{"id":2838,"date":"2016-12-20T12:16:35","date_gmt":"2016-12-20T03:16:35","guid":{"rendered":"http:\/\/www.01.asiapress.org\/rimjin-gang-2\/2016\/12\/report\/20161220-market-economy-realty-02\/"},"modified":"2018-08-24T18:20:48","modified_gmt":"2018-08-24T09:20:48","slug":"20161220-market-economy-realty-02","status":"publish","type":"post","link":"https:\/\/www.02.asiapress.org\/rimjin-gang\/2016\/12\/society-economy\/20161220-market-economy-realty-02\/","title":{"rendered":"\uff1cInside N. Korea\uff1e Expansion of the market economy as the driving force behind social transformation--based on sources from inside N.Korea. (PART2) \u3000The black market and \u201cfarmer\u2019s market\u201d connect. by ISHIMARU Jiro"},"content":{"rendered":"
<\/a>

A number of farmer\u2019s markets merged with black markets, which caused them to substantially increase. Industrial products also became prevalent in these markets. In October 1998 in Wonsan, Kangwon Province. Taken by Ahn Chol (ASIAPRESS)<\/p><\/div>\n

 <\/p>\n

2016\/Dec\/20<\/em><\/p>\n

\u25c6<\/strong> How did the expansion of the market economy take place?<\/strong><\/h2>\n

\u00a02-1 Black market and \u201cfarmer\u2019s market\u201d connect<\/strong><\/p>\n

In North Korea, a self-claimed socialist state, consumer goods except food and agricultural products are produced in state-owned factories.\u00a0 Except some stores owned by social cooperatives, the state-owned stores provide citizens with most of the goods they need.\u00a0 The \u201cCommercial Management Office,\u201d a state organization, is in charge of overseeing this commerce.<\/p>\n

The Commercial Management Department under the Provisional People\u2019s Committee of North Korea, which is a local administration, sold clothing, soap, cigarettes, tableware, beverages, alcohol and also vegetables and fish.\u00a0\u00a0 Apart from grain, which is a staple food, those other daily necessities and a wide variety of other foods were sold at a price fixed by the state.\u00a0 In order to purchase them at the state-owned stores one needed to use a \u201cfood stamp\u201d for foods like miso, soy sauce, beer and they had to use an \u201citem stamp\u201d for other general products.<\/p>\n

Old defectors consistently testified that \u201cthe state-owned stores used to sell sufficient amounts of candies, soap, and fish until the early 1970s.\u00a0 However, most of the food and other products had gradually disappeared from the stores by the 1980s. Around this time, when certain side dishes of food happened to be sold\u2013which rarely occurred\u2014everyone tried to thrust oneself through the crowd before they sold out.
\n Related Article:\u00a0\uff1cInside N. Korea\uff1e Market survey shows \u201cResolution 2270\u201d, the toughest-ever sanctions, didn\u2019t work<\/a><\/span><\/strong><\/p>\n

Staple foods such as rice and corn were produced at collective farms and sold at the \u201cfood management office,\u201d the food distributing center, at a state-fixed price according to a 15-day cycle.\u00a0 All people, workers, students, children, retired people, all had a specific quota per day.\u00a0 People were strictly prohibited from selling and buying food privately.\u00a0 The food rationing system in which the nation had total control over the food supply was called the \u201cgovernance based on the food supply.\u201d<\/p>\n

<\/a>

The collapse of the food rationing system made black markets the de facto center of commerce, attracting a huge number of people. Private businesses, once banned by the state, became unstoppable. Ladies selling bean sprouts. In October 1998, the period called the \u201carduous march\u201d, in Wonsan, Kangwon Province. Taken by Ahn Chol (ASIAPRESS)<\/p><\/div>\n

 <\/p>\n

The black markets and \u201cfarmer\u2019s markets\u201d gradually became vibrant as the food rationing system deteriorated qualitatively and quantitatively. The products sold at black markets are imported from Japan and also the old belongings of former Zainichi-Koreans (ethnic Koreans who lived in Japan) who returned to North Korea through the \"Homecoming Project\u201d in 1959.\u00a0 Also sold in the markets are the belongings of North Koreans who returned from the Soviet Union and the special gifts possessed by high ranking officers. Although it was called a market, the black markets at the time did not exist on streets. Trades took place via a middleman or by inviting a customer to one\u2019s home.<\/p>\n

