Abstract

This study examined whether the private commerce of North Korea were absorbed into the socialist economic system or liquidated, by analyzing private commercial policies at the time of the socialist transition.BRDuring the Korean War, private commerce grew steadily despite the suppressions by North Korean authorities. At that time, the policy direction of the Korean Workers’ Party(KWP) and the government were to restrain and eliminate private commerce rather than accepting it into the cooperative system. For this purpose, in January 1953, the income tax law, which applies a progressive tax rate of up to 74%, was amended. From November 1954, private trade in grains was banned. By these measures, private commerce shrank considerably, so that the socialist transformation of private commerce and industry could be promoted smoothly without intense class struggle. From the end of 1956, the North Korean government began to fully promote the socialist transformation of the private commerce and industry, declared its fulfillment in August 1958.BRPrivate merchants during this period were not ‘transformed’ into socialist workers by joining consumption cooperatives or production cooperatives. Many private merchants have been deprived of their economic basis and have fallen by imposing high rate of income tax, the blocking supply of goods and market.

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