed they were replaced by old-style hardliners (Ch'oe Yong-Rim, a close Kim family confidant can hardly be accused of being a moderate economic technocrat can he?).
Thus the policy of currency reform itself is a good argument against the so-called 'soft-engagement' or 'naive-engagement' idea. It seems that Pyongyang's 'modernisers' are even more reactionary than the so-called 'hard-liners', they just launch even more ambitiously far-sweeping reactionary policy projects. Which brings us to the policy itself.
The North Koreans explained it with the normal bellicosity of socialist rhetoric a la Mao. In fact this reminds me of Stalin's first policy moves after he secured power in the late 1920s. Attack the NEPmen; these were the market traders and intermediaries that were making money in the private economy of the Soviet Union which had come into existence as a result of economic liberalisation in the early 1920s. The liberalisation itself was a practical policy on the part of Lenin who having faced down a rebellion from Sailors demanding a little democracy and food decided to let people trade food (thus meaning more was grown, sold and eaten by most people). The North Koreans seemed to have just let the markets go after 2002, allowed official corruption in the market place so that middle and lower bureaucrats could be paid off the fruits of grass-roots capitalism rather than from an ever contracting state treasury.
But this policy was dangerous for the regime in a number of ways. One the state ceased to be the primary source of wealth and comfort even for its supposed 'core' supporters. These bureaucrats could get involved in market trading, rent-seeking etc. their privileged position as an officer of the state was useful in start-up but if they decided to go private they could make even more money (and if collapse came they would be less likely to end up in a South Korean jail than as an official). So the market did (does again) pose a true threat to the regime socially. It is slowly eroding the North Korean state's economic and social raison d'etre.
The market itself as an institutional mechanism (if we ignore its affects on the regime's political support) has been growing and poses more of a threat every year. I was reading an article in Chosun Ilbo yesterday, my Korean isn't good enough to capture everything that was written but I can mention just a few things and then I will explain their significance. North Koreans have been known to enjoy Chinese and South Korean video taped dramas for sometime (this has been known since the early 2000s in fact). But now we see the spread of modern technology not just DVDs (this is also not news) but computers, USBs and even American films and dramas.
This is of course made possible by a stable market mechanism, untouched by a state that lacks the warewithall outside of the shining citadel of Pyongyang (and increasingly even within the capital) to enforce any kind of ideological discipline on what is sold. In this sense the currency reform itself can be seen as a policy to disrupt and shrink the market, not a source of food (I think even top bureaucrats would admit in private to their wives that the food markets could not be replaced by state provision) but as a source of ideas, technology and 'ideological' pollution. The policy seen in this light has been an abject failure to an extent, but the lasting disruption to the mechanism remains to be seen. We do not know what would have happened if the currency reforms had not taken place but I am guessing the markets would be bigger now. Furthermore the fear the reforms have engendered is a good sign for the regime, it has shown that it can still get involved in and disrupt the economic life of the individual in North Korea and must not be ruled out.
Outside of this the policy seems to have served another aim. The growth of the aforementioned private class of traders; this emergent middle class in North Korea who owe nothing to and have little relation to the ruling class or the military minus the paying of bribes was disrupted and partially dispossessed of their ideologically 'ill-gotten gains'. What I mean is that the average market trader (mainly middle aged, hard working, and not in the least bit rich, or fat) lost upwards of 90% of any old-North Korean won denominated savings. This class of indomitable individuals who have no connection to the state were dispossessed in favour of the state treasury itself and those with direct connections to the state (those with senior positions in party, army, or government). As a regime policy it provoked unrest (see DailyNK, Chosun Ilbo, or even just Wikileaks). But this can be handled.
Unrest could not start a revolution because there are no alternative poles in civil society or groups within the country that have lines of communication extending over the country minus the market itself. But the market is itself a disparate group of individuals without political aims (many of these people are just trying to survive), dependent on the state currency anyway. Thus dispossessing them whilst unpopular, and partially apologised for was not such a bad move from the position of head of state (Kim Billionaire as he is called by refugees).
The central problem is this. It was probably launched by cadres who believe in a Socialist-Nationalist state, this is very Nazi sounding and it should sound Nazi-like, essentially minus a minority racial group to persecute this regime is quite similar to Nazi Germany. Both in its ideology, and the increasingly anarchic state of the state itself (if we believe reliable sources). Nonetheless there are probably many who implemented the policy with the full knowledge it was to their advantage (and at the same time with a belief in the state). Thus we have an irrational molasses of contradictions; funny I think that this is all too realistic.
The results of the policy are even less conclusive. The state lost, it could not revive distribution of food, but that was probably never a true aim. But it could not even stop the markets from growing, they have recovered now and they will continue to grow in terms of the quantity, quality and sophistication of goods they provide. There is no civil society in North Korea worth speaking of; yet the market mechanism will probably destroy the regime one day. Its ability to corrupt the most loyal of its followers, its ability to create an alternative locus of group organisation centred on survival and individual effort (as opposed to the state) represent a massive and probably insurmountable threat to the regime in Pyongyang. Although the market didn't bite the regime in the aftermath of the currency reforms it did already show that it cannot be destroyed. If it continues to grow, the disparate aims of its traders may well start to become more unified, and concurrently more anti-state. Although the state is thoroughly enmeshed with the market at a low level it also pursues policies which do not help the market. IE. The continued nuclear stand-off and the fights with South Korea are not good for the market and trading in the North Korean currency. Its funny what the North Korean state does internationally is much worse for its economy than the South Korean economy. So if it continues to pursue such policies, market traders may start to see and realise that the state can and should be disposed of or changed beyond all recognition. If such a consensus were to emerge as it did in Eastern European civil society after 1956/1968 (the suppression of the Prague spring and Hungarian Revolutions) then all that would be required is an external shock like a South Korean air-attack (as one of my professors has said) to bring the state down.
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