The new capitalists

NOT long ago North Korea-watchers were speculating that the new leader, Kim Jong Un, might prove a moderniser. The path-breaking boy-dictator let himself be seen with his fashionable wife. He actually spoke in public, whereas his late father’s speeches were as rare as a well-stocked Pyongyang supermarket. Lately, though, Mr Kim has reverted to type by prophesying war. Experts fear the North’s Punggye-ri underground complex is about to host a nuclear test. If it does, Mr Kim will inherit the family title of Asia’s pariah-in-chief.

The nuclear threat and the vicious eccentricities of its leadership are, for the West, the most compelling of the country’s features. But, as our briefing explains, a revolutionary force is rising from below: a new class of traders and merchants. Capitalism is seeping through the bamboo curtain. This is not at the behest of the regime, as happened in Deng Xiaoping’s China. North Korea is more repressive and backward than Cuba or the old Soviet Union. The regime will not depart quickly or easily: in the short term, Mr Kim’s growing unease could well make him still more of a threat to his neighbours. But a familiar picture is emerging—and the world should do what it can to encourage it.

Jinxed by juche

Mr Kim’s grandfather, Kim Il Sung, built his post-war paradise in the north on the principle of juche, or “self-reliance” (though, the Soviet Union greatly helped). At first the North and South Korean economies matched each other won for won but, starting in the 1970s, autarky decayed into inefficiency. The North’s huge army hogged resources. Managers and workers stripped state factories bare and flogged anything of value on new black markets. Today perhaps 200,000 North Koreans remain imprisoned in the gulag. Output per head is over 17 times larger in the South than the North. Twenty-year-old South Koreans stand 6cm (2.4 inches) above North Korean contemporaries stunted by famine and malnutrition.

In the 1990s famine provided an opening for a new sort of North Korean trader. Many of them were smallholders, often women, selling vegetables grubbed up from the family plot. The facts are patchy, but it is becoming clear that other merchants operate today on a far more ambitious scale, exporting raw materials to China and bringing back consumer goods. The merchants use an informal system of money-changing to move funds in and out of the country. In the capital those with cash go to restaurants and play the slot machines. It sounds surreal, but they are the North’s nouveaux riches.

North Korea’s capitalists are here to stay. The regime has repeatedly tried to purge them, by suppressing the farmers’ markets and cracking down on smuggling. But money talks in today’s North Korea, and the traders often have enough cash to bribe their way out of trouble. Moreover, they have become an indispensable part of the economy. Industry functions so poorly that tower blocks in Pyongyang cannot be built without the imported supplies the merchants provide.

As in China, capitalism is letting in the outside world—a vital change for a people fed only grotesque lies. Corrupt border guards and security operatives can be bribed by people determined, for religious or political reasons, to get information in and out. The mobile phones, computers and radios that the traders sell are eroding the state’s monopoly on truth. Television shows and films smuggled in on memory sticks confront North Koreans with the potentially revolutionary fact that their brethren in the South live in comfort and plenty—and without the fear of a knock on the door at midnight. They discover that the Workers’ Utopia is built on a Great Lie.

And the capitalists count because they stand somewhat apart from the security establishment. The Kims have always surrounded themselves with a caste of revolutionary families present at the North’s creation. For decades power began and ended with them. But some of the merchants come from outside the Kims’ circle—and all have a keen eye on their wealth. Although the traders make money from the status quo, they are likely to value growth more and security less than the ruling clique. Competition for resources is also emerging in parts of the government-controlled economy. Fissures are thus emerging in what used to be a monolithic state.

For years now the world’s dealings with North Korea have chiefly been about stopping its nuclear programme, which poses a grave threat to peace. But that policy has pretty much failed. Today’s nuclear intimidation is just the latest in a series of provocations from a state that will lie, threaten and blackmail its way to the negotiating table only to storm off again into belligerent isolation. The bet is that Mr Kim will never give up his weapons, because they are his only claim to influence.

The Chosun path

Change will not necessarily make North Korea safer. It may destabilise the regime and thus, in the short term, make it more dangerous. That is what China fears: its strategic nightmares feature migrants pouring across the Yalu river and South Korean or American troops approaching its borders.

But in the long run the best way of making North Korea less dangerous lies in defanging the Kims. That means taking every opportunity to undermine the regime, as the West did in eastern Europe during the cold war. The Soviet era teaches that nothing is more potent than exposing people to the prosperity and freedoms of the world around them. So outsiders should pay for North Koreans to travel and to acquire skills abroad, support the radio stations that broadcast into the country, back the church networks that supply documentaries and films and turn a blind eye to the smuggling networks and the traders.

China’s policy is contradictory. It props up the Kims, at the same time as its officials encourage North Korea to emulate the economic policies that transformed China 35 years ago. But development and stability—of the suffocating sort that the Kims represent—are incompatible.

Ultimately, the Chinese will have to choose. What the mercurial Mr Kim offers leads nowhere. The capitalists at least promise something better. China should back them.

READ MORE AT http://www.economist.com/news/leaders/21571421-even-another-nuclear-provocation-looms-hope-glimmers-worlds-most-oppressed-people