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North Korea: Witness to Transformation

New Evidence on North Korean Economic Planning, 1962-1978

by | November 7th, 2012 | 09:49 am
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Last month the Wilson Center’s North Korea International Documentation Project put out a fascinating new paper, “New Evidence on North Korean Economic Planning, 1962-1978.” The title is misleading: little attention in the 11 translated mostly Eastern European diplomatic documents is addressed to planning per se, though there is considerable material on the nature of North Korea’s foreign economic relations with its main trade partners.

The first document is a 1962 report from the Hungarian embassy in Pyongyang back to the foreign ministry in Budapest.  It is worth quoting at length to give a sense of these materials:

“Preparation of the plans takes place, by and large, in the following manner: the competent employees of the central organs visit the enterprise or factory in question, and the latter’s director informs them about its capacities and potentialities. The comrades coming “from above” usually find that insufficient, and then generally turn to workers in the matter of next year’s plan. With the adequate political arrangement, one can always find some “hurray” men, who assume production obligations that are well over what can be fulfilled […] The plan for the factory is made on the basis of these pledges, and the director, if he happens to protest, will be branded a “backward-looking” man, which often leads to his qualification as politically unreliable and to his dismissal. Of course, a plan drawn up in this way cannot fulfilled either by the enterprise or the branch of industry, and this also affects the other branches, since the same unrealistic plan targets are given as index numbers for the related industries as well.

The phenomenon described above is observable not only on the lower levels but also the highest level…” The report goes on to report Kim Il-sung chasing out of his office officials who accurately reported bad news on production levels and having them dismissed from the KWP.

Another Hungarian document, from 1964, reports a debriefing by the Soviet ambassador of a meeting with Ri Ju-yeon, Deputy Prime Minister and alternate member of the KWP Central Committee. Ri complained that the Soviets were not trading with the North Koreans. Specifically the North Koreans wanted to exchange raw materials for raw materials and manufactured goods for manufactured goods. According to this account, the Soviet Ambassador responded that “As was well-known, they did not purchase Korean machine-tools, because the latter’s quality was inferior to that of the Soviet machines, and the Soviet Union had no need of museum pieces.” (Ouch!) The ambassador went on to complain that Kim Il-sung had time to entertain imported prostitutes but not the Soviet ambassador.

North Korean objections to trade according to comparative advantage appear repeatedly in these documents. In a 1972 meeting with the head of South Korea’s CIA, Kim Il-sung describes the concept of a division of labor as “an excuse.”

In an earlier post, we included video of Kim Il-sung dancing in the streets of Romania; the final document of the paper is minutes from the 1978 meeting between Kim and Romanian leader Nicolae Ceausescu. Kim is expansive: at one point he claims that the North Koreans are planning on harvesting 12 billion (!) tons of rice and in the current year were targeting 8.8 billion tons (!).  After Kim makes several more astonishing production claims, Ceausescu responds dryly “Then you are a developed country.” “Yes, in this case we are…” Kim responds.

Congratulations to the Wilson Center and all the scholars involved in translating these documents and bringing them to light.