On the other hand, there were also small-scale legal markets called a farmer\u2019s market.\u00a0 It started as a periodic market, held on the 1st<\/sup>, 11th<\/sup>, 21st<\/sup>, 31st<\/sup>, or 5th<\/sup>, 15th<\/sup>, or 25th<\/sup>, of every month, where people at the collective farms could only buy and sell certain kinds of food like eggs or vegetables produced in their home gardens.\u00a0 Since other types of food were not allowed to be sold, secret selling of them would still occur.\u00a0 Small farmer\u2019s market, which merged with the underground black markets, started to openly operate during the chaotic period of the arduous march in the late 1990s.\u00a0 From big cities to small ones, both saw the emergence of explicit black markets, which are known to North Koreans as the \u201cJangmadang\u201d.\u00a0 All kinds of food and products including prohibited ones such as grain are sold there.
\n Related Article:\u00a0[Video Report] National bus network of the North Korean market economy<\/a><\/span><\/strong><\/p>\n

The black markets swiftly grew and started to sell items other than daily necessities.\u00a0 The DPRK government did not provide factories in different areas with the necessary production materials like, fuel, and mechanical parts to produce any goods.\u00a0 Those production materials were supposed to be given to them based on a national production plan, but with the collapse of the economy the factories turned to the black markets.\u00a0 They started to obtain resources illegally and then sell their products in the black markets.\u00a0 Han Jong-sik is a defector who used to be a professor at a university and was also a technician at a large state-owned factory in North Korea. He told me in 2004 that \u201cIn my workplace, a large state-owned company, the government did not provide any necessary materials like motors, electric wires, glass, nails.\u00a0 We bought everything at the black markets. \u00a0If we could not find one at the nearest market, we went to different cities.\u00a0 Then we were able to compare the prices and the product quality.\u00a0 The communication among the black markets began, and North Korea itself became grew a hugely integrated market.\u201d
\n Next page: 2-2 Government\u2019s response\u2013conforming the black markets...
\n <\/strong><\/p>\n

<\/p>\n

<\/a>

A legalized market called a \u201cgeneral market\u201d in Chongjin City. The reporter is holding a box containing chemical substances made in China. In July 2004. Taken by Ahn Chol (ASIAPRESS)<\/p><\/div>\n

 <\/p>\n

2-2 Government\u2019s response\u2013conforming to the black markets<\/strong><\/p>\n

Urban residents and factory workers gave up waiting for the dilapidated food rationing system and started to engage in illegal businesses.\u00a0 The government tried to stop the advent of black markets by reviving the planned economy.\u00a0 However, it could not propose a viable alternative economic plan and ended up just repressing and cracking down on the black markets. The government tried to impose some measures to regulate the markets, but they did not work in the long run.\u00a0 The government decided to legalize these private businesses operating within the black markets.<\/p>\n

On the first of July 2002, the Kim regime suddenly released a new economic plan.\u00a0 It was named the \"Economic Management Reform Measure of July 1, 2002\" (7.1 Measure) since it was publicized on July 1.\u00a0\u00a0 It aimed at maximizing the amount of profit from the black markets by adapting to the changing circumstances while adhering to the principles of socialism.\u00a0 The contents of the measure are as follows:
\n Related Article:\u00a0N.Korea Market Survey Reveals Basic Food Price Hike<\/a><\/span><\/strong><\/p>\n

    \n
  1. The state-fixed wage and the prices for food and goods, which have been left behind the current market economy, will be raised up to match the actual market prices.<\/li>\n
  2. Companies will be given more autonomy and independence for the management.<\/li>\n
  3. The black markets, which had hugely been expanded, should be closed.<\/li>\n
  4. The commerce of the consumer goods such as food will be under the control of the state again.<\/li>\n<\/ol>\n

    The measure slightly showed the aspects of the economic reform such as stressing the significance of the companies\u2019 profitability.\u00a0 Therefore, a lot of Japanese and South Korean experts and media commented positively, \u201cThis measure is the North Korean-style economic reform.\u201d\u00a0 However, 7.1 Measure was far from the economic reform in reality.\u00a0 Since the government forcefully banned the black markets without having an alternative plan to produce and supply food and consumer goods, the illegal transaction and businesses went back to underground again.\u00a0 Hyperinflation happened as a result, and the society was brought back into the disastrous situation.<\/p>\n

    <\/a>

    The entrance of an open market at southern South Hwanghae Province, Haeju. An arch and building have been constructed. In October 2008. Taken by Shim Ui-cheon (ASIAPRESS)<\/p><\/div>\n

