Yongusil 85: Alexander Dukalskis on the Political Impacts of the Shadow Market

By | June 10, 2016 | No Comments

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Marketization is the most important process in modern North Korea, and scholars of the subject have analyzed it from a range of perspectives. In his new paper, Alexander Dukalskis addresses the impact of the widespread “shadow” market on the North Korean political system and political life of citizens. | Image: Destination Pyongyang/Sino-NK

There is little doubt that markets are playing an increasingly prominent role in North Korea’s economy. Since the famine of the mid-1990s and the resulting disintegration of state structures most of the North Korean population has been reliant on the market in one way or another for food and basic goods. Markets come in varying forms of legality, from officially permitted to tolerated to targeted and repressed. Much market activity is technically illegal but widely tolerated, thus existing in a liminal space of permissibility. Scholars of North Korea have analyzed the market from a variety of perspectives, including its emergence and characteristics, its roots in the famine, and the relationship between marketization and the military.

These developments raise the important question of how a widespread “shadow” market impacts the North Korean political system and the political life of its citizens. In a recently published paper in Europe-Asia Studies, I take up this question.1)Alexander Dukalskis, PhD (University of Notre Dame), is an Assistant Professor in the School of Politics and International Relations at University College Dublin. His research and teaching broadly focuses on contemporary autocracies, international human rights, Asian politics, and transitional justice. He has a book forthcoming on legitimation and ideology in autocracies, which includes analysis of North Korea. He can be reached on Twitter @AlexDukalskis. In addition to evidence from previous research by scholars, I conducted semi-structured interviews with 35 North Koreans living in South Korea during October of 2011 and June of 2012. Of course, one must account for the directions of bias and the limitations inherent in this kind of evidence. Nevertheless, when interpreted carefully semi-structured interview data can be a valuable source of evidence for studying otherwise closed political systems because they can help explain everyday processes and patterns. Details about the data and my methods can be found in the full paper.2)Alexander Dukalskis, “North Korea’s Shadow Economy: A Force for Authoritarian Resilience or Corrosion?” Europe-Asia Studies 68 no. 3 (2016): 487-507.

For a comparative reference point I examined decades-old scholarship on the shadow economy of the Soviet Union. This helped to provide hypotheses about what influence a widespread shadow economy would be likely to have on a communist-style political system. The scholarship suggested that a shadow economy could both undermine and bolster the government’s political power. It can erode official power by diminishing the state’s control over society, encouraging a skeptical attitude about communist ideology, and facilitating networks accustomed to evading state power that could potentially be used for political purposes. However, the shadow economy can also pull in the other direction. It can bolster a communist regime by alleviating the impact of goods shortages, helping the planned economy to function, allowing the use of anti-market laws to render nearly everyone vulnerable to repression, and perhaps most importantly by creating vested interests in the status quo that result in opposition to drastic change.

The findings can be summarized in a few brief points. First, my interview evidence supports the idea that many took to the markets out of economic desperation and for survival, not out of any anti-communist or anti-state feeling. Second, state actors are heavily involved in market activities, which I argue generates incentives to support to the political status quo. Third, while many in the markets may hold ambivalent or even skeptical ideas about government personnel or some policies, my interview evidence suggests that market participants are not self-consciously acting to undermine the state. The market may yet become a sphere of discussion and activity where explicit opposition to the government is common, but my findings suggest that this is not the case. This is most starkly illustrated in the experiences of market vendors who save up their earnings not to launch a rebellion or fund a protest against the government, but rather to escape to China and hopefully South Korea.

Fourth, my research discusses the role of illicit and ideologically-suspect information circulating in the markets. It is certainly the case that the shadow markets help spread South Korean TV shows (for example) but the political impact of this information is not yet clear. Claims that such information will encourage an uprising against the North Korean government are empirically and theoretically suspect, and my interviews highlight the dense controls that still exist on the public sphere which permeate what citizens think is politically possible. Although this claim needs further empirical validation, the entertaining information smuggled in by market vendors and well-meaning civil society organizations (e.g., Flashdrives for Freedom) may do more to encourage people to leave North Korea rather than to challenge its government directly.

Ultimately, the research concludes, the most likely scenario is that the state and market will continue to operate in a condition of wary co-existence. The government will attempt to clamp down on the market at some times and adapt to it at other times, which is to be expected given the cross-cutting pressures that shadow markets generate in communist-style systems. Government ambivalence is unsurprising. If the shadow market significantly impacts on the political system, the effects are likely to unfold over a long period of time as the government and market continue to mutually adapt to one another.

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1. Alexander Dukalskis, PhD (University of Notre Dame), is an Assistant Professor in the School of Politics and International Relations at University College Dublin. His research and teaching broadly focuses on contemporary autocracies, international human rights, Asian politics, and transitional justice. He has a book forthcoming on legitimation and ideology in autocracies, which includes analysis of North Korea. He can be reached on Twitter @AlexDukalskis.
2. Alexander Dukalskis, “North Korea’s Shadow Economy: A Force for Authoritarian Resilience or Corrosion?” Europe-Asia Studies 68 no. 3 (2016): 487-507.

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