Pyongyang’s Taste of Capitalism
Updated: Nov 21, 2019
Pyongyang’s Taste of Capitalism
By Xiao Siming
U.S. President Donald Trump met with North Korean leader Kim Jong-un on June 12, 2018, in Singapore, during the first summit meeting between the leaders of the two countries. Needless to say, this was a historic event as this was the first ever meeting between a current US president and a North Korean leader. However, for the North Korean delegation – consisting of security staff, chefs, state media workers, Kim Jong-un and his official staff; the trip to Singapore was probably their first ever out-of-state visit to a foreign country, aside from China.
To them, this was a chance to experience and enjoy the capitalist success of Singapore. During their 3-day stay in Singapore, the North Korean delegates resided at the 5-star hotel St. Regis, furnished with chandeliers hanging from the ceiling and large art works decorating the wall. The hotel also provided lavish buffet breakfasts valued at $47, which costs almost half of what the “best paying” job in North Korea pays. [] Some of the delegates were also seen ordering McDonald’s takeaway, shopping trips with bags from NBC stationery and other gift shops, and dining in at the hotel’s high end Chinese restaurant.
This will lead to many wondering if this “culture shock” will bring about change back in Pyongyang. Currently, North Korea’s economy is considered a command economy, where its focus lies on being self-sufficient and rejecting the idea of globalization and trade, with the exception of mainly China. This model has proven to be unsuccessful, given the decades of economic stagnation, poverty and nationwide starvation in North Korea.
Historically, countries that successfully undergone an economic transition – Poland, Hungary and Bulgaria – have benefitted tremendously. For instance, Poland’s successful transition had helped the country to raise its GDP figures by close to 60% and the government managed to curb inflation and resolve stagflation.
Transition from a command market to a free market is no easy feat – Pyongyang would have to start allowing privatization of state owned industries; removal of price controls; and allow the free market to allocate resources efficiently. Besides that, Pyongyang has to ensure that workers and managers accustom themselves to the incentives of the free market, maintaining the strength of the North Korean entrepreneur spirit.
As they witnessed the success of a capitalist system, will the North Koreans open up and change their economy? Evidently, the benefits of a capitalistic system far outweighs the benefits of a centrally planned system – Kim and his delegation should realize this and should slowly implement the change. The goal is not elusive but it may be arduous, and Kim Jong-un could potentially be the first leader to bring North Korea out of poverty, open up its market, and allowing capitalists’ joy to flow in too.
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