     <\/p>\n

    In contrast to the 7.1 Measure, the government announced that the black markets would be incorporated with the open markets in March 2003, finally legalizing the Jangmadangs.\u00a0 Since production and commerce and the food rationing system had been so dysfunctional, the government intended to gain profit out of the black markets by controlling their growth and expansion.\u00a0 It could be argued that the government first crushed the black markets with the 7.1 Measure, then merged them with the open markets under condition favorable to the state.<\/p>\n

    Therefore, black markets in different parts of North Korea had gotten themselves legalized under the name of \u201copen markets\u201d, merchants then had proper spaces at markets.\u00a0 Merchants had to pay a land tax called \u201cJangsae\u201d to the market management department under the Provisional People\u2019s Committee of North Korea and get permission to open stalls.<\/p>\n

    They became owners of the stalls, which are around 80 cm wide.\u00a0 Men, except retired ones, were not allowed to have businesses in the Jangmadang.\u00a0\u00a0 Although production of goods from factories was haulted and the food supply had ceased to be effective, men were not permitted to leave their jobs to become merchants.
    \n Related Article:\u00a0    \u3008Photo Report -1\u3009Public Market \u2013 The Moran Market (Pyongyang)<\/a><\/span><\/strong><\/p>\n

    This meant that the majority of the merchants at the markets were women, the retired, and the elderly.\u00a0 Though women were not allowed to work in the markets if they had another job through the state.\u00a0 Only women who stayed at home, which are categorized as \u201cdependents\u201d could work in the markets.\u00a0 The legal age for women to become a merchant was set at 45 years old.\u00a0 The age restriction has been changed and withdrawn from time to time and there is no limitation for women as of July 2016.<\/p>\n

     <\/p>\n

    <\/a>

    Crowded stalls at the back of some apartments. Most of the people are women and the elderly. Electric wires are being sold. It is said that most of the products are from China. June 2008, Pyongsong, South Pyongan Province. Taken by Paek Hyang (ASIAPRESS)<\/p><\/div>\n

     <\/p>\n

    Aside from food, most of the products sold in the open markets are from China.\u00a0 Since the domestic production of the factories in North Korea have been stagnant, the massive amounts of cheap products from China flow into North Korea.\u00a0 Those imported products were first sent to central places of commerce such as Sinuiju, Rason, Chongjin, and Pyongsong, then wholesaled to the more remote local areas. Seaweed, medicinal plants, scrap iron, and copper scrap were gathered from different areas of North Korea, then exported to China through trade companies.\u00a0 In the course of this trade, new types of jobs and a natural competition were created, making the North Korean black market economy more developed and diverse.<\/p>\n

    A market economy does not only mean the trade of items; service, transportation, property, information, and labor can also be subject for transaction as a good. A variety of the market economy\u2019s goods and its development will be discussed later in this report.<\/p>\n[To be continued in part 3<\/a><\/span>]\n

    \uff1cMarket Economy in N.Korea\uff1e View article sections<\/a><\/span><\/strong><\/p>\n

    \u3010Related Article<\/strong>\u3011
    \n \u25c6     Is Economic Sanction Really Effective? Searching Effect from Retail Price Index<\/a><\/span>
    \n \u25c6     Delinquent Juveniles Mobilized For Forced Labor<\/a><\/span>
    \n \u25c6     [Video Report] Back alley of Pyongyang: Never let foreigners go. Residents of central Pyongyang live on businesses in the market<\/a><\/span><\/p>\n

    \"rimjingang_banner001\"*\u00a0<\/span><\/a>Editor\u2019s notes on North Korean reporters<\/a>
    \n <\/a>    ALL REPORTS >>><\/a> <\/strong><\/span>
    \n     ARCHIVE(pdf) >><\/a><\/span>
    \n     DPRK MAP >><\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

      2016\/Dec\/20 \u25c6 How did the expansion of the market economy take place? \u00a02-1 Black market and \u201cfarmer\u2019s market\u201d con\u2026<\/p>\n","protected":false},"author":3,"featured_media":3571,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[12,13],"tags":[20],"_links":{"self":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/posts\/2838"}],"collection":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/comments?post=2838"}],"version-history":[{"count":0,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/posts\/2838\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/media\/3571"}],"wp:attachment":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/media?parent=2838"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/categories?post=2838"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/tags?post=2838"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}