Defenders of unregulated globalist capitalism often compare economic conditions in North Korea to those in South Korea as an argument for their policies. This is a completely fallacious argument, ignoring the actual history of how the Korean Peninsula has developed since 1945.
Defenders of free-market capitalism generally play on people’s ignorance with wild oversimplifications. For example, it is very common for critics of the Cuban government to point to the low quality of the refrigerator an average Cuban family owns. Anti-Communists will point to these refrigerators and declare that they are of much lower quality than the refrigerators possessed by those living in the United States.
Their argument is this: capitalism is better because the refrigerator possessed by the average American family is better than the refrigerator possessed by the average Cuban family.
However, anyone who has ever been to Latin America knows this argument is completely bunk. All throughout the region in places where free market capitalism reigns, there are millions and millions of people who do not have running water or electricity. Millions of Haitians, who live under US free market capitalism and in some cases eat dirt mixed with oil, have no refrigerator at all. In the jungles and mountains of Peru, Guatemala, and Honduras, there are millions of people who have never seen a flushing toilet in their lives, let alone a fully functioning refrigerator.
The Cuban system, in which employment and housing are guaranteed by the state, results in an overall living standard that is much higher than many people experience throughout the region under capitalism. The fact that Cuban refrigerators are of lower quality than those produced in the fully industrialized United States, is completely irrelevant.
The often referenced NASA photograph of the Korean Peninsula at night, with the south brightly lit up and the north dark, is equally fallacious. The idea that “communism” has made the north dark, and “free market capitalism” has made the south bright and prosperous is wildly inaccurate.
The Post-War Boom in North Korea
The actual story of Korean War is deeply horrific and unknown to most Americans. The US military destroyed every building above one story tall in the northern part of the Korean Peninsula. Dykes and dams were bombed in order to cause flooding. US Army General Douglas Macarthur openly discussed using nuclear weapons against both the Koreans and their Chinese allies. The number of dead is estimated to be between 3 and 5 million.
The fact that the Korean and Chinese communists were able to force the United States to an armistice in the face of such a massive, murderous onslaught from the United States, speaks to a very high level of military prowess. The Democratic People’s Republic of Korea remains the only country in world history to have ever taken a US Army General as a prisoner.
Yet, even more unknown than the horrendous atrocities committed by the United States during the war, is the staggering economic boom in North Korea, following the war.
The Soviet Union poured huge amounts of economic assistance into North Korea. With Soviet assistance, the entire country was rebuilt and universal housing was established. Between 1953 and 1956, the gross domestic product (GDP) of North Korea tripled, according to Martin Hart-Landsberg’s academic text “Korea: Division, Reunification and U.S. Foreign Policy.”
The US Library of Congress has published a country study of North Korea that describes how illiteracy was wiped out, hundreds of new hospitals were constructed, and huge strides were taken for the population. Dr. Bruce Cummings book “North Korea, Another Country” describes how the economy of North Korea grew at a much higher rate than the South during the 1960s and 70s.
If a night photograph had been taken during the period when North Korea was experiencing what the BBC described as an “economic miracle” it is likely that the South would have been embarrassed by it rather than the north.
The economic crisis in North Korea during the 1990s, specifically the food shortages, were directly linked to the fall of the Soviet Union. Koreans refer to this period as the “arduous march.” The DPRK was unable to import petroleum to power its tractors and maintain its agricultural system. Furthermore, its ability to trade on the international markets, in the absence of the Communist bloc, was greatly restricted.
North Korea suffered huge economic setbacks during the 1990s, with malnutrition-related deaths. Facing huge vulnerabilities, the Workers Party of Korea adopted the policy of Songun, or “military first,” focusing on defense.
The dark image of North Korea at night is the result of the extreme hardships that has faced the DPRK since the fall of the Soviet Union. It does not represent the entire history of the DPRK.
How South Korea Became Prosperous
Those who point to the photograph not only use the darkness as a metaphor to demonize the north, blaming its problems on “Communism,” but they also point to the lights in the South as proof of the wonders of capitalism. They argue that the “free market” has made the South prosperous, unlike the “socialism” of the North.
Though the Republic of Korea in the south has always maintained a capitalist economic system, linking its economic prosperity to “free market” policies, deregulation, and neoliberalism is nothing short of delusion. Park Cheung Hee, the military dictator who took power after Sygman Rhee, the previous US-backed autocrat was brought down, was hardly a free marketeer. During his reign, the Kennedy and Johnson administration of the United States worked with Japan, to facilitate the economic development of South Korea.
The April Revolution of 1960 involved student activists and Marxists, rallying under the banner of democracy and anti-fascism, toppling the US-backed military strongman. The feeling among many US strategists was that poverty and poor living conditions in South Korea would create an opening for further Communist-led uprisings. In the hopes of preventing further Communist uprisings in the south, the United States facilitated Japan lending millions of dollars to the Republic of Korea, in order to create POSCO, a state-controlled steel monopoly.
The South Korean government, under Park Cheung Hee and even today, has done a huge amount to facilitate the development of industries and raise living standards. Various industries received state subsidies, government protected monopolies, and other facilitation by the government.
Park Cheung Hee’s regime is accurately called “bonapartist,” as the state suppressed both Marxist and labor activists, as well as certain sections of capital, in order to restore stability and facilitate economic growth. While Park’s policies resulted in the creation of a comfortable middle class in the urban areas of South Korea, they also involved a huge level of brutality and suppression. For example, Park oversaw the creation of slave labor camps for orphan and homeless children, where many of them were worked to death, badly treated, and tortured.
