One Night in Pyongyang, around 9 p.m., my North Korean minder, S., and I pulled into the empty parking lot of the Chongryu Restaurant on the quiet banks of the Potong River. It was the spring of 2017, and, though I didn’t know it at the time, I was among the last Americans to visit North Korea before a travel ban took effect. It was my fifth trip in five years to the country, whose supposed impenetrability to American visitors had spurred me to visit as often as possible. On my first three visits, I traveled as an ordinary tourist, which was surprisingly easy to do (albeit in a highly monitored, regimented fashion); then, in the summer of 2016, I enrolled in a monthlong immersive Korean-language program at Kim Hyong-jik University of Education. Now I was back in the country to take an additional two weeks of language classes by day while covertly making further notes for a book in my hotel room at night.
This was the second time that S., who was 26, had been assigned to look after me in less than a year; she had become something like a friend. Over the course of my visits, I learned that young couples often met for night strolls along this stretch of the Potong. “Are we here for a date?” I joked.
S. laughed. “Yeah, sure,” she said. “We have a date tonight with Comrade K.!”
K. — I refer to several key people in this article by their first initials to protect them and their relatives from reprisal — was the director of the state-owned travel company that arranged my visit. He had offered to take me out for a drink at his favorite gastro pub, in east Pyongyang near the Juche Tower, a 560-foot candle with a cherry-red flame kept constantly lit throughout the night. (The tower was built in 1982 on the orders of Kim Jong-il as a 70th-birthday present to his father, the North Korean founding leader Kim Il-sung.)
In Pyongyang, a city that requires drivers to hold a special permit to be out past 11, 9 p.m. felt decidedly late. We climbed out of the car to take in the late spring nocturne. In addition to S. and I, there was our required second guide, P., as well as our driver. Usually, the tour guides are tasked with looking after large groups, but with all the bad publicity — North Korea’s relations with the West were at their worst, with missile launches and the imprisonment of an American college student named Otto Warmbier (who would later die after falling into a coma during his 17 months in North Korean custody) dominating the news cycle — tourism numbers, already low, had been plummeting. For the next two weeks, I would be the sole foreigner in their charge.
Across the otherwise vacant parking lot, about a dozen figures were shuttling between the back of an open truck and the river, removing what appeared to be solar panels and carrying them to float upon the placid waters. I had begun to notice solar panels on apartment balconies throughout the city — a convenient solution to the country’s electricity shortages for those who can afford it — and knew that placing them in water was a way to cool them off. But owing to the great quantity here, it almost seemed as if the panels were being set afloat as a form of display, as if they were merchandise for sale. As I wondered what exactly it was I was seeing, P. shrieked out to her fellow Koreans: “Jangmadang! Jangmadang!”
“Jangmadang! Jangmadang!” I echoed playfully. My minders ceased their laughter and looked down at the ground. They had forgotten for a moment that I was a language student; jangmadang was one word I was not supposed to know.
Usually translated as “market grounds,” jangmadang is the word for the unofficial markets that emerged during the Arduous March, which is the regime’s official name for the famine that blighted the country throughout the middle and late 1990s. These were illegal markets, to begin with, that sprang up as a result of the collapse of the public food-distribution system that all North Koreans had previously relied on for their monthly rations. During the later years of Kim Jong-il’s reign, the government began to grudgingly accept their existence and took steps toward regulating them: charging rent for stalls, controlling prices and monitoring what goods were for sale. Under Kim Jong-un, the restrictions against this form of private enterprise have been all but lifted, and jangmadang has transcended the cramped market stalls of its birth to refer to the vast array of legal, illegal and semi-legal markets that exist for all sorts of goods in North Korea. Among recent defectors and expat residents, it is said that now, as long as you have money, you can buy anything you want in North Korea. But since the government still hasn’t figured out a way of publicly reconciling with this nascent form of capitalism, it was considered taboo to discuss the jangmadang with foreigners.
Which is a shame, because the rise of the jangmadang is arguably the most significant milestone in North Korea’s recent history. It lies at the root of all the country’s economic development over the past few years. They might not be permitted to speak about it with outsiders, but North Koreans are no longer shy about flaunting their consumption habits, as anyone who has witnessed the displays on the streets of Pyongyang in recent years can attest. Montblanc watches, Ray-Ban sunglasses and Burberry couture hardly fit the stereotype of a half-starved populace completely cut off from the outside world. And while extreme poverty continues to afflict large swaths of the population, North Korean society no longer conforms to a simplistic picture of haves and have-nots, but is home to an increasingly diverse and complex array of socioeconomic classes. While the presence of a rising upper middle class is most apparent in Pyongyang, a nouveau riche strata has been observed in other parts of the country, such as the port city of Chongjin and in many places along the border with China, where licit and illicit trade continues to flourish.
Stewing in awkward silence with my guides, I struggled to reignite the conversation but couldn’t come up with anything witty on the topic of solar panels. I was relieved from this lonely task by the appearance of a figure approaching the parking lot on foot, a 37-year-old man sporting a Dolce & Gabbana flannel shirt and a pair of neon Nikes. Were it not for the red pin bearing the smiling faces of Kims Il-sung and Jong-il installed dutifully over the heart — a pin that all North Korean adults are required to wear in public — he could, I realized, easily be mistaken for one of his compatriots from the South.
“Comrade K. is here,” S. announced with a sigh. “Finally.”
The Arduous March had many causes, but probably the main one was the collapse of the Soviet Union in 1991. During the decades following the Korean War, the Soviets provided North Korea with regime-sustaining aid, such as selling oil at artificially deflated prices in exchange for shoddily made North Korean goods. It made no sense politically, let alone commercially, for the Russian Federation to continue this form of aid-as-trade with North Korea. Between 1990 and 1994, annual trade between North Korea and Russia plummeted to $140 million from $2.56 billion, according to one estimate. In the following years, with flooding exacerbating the crisis, North Korea would experience a devastating famine that killed anywhere from 600,000 to more than a million people.
