Stuck In Limbo: Why Kim Jong Il Couldn’t Reform

By Charles Park

It is Juche year 101 [2013] in North Korea.  But while Juche is supposed to be a philosophy of self-reliance and independence, the reality is that North Korea has rarely been self-sufficient economically. Kim Il Sung was a master salesman, able to play off the Soviet Union with China for aid and subsidies while retaining a great deal of independence.  But once those sources dried up in the early 1990s, the North Korean economy went into a tailspin. And with a U.S. embargo imposed since 1950 and successive waves of trade sanctions, the North Korean Juche economy has barely limped along, sustained only by Chinese life support and international humanitarian aid.

When ideals don’t match reality, the human inclination is to rationally modify one’s behavior and thinking. Indeed, following the end of the Cold War, there were many examples of former communist nations implementing or adopting market capitalism. It didn’t take long for these countries to adapt to new realities and knowledge, turning their previously closed central planning systems into open market economies. After initial shocks in their transition, a majority of these former communist countries have grown substantially. This is especially true with North Korea’s former benefactors Russia and China. This is also true with Vietnam and others.

Then, one would think, it would have been natural that North Korea would follow suit with its own version of Glasnost and its own rendering of Deng Xiaoping’s “Rich is Glorious.” However, against what became a widespread tide of change, Pyongyang pursued a rather reactionary Military First Policy called Songun. Without changing any of the elements of Juche, it went full tilt for acquiring nuclear weapons and long-range missiles, funding the programs in part by starving its citizens and foregoing economic development. No wonder then that the mainstream media, guided by think tank narratives coming from Washington DC, see this behavior as “irrational,” “bizarre,” “unpredictable,” “pariah,” “rogue,” etc. Surely, Pyongyang is irrational.


(Graph: GDP Growth Rates from 1971-2003. With the collapse of the USSR and the East Bloc trade, DPRK entered the Arduous March in 1992/1993 which lasted until 1998/1999. DPRK GDP growth rate has been largely non-existent since. Contrast that with the high Chinese and Vietnamese GDP growth rates. Data source: Historical Statistics for the World Economy, via

However, some reflective thought on the unique circumstances that North Korea faced suggests Pyongyang’s thinking may have been far from irrational. Indeed, research in behavioral economics suggests that there is an interaction between losses and gains, for people tend to desire to avoid losses more strongly than seeking gains. As such, the reason China and Vietnam could embark on economic reforms (while North Korea couldn’t) may have had to do with a substantially different view of the risk-reward calculus seen in Pyongyang as opposed to Beijing or Hanoi.

Change toward an open system was not an option under Kim Jong Il, because he must have perceived the potential losses to be much greater than the potential gains. As terrible as the circumstances were in North Korea, he opted to stay the course and try to tinker with the economic system without opening it up wholesale, forcing the nation to be stuck in the netherworld of reform and no reform, constrained by the existing ideology and latent security environment. Thus throughout the decade of 2000-2010, we saw government economic policies repeatedly going two steps forward, then one or two steps back.

What could have been Kim Jong Il’s rational calculus? The achievements of the Chinese economic reforms must have been eye-popping. He made many visits to the Chinese cities and factories. He salivated openly over the gleaming skyscrapers of Shanghai and designated several SEZs (Special Economic Zones) of his own. However, he also saw what happened in USSR, East Germany, and a few other East European communist states like Romania (Ceaușescu admired Kim Il Sung greatly) where the government either collapsed, disintegrated, or had their leaders thrown out of power or executed. So while you can fault Kim Jong Il for the dire poverty of his country, as a rational self-preserving actor, he ignored the possible gains of reform in favor of the ultimate goal: regime survival.

To be fair, if you can fault the North Korean personality cult and its paranoiac militarism for the poverty of the country, you could also fault the militarism and unconditional hostility of the U.S.-ROK alliance. The current underdevelopment of the economy is a function of the two. Sure a lot of blame can be placed on the Pyongyang regime. But remember, the U.S.-ROK and DPRK are still technically at war. The U.S. has had an embargo in place since 1950 and has added several sanctions over the years. The U.S. maintains many bases in South Korea and the U.S.-ROK alliance conducts multiple, yearly, and massive military exercises ostensibly directed at North Korea. Security has been a top priority by necessity. The Armistice has yet to be replaced with a Peace Treaty.

This is what Kim Jong Un inherited, a netherworld between reform and no reform. It’s a situation where reform is needed, but one in which it cannot be extensively implemented due to internal and international security risks. It’s a situation where Pyongyang may want and need reform but is nevertheless too afraid or unwilling to risk losing it all. It’s an unfortunate situation because true prosperity in North Korea is not too difficult. The Chinese and other East Asians did it. A poor and perennial dictatorship and human rights abuser like South Korea is now a rich market democracy. North Korea already has a highly urban, disciplined, and literate workforce and it has many natural resources. In a Juche 2.0, North Korea can easily be turned into to a well regulated mixed economy which balances socialist goals and private freedoms.

But the status quo will hold for the foreseeable future. On the birthday of Kim Il Sung in April 2013, North Korea will celebrate the Juche 102 new year. Sooner or later there will be another nuclear and/or rocket test. The U.S. will add on another set of sanctions. The status quo means that the winners are the elites of the respective sides who hold power and who own the military industries. The losers are the people on both sides. The costs for the North Korean people are easily recognizable in the yearly food aid received. The costs for the American people are more difficult to see.

This article was previously published as “Stuck In Limbo: The Reason North Korea Can’t Reform” on January 30, 2013, in NK

Photo Credit: yeowatzup

Further Editing: 9/4/2018