North Korea’s Political System

2. “Measures for the Improvement of Economic Management”
The period of transition that had followed the death of Kim Il-sung nominally ended with the convoca-
tion of the Supreme People’s Assembly in 1998 and the assumption of the post of Chairman of the 
National Defense Commission by Kim Jong-il. However, economic conditions remained dire to the point 
where distribution of food rations could not be conducted normally. In this environment, black markets 
and other forms of an “underground economy” began to emerge that stood in stark contrast to the social-
ist planned economy, the “face” of the national economy that remained under the direction of the authori-
ties. These black markets became a widespread and normal phenomenon and came to play a critical role 
in the survival of the population. When observed in the framework of the system of Suryong, this devel-
opment can be interpreted to mean that one of the important tools used by the authorities to control the 
population had ceased to function. In addition to facilitating the procurement of food, these black mar-
kets became a venue for buying and selling VCDs and DVDs of South Korean dramas, which implied 
that the long established control of information was coming apart at the seams and domination through 
ideology was being further eroded.
The banner of constructing a “strong and prosperous nation” was raised at around this time and 
remains a key slogan to this day. The objective of this slogan was to transform North Korea into a “great 
power in politics, ideology, military and economy.” “Building the economy” was presented as an urgent 
requirement in the attainment of this objective. The selection of this goal appears to embody the longing 
to end the state of non-normalcy and to return to the comprehensive integration of the population under 
the system of Suryong.
However, the program to reconstruct the economy under the direction of the authorities did not 
succeed, which stimulated the further growth of the “underground economy.” It was against this back-
drop that the so-called “measures for the improvement of economic management” were introduced in 
2002. Among various measures implemented, official prices and wages were revised to bring them into 
line with current market prices, and public markets were established. At the time, some interpreted these 
measures to be aimed at realizing a Chinese-style of “reform and openness.” However, a more accurate 
interpretation is that these measures were basically implemented for the purpose of heightening the 
effectiveness of the leadership of the authorities, halting the proliferation of the “underground economy” 
and reincorporating these activities into the “official economy.”
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For example, the authorities dramati-
cally raised their purchase prices for foodstuff to stem the flow of supplies to black markets and to rein-
force the official distribution system. Needless to say, the sharp increase in wages was similarly designed 

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to draw workers who were working in the “underground economy” to make their living away from there 
and back to their original workplaces. That the purpose of these policies was not the implementation of 
“economic reform” patterned after the Chinese model but rather the restoration of the planned economy 
becomes even more evident when subsequent developments are examined. Thus, when the food produc-
tion situation improved somewhat in the mid-2000s, repeated efforts were made throughout the country 
(albeit unsuccessfully) to strengthen market restrictions and to reinstate the food ration system. 
Furthermore, in 2009, the currency was suddenly redenominated and replaced in a dramatic measure 
designed to deliver a serious blow to the “underground economy.”
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It can be concluded from the above that the original aim of the “measures for the improvement of 
economic management” was the reabsorption of the “underground economy” into the “official econ-
omy.” However, what actually resulted from these measures was the emergence of a situation that may be 
described as “driving the official economy underground.” As these measures were being implemented, 
some shrewd individuals succeeded in “entrepreneurship” through clever maneuvers. At the same time, 
state-owned enterprises, the military and various other government organizations began to openly 
engage in a wide range of profit-making activities. Due to these developments, significant disparities 
based on differences in economic power surfaced throughout society, and a so-called culture of “money 
worship” swept through the country.
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Concurrently, ideology and political doctrine as a source of power 
was undermined and the regime suffered a decline in its centripetal forces.