Jangmadang (North Korea)

From Global Informality Project
Jump to: navigation, search
Jangmadang
Location: North Korea
North Korea map.png
Author: Sokeel Park and James Pearson
Affiliation: Director of Research and Strategy and Liberty in North Korea (LiNK); author of North Korea Confidential

Original text by Sokeel Park and James Pearson

Contemporary North Korea effectively has two messily-interlinked economies: the ‘official’ economy (where people work in state jobs and are paid a state salary) and the ‘real’ economy, where people earn money in the shadows. The latter is de facto of much greater importance in today’s North Korea, and at its heart is the jangmadang.


A portmanteau of jang meaning ‘market’ and madang literally meaning ‘place’, jangmadang is an archaic Korean term for marketplace that was brought back into widespread usage in North Korea in the Nineties, when a devastating famine forced North Koreans to engage in informal market activities in order to survive. The word has its roots in old-fashioned Korean farmers’ markets, often seen at the busy intersections of narrow, muddy residential streets in rural North Korean towns or, on occasion, in specially-constructed buildings designed for market activity.


Before the famine of the Nineties drove people to private trade, the state presided over one of the most tightly organised command economies in world history. The system was neither efficient nor innovative, but thanks in part to subsidised trade and aid from other communist countries, the state-socialist economy was relatively serviceable and provided the people with their basic needs.


Following the disintegration of the USSR in 1991, former communist countries withdrew their economic subsidies to North Korea. This resulted in the collapse of the economy, causing a devastating famine and forcing a long-term decentralisation and restructuring of the economy and a bottom-up opening of society that continues to this day. Realising that they could no longer rely on the government for food and other basic needs, ordinary North Koreans abandoned their defunct work units and turned to private farming and private entrepreneurialism centred around the new jangmadang in order to survive. To this day, North Korean refugees regularly report that without the jangmadang, survival would be impossible. This is reflected in the popular saying, ‘you can buy anything in the jangmadang but a cat’s horn,’ meaning, if it exists, you can buy it in the jangmadang. Sixty-two per cent of defectors surveyed in 2010 stated that they had engaged in work other than their official jobs before leaving North Korea (Tudor and Pearson 2015: 16[1])


As the jangmadang grew they became networked both to each other and through the porous border to China, with the result that the sub-systems and mentality of capitalism became increasingly entrenched. The government, uneasy with this development but ultimately powerless to stop it, has oscillated between trying to reign in the market forces and making halting steps to formalise and co-opt certain aspects of the market economy. Officially, private property and private trade are still illegal in North Korea, yet in practice private trade accounts for a major share of the economy. The fact that many government insiders are now using trade as a means of generating personal wealth, as well as the potentially destabilising economic and social upheaval that clamping down on private trade would bring at all levels of society, effectively neutralises any desire the government may have to wage war on the jangmadang.


People setting up stalls in formalised jangmadang are required to pay a stall tax to Party cadres in order to keep their slots—thus making the state complicit in marketisation. In some large markets, there are even electronic registration systems in effect, to keep track of who has paid their stall tax. Traders looking for new customers often transport their goods by hand over mountain paths, across rivers, and through muddy valleys or dusty tracks in order to avoid the prying eyes of government officials who may try to stop them or, more likely, demand a cut of the profits.


The typical jangmadang stallholder is a lower or middle class ajumma (a middle-aged, married woman). Though Korean culture has been male-dominated since neo-Confucianism stamped its imprint on the Joseon dynasty (1392–1910), it was often the case among the peasant population that women were the market traders, not men. This legacy can still be seen in South Korea today, where poor old ladies sell vegetables and rice-cakes on street corners, and appear en masse outside metro stations with baskets full of umbrellas on rainy days. It is therefore natural that jangmadang traders in North Korea are usually female.

There is an additional reason why the ajumma dominate the jangmadang. In North Korea, adults are assigned to work units, to serve the state in return for pitiful salaries. Married women, however, are exempt from this rule, which means they are free to work as market traders. They can therefore earn significant multiples of what their husbands make, turning them into breadwinners and challenging the traditional Korean husband-wife dynamic.


The term jangmadang is also used by North Korea watchers to denote the ‘Jangmadang Generation’, the cohort of North Korean youth born in the 1980s and 1990s who grew up during the famine and post-famine era. This generation has little to no memory of a functioning state-socialist economy, instead operating in and relying on the market economy from an early age. Researchers of social change in North Korea also note that this generation came of age at a time of unprecedented access to illegal foreign media smuggled into the country on DVDs and USB sticks, contributing further to a cultural and ideological shift amongst this generation, making them harder to control through traditional North Korean propaganda and social controls.


Many officials working in government agencies and institutions have also seized opportunities for covert or camouflaged capitalism in order to generate operating budgets for their department, as well as enriching themselves personally and making payments to senior levels to buy good favour. This has spawned a plethora of de facto private businesses operating under the guise and licenses of state-socialism, which seek protection and stability through links to the top political families in the country. Lack of funding by the state for its own bureaucracy following the economic collapse of the 1990s led to the emergence of these informal ‘public-private partnerships’, which outstrip in size and scale grassroots jangmadang trading. Joint ventures or import-export opportunities in food, agricultural supplies, medicine and consumer luxuries are particularly lucrative. A successful firm may contribute 30-40 per cent of its profits to its parent department (as well as bribes to senior officials), with the remaining 60-70 per cent being pocketed by its private de facto owners (Tudor and Pearson 2015: 36[2]). The practice bears similarities to the phenomenon of ‘state capture’ in 1990s Russia and other post-Soviet countries, whereby private individuals, firms and groups (including the mafia) were able to extract enormous rents from the state due to its institutional weakness (Frye 2002[3]). However, the crucial difference in the North Korean case is that there is no legally-recognised private sector. There thus obtains the somewhat paradoxical situation that these informal private companies can only exist under the guise of the state, and sustain it while simultaneously siphoning resources away from it into private hands.


This loss of centralised control over the economy and resource distribution significantly degrades the government’s hard and soft power. These trends seem not only to be irreversible but are actually increasing year by year. The growth of the jangmadang means that it is inaccurate to classify the contemporary North Korean economy as ‘communist’ or ‘collectivised’. The growing market economy and the increasing economic independence of the people is one of the biggest long-term challenges facing the North Korean government, and how they respond will be a key determining factor for the future of the country. [4] [5]

Notes

  1. Tudor, D. and Pearson, J. 2015. North Korea Confidential: Private Markets, Fashion Trends, Prison Camps, Dissenters and Defectors. Rutland, Vermont: Tuttle Publishing
  2. Tudor, D. and Pearson, J. 2015. North Korea Confidential: Private Markets, Fashion Trends, Prison Camps, Dissenters and Defectors. Rutland, Vermont: Tuttle Publishing
  3. Frye, T. 2002. ‘Capture or Exchange? Business Lobbying in Russia’, Europe-Asia Studies, 54(7): 1017-1036
  4. Haggard, S. and Nolan, M. 2011. Witness to Transformation: Refugee Insights into North Korea. Washington , DC: Peterson Institute for International Economics
  5. Lankov, A. 2015. The Real North Korea: Life and Politics in the Failed Stalinist Utopia . New York: Oxford University Press