Yet as the government attempted to crack down on illicit activities and regain social control, it was at the same time forced to tolerate, if not sanction, a vari- ety of behaviors that it had not tolerated before. Some of these coping strate- gies constitute the grisly survival mechanisms evident in all famine settings:
purchasing or foraging for inferior foods, such as grasses and tree bark; begging;
criminal activity; and even cannibalism (see, e.g., Becker 1997c, 1998b; Associ- ated Press 1998; Struck 2003). Yet an important component of these coping strategies involved some form of trade: barter, sale of assets in order to purchase
172 DEALING WITH A NEW NORTH KOREA
food, prostitution, or foraging for foods that were then sold in order to pur- chase grain. Many of these activities implied the diversion to emerging markets of grain and other foods not only from aid (chapter 5) but either from farm households or the PDS. As a result, access to food was increasingly determined by the position of the individual or household vis-à-vis these markets. These fac- tors included geographic location (food-surplus or -deficit region), occupation (urban or rural), and, increasingly, access to foreign exchange (either through official employment or nonofficial economic activities or through remittances, principally from relatives in Japan or China).
To some extent, this process of marketization reflected piecemeal policy changes that occurred well before the reforms of 2002 discussed in the next sec- tion and even before the famine (the following draws on S. Lee 2003:298–303).
These can be classified into two basic sorts: those that regularized the use of private plots and thus affected the supply side of the equation and those that regularized markets and thus provided new distribution channels for food. One innovation was to allow PDS populations, most notably those on state farms, to grow grains other than maize and rice as well as other foodstuffs. These private plots were officially incorporated into the supplementary channels of supply in 1987. At that time, the government ordered all state farms to allocate a certain amount of land and work time to these activities and allowed the cul- tivation of maize, clearly in compensation for the declining ability to provide PDS rations. In 1995 the right to cultivate private plots was also granted to mili- tary personnel, although it is interesting that these grants to the state farms and military were not formally approved by the government until the constitution of 1998. In 1987 the government also allowed cooperative farm households to grow any crops they chose on private plots, which supplemented overall supply but generated the incentive problems we highlighted in chapter 2.
In addition to these formal grants, the government tolerated to varying degrees illegal private plots (t’uigibat). These plots included urban gardens near residences or workplaces but primarily illicit holdings by cooperative and state farmers on marginal lands such as steep hillsides. This tolerance was not sanc- tioned, however, and thus was subject to classic credibility problems about future policy reversal. In 1989 the government announced that such plots were illegal, and in 1992 groups aimed at breaking up such nonsocialist activities were sent down to the countryside to eliminate them. Thus while local officials may have tolerated these sources of supply, they, too, were undoubtedly sur- rounded by corruption and bribery.
Finally, the government did allow farmers’ markets to function to a greater extent than in the past. From the banning of private grain trade in the late
Coping, Marketization, and Reform 173
1940s until the revival of private plots in the 1980s, farmers’ markets played a minimal role in the overall distribution system, confined largely to supple- mentary foodstuffs. In 1982 markets were allowed to operate on a more regular basis: daily instead of every ten days. In May 1984, additional markets were allowed to operate, with the total number rising to three or four per county. In the early 1990s, as the capacity of the PDS began to falter, such markets were allowed to trade in grain, although this was not formally institutionalized.
As the PDS went into decline, these markets spread and, according to a study by the South Korea’s Ministry of Unification, totaled between 300 and 350 as early as 1998, covering all counties in the country (Lintner 2005). The scope of goods traded also increased from supplementary food and grains to industrial products and came to include not only farm households but also pro- fessional merchants, even Chinese-Korean ones granted permission to enter the country and trade. Trade in these markets remained a precarious undertaking, however. In his December 1996 speech, Kim Jo˘ng-il expressed his antipathy to these activities, underlining that “the party and the government have full responsibility for the care and well-being of the lives of the people” and that
“if the party lets the people solve the food problem themselves, then only the farmers and merchants will prosper, giving rise to egotism and collapsing the social order of a classless society. The party will then lose its popular base and will experience meltdown as in Poland and Czechoslovakia.” In January 1999, Kim Jo˘ng-il ordered the government to reinforce state control over farmers markets and prevent labor from being diverted to them.
In sum, the course of policy before the 2002 reforms suggests a tolerance but not institutionalization of market means of allocating food. But precisely what role did market-based activities play? Again, we start with the evidence from refugee interviews. Although the questions were not addressed in every interview, putting the results of these surveys together in sequence suggests a process of increasing marketization over time.
