NK economy in the 1950s: a reply to Han Kyu-han, part one

Another excellent writer on North Korea, Kim Ha-yông, has written a reply to the Han Kyu-han article I translated recently, in the latest issue of Ta Hamkke. I realise that not all readers are going to find this subject interesting and may be amused by my obsession with the North Korean economy – but what’s a blog for if not for pursuing your own egocentric, personal interests?

I think that Kim makes some very interesting points, particularly about the North Korean economy in relation to long-term trends in the world economy (this definitely brings to mind Kondratieff). I also feel some obligation to translate this reply as I think it provides some important points to balance areas which were perhaps weak in Han’s analysis. Well, anyway, if you can be bothered to read it you can make your own minds up about who is right on this one. Here’s the first part:

Was the North Korean economy in crisis in the 1950s?
Ta Hamkke 57, June 2005
Kim Ha-yông

I won’t deal with all the detailed facts in [Han Kyu-han’s] article, but limit myself to addressing the big picture: was North Korea’s economy doing well in the 1950s or was it in crisis?

To begin with the conclusion, the decade from 1950-1960 was one of renaissance that saw North Korea create a miracle from the ruins of the Korean War.

In the three-year plan implemented from 1953-1956 the economy recorded a massive average annual growth rate of 41.7 percent – almost world record level – and in the ten years after the Korean War, North Korea maintained an annual average growth rate of 25 percent.

To achieve this sort of growth in the place that, after the Korean War, the US had boasted “would never recover, even if it took 100 years” was astonishing. During the war the majority of the North’s industrial facilities had been destroyed and one million people were killed, including some 400,000-480,000 civilians.

It is true that pursuing rapid economic growth in a small country with few resources and almost no aid produces massive contradictions. But during this period the trend of the North Korean economy was an upward curve.

The reason why I’m bringing up this problem is that I worry that comrade Han Kyu-han’s article almost gives the impression that North Korea is a society that has been in a permanent state of crisis from the 1950s right up until the present. This can be a major obstacle to understanding the character of North Korean society.

The impression that North Korea is a society that has fallen into a state of continuous stagnation is a typical, and prevalent misunderstanding and one that is clearly connected to the idea that the South Korean system is superior to the North Korean one.

However, the important fact that people have quickly forgotten as a result of the famine that North Korea is suffering today is that South Korea could not catch up with the North Korean economy at all until the 1970s. In 1982 North Korea’s average food intake was higher than that of South Korea.

It goes without saying that today the North Korean economy has fallen into a severe crisis, but you have to look at this alongside the fact that the country was able to achieve massive economic growth up until the 1970s.

If you don’t look at this contradictory development, it is easy to fall into the view that the North Korean system is fundamentally inefficient, irrational and different to the capitalist system.

However, far from displaying an inefficiency that makes it fundamentally different to capitalism, the [trend of the] North Korean economy followed the rise and decline of state capitalism in the world economy. In the 1950s the trend toward state capitalism remained marked in the world economy, and North Korea was just one country among a number that created an economic success story through the use of powerful state intervention.

In the 1970s, the trend toward “globalisation” (세계화) became more influential in world capitalism than the state capitalist [trend], and those countries that stuck to the state capitalist road began to fall behind. North Korean economic growth had begun to slow down in the late 1960s and by the end of the 1970s it had dropped to 3-4 percent [annually].

part two

[Further reading: T. Cliff, State Capitalism in Russia.]