If Park Cheung Hee had done, as advocates of free-market policies advocate, and “let the economy take care of itself,” the southern part of the Korean peninsula would still be hugely impoverished and under-developed.
The Difference Between Capitalism and Socialism
When adherents of free-market ideology hold up an image of North Korea at night, they are being deceptive on many levels. They misrepresent the entire history of North Korea’s economic development prior to the fall of the Soviet Union. They also give the illusion that South Korea’s development was carried out with the laissez-faire policies that they advocate, which it clearly wasn’t.
Furthermore, those who point to the infamous image of the Korean Peninsula at night often completely misunderstand the difference between capitalism and socialism.
Capitalism is a system in which the economy functions for the profits of a group of owners. Capitalist economies generally involve government-constructed roads, power plants, and other infrastructure to facilitate the market. The US Constitution mandates that a state-controlled postal service be maintained, for example. The private, profit-making entities that are the basis of a capitalist economy tend to depend on such things. Under capitalism, state intervention is often carried out to facilitate the market.
The US Postal Service, the US Federal Highway System, Medicare, and other state economic activity has not eroded the profit system in the United States. On the contrary, they have significantly enhanced the ability of the market to function. In some cases, welfare programs and workplace protections came as the result of labor activism and the threat of communist revolution. In many cases, the major factions among the owners of private industry and business will be willing to accept such reforms as they increase the overall level of stability within society.
Welfare programs, infrastructure, and other elements of state intervention in the economy do not make a country socialist. As long as production is carried out for the purpose of making profits for a group of owners, capitalism prevails. As Frederick Engels put it “under capitalism, the means of production only function as preliminary transformation into capital.” Mao Zedong described capitalism as “profits in command.”
Just as state intervention does not change the capitalist nature of the US economy, the market sector does not erode the socialist nature of China. China’s state-run economy has allowed the growth of a huge amount of private business. Though state-run industries and banking institutions are dominant, a five-year plan has been created by the government in order to map out the direction of the Chinese economy. A Communist Party, rooted in Marxist-Leninist ideology, has unlimited power to control both state and private enterprises, in order to ensure that they function in line with the overall goals. The private sector has brought in huge amounts of foreign capital and wealth, enabling the Communist Party to raise 700 million people out of poverty, construct a state-run railway corporation that is top in the world, and achieve other overall successes under the direction of the party.
Just as the postal service does not make the USA socialist, the private sector in China does not make it capitalist. In the USA, profits dictate production, with the state functioning simply for the benefit of capital. In China, the state’s overall vision dictates production, and capital operates simply at the will of the central planners.
To put it simply: In capitalism, private corporations control the government. In socialism, the government controls the corporations.
The Confused Vocabulary of Neoliberalism
The inculcation of neoliberal economics into US society since the 1970s has muddled these definitions. According to libertarians and free marketeers, the profit run economy of the United States is somehow “socialist” or “half socialist.” The adherents of the Austrian and Chicago School Economics equate all state intervention in the economy with socialist central planning, even though historically, almost every capitalist economy has relied on government facilitation.
The followers of Milton Friedman and Ayn Rand have then argued consistently that minimum wages, guaranteed healthcare, and other state programs will result in an overall disaster because they are somehow the equivalent of Pol Pot’s regime in Cambodia or Stalin’s leadership of the USSR. In the rhetoric of neoliberalism, all government intervention is equated with the Marxist-Leninist governments of the 20th Century and their economic system.
This is a huge logical leap, and this confusion has great permeated US culture. For example, Bernie Sanders now runs for President of the United States, calling himself a “Democratic Socialist.” However, Sanders’ platform does not include any call for a state-run economy or even a single nationalization of industry or resources. He simply calls for expanding the welfare state and raising taxes on the rich. Sanders has gone as far as to say that his vision of “Democratic Socialism” is not contrary to capitalism. The neoliberal declaration that all progressive economic reforms are “socialism” has resulted in liberals now proclaiming themselves, wrongly, to be “socialists” as they now call for them.
As North Korea continues to engage with US President Trump, many hope that Kim Jong-un will be able to adopt Deng Xiaoping style economic reforms in North Korea. They hope that like China, North Korea will be able to use foreign investment to strengthen its socialist system.
Donald Trump recently tweeted out his optimism regarding North Korea’s potential for economic success and foreign investment. Yet, Trump has repeatedly insisted that socialism has been a failure everywhere it has ever been tried. In reality, if North Korea were to be able to bring in foreign investment, as China has done, and become more prosperous, this would be an example of socialism working.
Foreign Investment Does Not Guarantee Significant Growth
Many countries have experienced significant foreign investment but remained deeply impoverished. The US-backed regimes of Central America, Nigeria, the top-oil producing state in Africa, Bangladesh, Haiti, and other deeply impoverished countries all have been penetrated significantly by western capitalism. The sweatshops of Bangladesh, the oil-stained black beaches of the Niger Delta, and the McDonalds restaurants of Honduras and Guatemala have not led to economic prosperity. In fact, they have often resulted in displacing local businesses and shrinking the domestic economy.
China’s successes are largely due to the ability of the state to control the foreign investment and utilize to carry out its overall economic vision.
In the aftermath of Trump’s second meeting with Kim Jong Un in Hanoi, Bernie Sanders second run for the Democratic nomination for President, and the persistent allegation that “socialism always fails” many Americans will no doubt be pondering with these very questions.
In a post-Cold War world where economic systems are multi-faceted, the realities are not always very obvious. Regardless, the actual truth reveals that social control over the centers of economic power is far preferable to an economy that functions simply to make more money for those who are already rich.
Originally published in New Eastern Outlook