The Johns Hopkins studies (Robinson et. al. 1999, 2001) ask respondents what their principal source of food was from 1994 to 1997; we reproduce their results in tables 7.1 and 7.2. As the famine deepened, the share of respondents in the first sample depending primarily on foraging increased dramatically, reaching 40 percent by 1997. But fully 16 percent of respondents claimed that purchases were their main source of food in 1994, and another 4 percent said they relied on barter. By 1997, 39 percent relied primarily on food purchases (26 percent) and barter (13 percent). When this question was posed again in the sec- ond, larger set of interviews in 1998, a marginally larger share of respondents—
31 percent—said that they had come to rely primarily on food purchases, but a
TABLE 7.1. Johns Hopkins 1999 Survey Results on Principal Source of Food, 1994–97 Government
Ration* Buy Barter Forage Grow Other Total
n % n % n % n % n % n % n %
1994 260 60.6 70 16.3 16 3.7 51 11.9 18 4.2 14 3.3 429 100.0
1995 122 28.4 99 23.1 60 14.0 98 22.8 29 6.8 21 4.9 429 100.0
1996 42 9.8 117 27.4 67 15.7 148 34.7 31 7.2 22 5.2 427 100.0
1997 24 5.7 108 25.8 54 12.9 168 40.2 36 8.6 28 6.7 418 99.9**
*Includes public distribution system as well as government allocations to farmers and the military.
**Total does not sum to 100 because of rounding Source: Robinson et al., 1999.
TABLE 7.2. Johns Hopkins 2001 Survey Results on Principal Source of Food, 1995–98 Government
Ration Buy Barter Forage Gift Grow Other Total
n % n % n % n % n % n % n % n %
1995 802 30.1 651 24.4 479 18.0 339 12.7 34 1.3 269 10.1 93 3.5 2,667 100.1*
1996 242 9.1 756 28.4 696 26.1 416 15.6 39 1.5 384 14.4 130 4.9 2,663 100.0
1997 56 2.1 760 28.6 754 28.4 433 16.3 37 1.4 422 15.9 195 7.3 2,657 100.0
1998 50 1.9 833 31.4 679 25.6 397 15.0 45 1.7 422 15.9 223 8.4 2,649 99.9*
*Total does not sum to 100 because of rounding.
Source: Robinson et al., 2001
HAGGARD PT 3, CH 07.indd 1748/23/06 11:03:49 AM
Coping, Marketization, and Reform 175
very much larger proportion said they relied on barter (25 percent) and growing their own food (16 percent). If we take those relying primarily on purchases and barter as the marketized segment of the sample, it accounts for 56 percent of all respondents. Lim (2005) cites similar results from an unpublished 500-person survey conducted by the South Korean Ministry of Unification that concluded that by the late 1990s ordinary citizens obtained up to 60 percent of their food through unofficial channels. Interestingly, these results correspond roughly to our estimate in chapter 5 of the share of total food nonfarm residents were securing in the market.
The 1998 Good Friends interviews confirm some of the findings of the first set of Johns Hopkins interviews. These interviews asked how families survived following the end of government distribution. The Good Friends surveys on this question also allowed multiple answers, giving us a wider view of household strategies. The dominant coping mechanism was listed as foraging and con- sumption of inferior foods, with 57 percent reported resorting to these means.
Yet 46 percent reported engaging in barter, and nearly 45 percent reported selling assets (with 4 percent even reporting that they had sold their houses).
Even though only 5 percent of respondents were farmers, 13 percent reported farming fields in the mountains, and another 6 percent reported collecting herbs to exchange for food.
The Good Friends (2004) interviews asked respondents to estimate the share of households involved in trade in their locales. Nearly 50 percent of respon- dents answered that more than 90 percent of households engaged in trade;
only 20 percent estimated that less than 80 percent of households did. When asked personally if they had engaged in trade, 92.5 percent said that they had.
Of this group, 61 percent reported trading in food. These results reflect the fact that many refugees either were, or became, traders. However, their perception of North Korean society is nonetheless revealing: at least by these respondents’
estimates, North Korean society had become actively engaged in trade as a mat- ter of survival. In the words of one refugee, “those who could not trade are long dead” (cited in Lankov 2006a:112). Indeed, the figures on the wedge between official and market prices reported in table 5.1 indicate that there were tremen- dous incentives to channel supplies outside official avenues; these incentives, although attenuated by the July 2002 price reforms, as discussed below, have persisted to a significant degree.
Additional evidence about the process of marketization can be found by considering price trends. The extent of depreciation of the won on the black market is one indicator of the severity of economic distress in North Korea and has been monitored by Chinese scholars and in the Chinese-Korean com-
176 DEALING WITH A NEW NORTH KOREA
munity; Snyder 1997 provides some early evidence. The unofficial black mar- ket exchange rate soared as the food crisis worsened—from about 90 won per dollar in the early 1990s to over 220 won per dollar in June 1997 (the official exchange rate was 2.2 won to the dollar that year, and average salaries ranged from 100 to 350 won per month). The won/dollar exchange rate in black mar- kets along the Chinese border reached its peak in late fall 1996, at 250 to 280 won per dollar. The black market price of one kilogram of rice quadrupled during the same time frame, to 80 to 90 won per kilogram, and was as high as 150 won per kilogram in October 1996. When put side by side, the evidence on the exchange and rice prices provides an important reminder of the fact that those with access to foreign exchange could protect themselves from the crisis while those locked into won incomes—the vast majority of the urban popula- tion—faced debilitating prices on the market.