The Shadow Economy and Social Change in North Korea

Abstract

ABSTRACT North Koreans have relied on the shadow economy since the collapse of socialism in the 1990s, but little is known about the degree to which informal markets have influenced the country’s everyday politics. Based on a large-scale survey of defectors, as well as interviews with almost 100 defectors, including some who had been high-ranking officials prior to leaving North Korea, this article finds that the shadow economy has elicited many changes. First, informal marketisation has affected social practices in the workplace, such as reduced job attendance, decreased participation in mandatory organisational meetings, and a strengthened public perception that official job allocations are unfair. Second, the shadow economy has spread unfavourable views of the official welfare system, leading people to prefer life in the market to their past reliance on the command economy. Third, the shadow economy has led to rampant corruption, strengthening popular perceptions that officials are corrupt and law enforcement is unfair. Finally, the shadow economy has negatively affected public views of the North Korean regime, decreasing loyalty to the leadership and reducing public trust in political institutions. Despite these social transformations, people remain sceptical about the idea of regime change due to tight social control.