April 28, 2022
Since June 2021, the National Committee on North Korea and the Wilson Center's Hyundai Motor-Korea Foundation Center for Korean History and Public Policy have worked together to implement a roundtable series called "Understanding North Korea." The series provided a platform for six emerging scholars to share their research ideas with peers and experts in the field and publish their findings in a format accessible to a general audience. Topics included North Korea's cyber activities, illicit finance, social controls, socioeconomic trends, and intra-elite power relations. Dr. Darcie Draudt's paper is the second in the paper series. Read the summary below and check out the full report.
Over the past thirty years, the rise of black and gray markets in North Korea have unmistakably transformed social relations between citizens and the government. What began as a survival strategy during a period of severe shortages of food and goods during the Great Famine in the 1990s has grown into a bona fide class of entrepreneurs who maintain the stability and development of the state economy. Commonly known as donju—“masters of money”—North Korea’s new entrepreneurs have risen in ranks from small-time smugglers under Kim Jong Il (r. 1994-2011) to elite financiers and suppliers of goods and services essential to Kim Jong Un’s economic development plans (r. 2011-present). The result has been an informal socioeconomic class system that intersects the historically rigid political caste system, leading to new lifestyles, the pursuit of social status, and incentives based on wealth rather than only political loyalty.
This paper explores two simultaneous trends in the state’s management of ersatz capitalists. Analysis simultaneously looks at three indicators vis-à-vis the role of donju: economic development patterns, ideological incorporation, and punishment. The paper draws from state media and secondary sources with information from author interviews with experts to explore how Kim Jong Un has responded to the growing entrepreneurial class in North Korea. First, I analyze the roots of donju market practices. I examine how this new unofficial and illegal class of moneyed elites simultaneously intersects, challenges, and upholds the official political classification system that undergirds the country. The paper then outlines how Kim Jong Un coopts middle-class wealth. Kim Jong Un’s Pyongyang-centered development draws on the ersatz capitalist class in North Korea. These changes have contributed to improved quality of life for the middle class and elite North Koreans while also driving income inequality in one of the world’s poorest countries.