What occurred Monday in North Korea is different. Unlike a Turkish or Ghanaian-style reform, in which all citizens are encouraged to convert all their holdings of the old currency, the North Korean regime limits the amount of currency that can be converted. This renders excess holdings worthless, and has set off the frenzy this week to get out of old won and into anything else—dollars, Chinese yuan, physical goods—that will maintain value. Any economic "reform" also creates opportunities to parcel out benefits, as with a 2002 price and wage reform that favored the military.For those who frequent One Free Korea, the rest is old hat, but it's important to remember the context in which this "reform" has come, one in which the government is doing whatever it can to rein in on the economic activities it cannot control:
This move is part of Pyongyang's broader effort to curtail the rise of market activities and the development of pathways to wealth—and potentially power—beyond state control. Participants in North Korea's bootstrap capitalism include everyone from laid-off factory workers to government officials who exploit their inside knowledge to deal privately in everything from grain to imported Chinese consumer goods.
The currency reform isn't the only way Pyongyang is trying to crack down on nonstate economic activity: The penal system increasingly is being used to control market-oriented activities, with the added benefit of facilitating predatory extortion.One thing I wonder about, however, is whether or not the earlier green light given these marketplaces means that there are some in Pyongyang who differ from this hardline stance. And if those people are in power, maybe they will be in a position to step when/if the Great Currency Obliteration of 2009 leads to turmoil in the provinces that the hardliners can no longer control.
Changes to the North Korean criminal code approved in 2004 and 2007 include expansive definitions of economic crimes that, if taken literally, prohibit a wide range of standard commercial activities. This includes up to two years of "labor training" for individuals convicted of engaging in "illegal commercial activities, therefore gaining large profits." The code also bars "illegally giving money or goods in exchange for labor." Capital punishment is to be meted out for "extreme cases" of theft of state property and for drug dealing, and increased punishments are prescribed for "illegally operating a business, such as a restaurant, motel or store."
Surveys of defectors suggest that the repressive apparatus of the state is disproportionately targeting those involved in market-oriented activities. Participants in market activities are more than half again as likely to be detained as other citizens.