Whenever we imagine a nation that is still under dictatorship or a communist nation our thoughts are North Korea or china. China has the world’s largest economy and the world’s largest population, usually, these two things do not go together as seen in some countries but despite being the two most communist nations why are they so different? Because today we are seeing democracies shifting towards communism let it be the united states or the united nations, they are run by two authoritarian people, Donald Trump and Borris Johnson. Now while we see big economies have authoritarian leaders why did North Korea fail to achieve economic excellence as China or U.S.A or the U.K.? Did becoming a communist nation really help China implement economic reforms to achieve economic excellence? Is political reform as important as economic reform? Let us find out in today’s post at Truly Global.
The history of China’s reform and opening up demonstrates why political reform should be implemented together to succeed in economic reform programs. China’s reform and opening policies started with rural reforms in 1979. The Chinese Communist Party (CCP) returned greater autonomy to rural communes and gave them the right to experiment with incentive pay. The party introduced the ‘household responsibility system’ to promote commercialization, specialization, and marketization of the rural economy. For agricultural reform, the CCP also encouraged the development of ‘township and village enterprises’, rural factories operated by local governments that could compete with inefficient state factories in a market economy. All these policies began ‘the golden era’ of the 1980s for China’s rural economy. For the next step, the Chinese government introduced the dual-price system to expand the function of market economies in China. It privatized state-owned enterprises, promoted private entrepreneurialism, and reformed employment laws, contract laws, and labor laws. Through these measures of economic reform, Deng aimed to incentivize productivity and efficiency by allowing individuals to earn and retain their profits. This meant, in essence, that the Chinese state needed to de-centralize power and relax its control over Chinese society, which then meant that the CCP had to implement political reform, too. For the stable and persistent implementation of economic reform policies, the CCP needed to enhance the stability and predictability of China’s political system. As a starter of political reform, Deng had openly criticized ‘bureaucracy, overconcentration of power, patriarchal culture, life tenure in leading posts’ within the party leadership. Next, Deng launched a series of reform programs to promote ‘inner-party democracy’. The CCP developed institutional mechanisms, including formal regulations and informal norms, to curtail various forms of favoritism and abuse of power. The party imposed both the term limit and age limit for senior officials. At the same time, Deng set up the Central Advisory Commission to ease elderly senior leaders into retirement and reinvigorate the ranks of the CCP between 1982 and 1992. While ensuring a regular change of party leadership through a generational change, Deng significantly enhanced the predictability of power succession by anointing the heir apparent to several preparatory positions at the halfway point in the incumbent general secretary’s term. Enhanced predictability moderates factional politics, which then increases the overall stability of China’s political system. These measures were designed to decentralize power within the top echelon of the party first, followed by multifaceted de-centralization of economic decision-making power from the center to the province, from state to society, and from commune to individual.
Certainly, North Korea has been trying to emulate these Chinese reform programs. Most notably, Kim Jong-il announced a major reform program in 2002 known as the ‘July 1st Economic Management Improvement Measures’. The measures included price reform to raise the prices of agricultural products thirty times and to bring them closer to the market-based price level. To keep up with this price reform, the North Korean government raised the average income level by 20 to 30 times. It also floated the exchange rate of North Korea’s currency, implemented a phased abolition of the public distribution system for foods and necessities, promoted private economies as well as autonomous decision-making for state-owned enterprises, and introduced incentives for a performance-based wage system. According to Kim Byung-Yeon, a professor at the Seoul National University and specialist on the North Korean economy, Kim Jong-il intended to launch these economic reform programs based upon the principle of ‘a less centralized decision-making structure’, which is similar to the core of Deng’s economic reform policies. Nevertheless, Kim Jong-il’s measures were not sufficient to be assessed as structural reform. They did not include fundamental reforms such as the de-collectivization of state farms or the legalization of market exchanges. In this regard, Kim Byong-Yeon concludes that Kim Jong-il’s economic reform programs were designed to normalize the socialist economy rather than to make a transition to a market economy. But even with these limited economic reforms, the North Korean currency significantly inflated, and the market economies expanded along with illegal markets. As the North Korean government found these changes weakening the state’s control of society, Kim Jong-il started re-introducing new anti-market policies in 2005. The 2009 currency reform marked the most substantial anti-market policy, which reversed the previous reform policies. As Kim Jong-il focused on power succession to Kim Jong-un from 2009, his economic reform programs had utterly lost momentum. Kim Jong-il’s economic reform failed because he could not implement the political reform that was needed to facilitate economic reform. In North Korea, political power has been overly centralized and poorly institutionalized. For a successful economic reform, North Korea needed to reform its totalitarian political system, which means political power should have been effectively de-centralized so that provincial governments could have more autonomy for decision-making about their economic development projects. Ideological control should have been relaxed to encourage entrepreneurship and to allow experimental approaches among economic players. Economic resources should have been re-allocated from national defense projects to economic development projects. As examined above, China implemented political reform together with the economy, but Kim Jong-il did not. North Korea had not been able to implement the political reform at the structural level, and its economic reform programs also ended up as an ad hoc policy rather than structural change.
Reading the past of these two countries have certainly given us the idea that only an economic reform in the country is not enough but they have to be willing to political openness and if the leader of the country focuses on centralizing their power and maintaining their regime then their economic reform is not possible, and the results will be same as that of North Korea today where North Koreans are taught to believe that at the age of three Kim Jong-un could already fire a gun and was a remarkable marksman. But North Korea’s propaganda system does not teach that Kim Jong-un was the son of Kim Jong-il’s mistress, who had immigrated from Japan, let alone the story of his half-brother’s assassination that was apparently ordered by Kim Jong-un himself. North Korea’s educational system has presented that North Korea is the happiest country in the world, while South Korea is depicted as a land of destitution—a ‘living hell’, and a de facto colony of the United States. Americans are often described as ‘jackals’ who always attempt to invade and conquer North Korea, which is why the Kim family needs to take the role of ‘parental leader’ to protect ‘the cleanest, innocent and pure-blooded people of North Korea’ from the existential threat posed by the United States. Therefore, the narrative of North Korean propaganda goes, North Korean people should unite under the leadership of the Kim family to preserve its society from contamination by the outside world. Now if you do not know if your country turning into a land of living lies then see if things like these happen in your country for example saying that the leader of the nation should not be questioned or the leader of the country is above everyone or if bills are passed overnight without a proper parliament hearing. If the answer is yes, then congratulations you know where your country is heading and what you need to do.
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