With food scarce and the government unable to provide through its rationing program, North Koreans began turning away from the official, centrally planned economy. Markets sprang up all over the country, selling everything from food, cigarettes and household goods to illegal foreign media. According to Daniel Tudor and James Pearson’s book “North Korea Confidential,” the stalls were generally operated by middle-aged married women who were compelled to pay a “stall tax” to their local party cadre, “making the state complicit in marketization” — uncomfortably so. In 2009, under Kim Jong-il, the government implemented a disastrous currency reform, tried to close down the markets and forbade market activity within the country. This resulted in wide public discontent, and a high-ranking Workers’ Party official was executed as a scapegoat for the government’s decision. Still, the regime had failed in its promise to feed its citizens, and the gray markets of the jangmadang had, to some extent, filled in the gaps.
Today there are more than 400 sanctioned markets in the country, representing about 600,000 vendors. After the currency reform wiped out the wealth and savings of a number of merchants, the preferred currencies in business became the United States dollar and the Chinese renminbi. According to one survey, some 90 percent of all household expenditures are said to take place in these markets; they are so pervasive that people speak of a Jangmadang Generation that grew up knowing nothing else. Under Kim Jong-un, market activities have not only been tolerated; they have slowly crept into the official sector, as I witnessed firsthand in my visits to the country.
Among close observers, there is a growing consensus that the economy has been undergoing a quiet revolution. The South Korean economist Byung-Yeon Kim is among the first to offer hard data about what this transformation looks like, in his 2017 book, “Unveiling the North Korean Economy.” The average worker in North Korea’s informal economy, Kim reports, earns 80 times more than at an official job. Approximately 23 percent of employees at state-run enterprises are simultaneously involved with some unofficial form of business. At least 58 percent of all companies in North Korea employ so-called 8/3 workers, who pay a fee in order to be absent from work and engage in unofficial market activities; these funds are an important form of revenue for these companies, helping them to continue paying the salaries of their regular employees. This level of systemic corruption gets expensive: From 1996 to 2007, spending on bribes is estimated to have made up between 5.2 and 10.7 percent of total household expenditures. In spite of this endemic corruption, the North Korean economy was growing, by some estimates, at more than 4 percent annually before the latest round of sanctions went into effect in the fall of 2017. “The socialist economic system of North Korea has virtually collapsed,” Byung-Yeon Kim wrote.
But this is a shift that has been hard to reconcile with the state’s self-image as a socialist paradise, which it continues to project to the outside world and its own people. Peter Ward, a Seoul National University master’s graduate whose research focuses on the North Korean economy, spent nearly a month traveling in North Korea last summer, perusing official government publications and academic journals. In the course of his research, he discovered that the state had issued new rules, lifting restrictions on the utilization of “order contracts,” so long as it agrees with the state’s objectives. Order contracts, Ward explained on a recent podcast, involve state-owned enterprises setting their own prices in consultation with customers. They are, in other words, market forces, but by another name. This change was not confined to any one sector, he explained; rather, supply-and-demand economics can be employed by management and staff members of state-owned enterprises in nearly every sector of the economy.
At birth, every North Korean citizen is assigned a classification that is kept secret from them. This system is called songbun, and within it, there are three main categories — loyal, wavering and hostile — and 51 subcategories that serve as qualifiers. The assignation of songbun is meant to be the chief factor in determining the extent of a citizen’s lifelong opportunity. It is familial, based on what your parents, grandparents or great-grandparents were up to during the years of the country’s foundation — or even earlier.
Those whose predecessors fought alongside Kim Il-sung in the guerrilla struggles against the Japanese occupiers of Korea before its 1945 liberation are endowed with the highest level of songbun; many of their descendants today occupy the highest echelons in the government. Those branded “hostile” might be the descendants of former landowners or of people who collaborated with the Japanese colonialists, those with relatives in South Korea or Christians; they are largely consigned to the mountainous, inhospitable regions of the country, forbidden to enter Pyongyang or other major cities and forced to eke out a meager living as farmers or manual toilers, with almost zero opportunity for further advancement.
Even if most North Koreans don’t explicitly know what their songbun categorization is, everyone can generally intuit it, based on where they live, what their ancestors were known to have done, the degree of opportunities open to them and the level of discrimination to which they are regularly subjected from school age onward. Songbun, while a clear component of the police-state apparatus, has historically been tethered to the North’s traditional centrally planned economy. And there is evidence that as North Korea goes further in the direction of the free market, this political class system is eroding.
Before my last trip to North Korea in 2017, I spent three months in Seoul interviewing North Korean defectors. One of them, Bomhee Kim, now 30, left the country in 2006. Throughout her childhood, which coincided with the famine years, she was able to observe firsthand how the songbun system began to unravel as the country did. It all began, she told me, with the death of Kim Il-sung on July 8, 1994 — as though, with the death of the Great Leader, a catastrophe of such cosmological proportions was inevitable. To Bomhee, a child of 5 at the time, this made perfect sense. People were taken to cry in mass displays of mourning before statues of the leader throughout the country. As if the gods were responding in kind, the skies opened and poured torrential rains across the land, ruining the year’s harvest.
By 1997, the end of the three-year state-sanctioned mourning period for the eldest Kim, the tone of the propaganda under his son and successor, Kim Jong-il, had shifted to a message of struggle and endurance. In North Korea, salaried wages have always been so low as to be almost meaningless; all essential goods, including food, were meant to be provided by the state’s public rationing system. With Russia’s withdrawal of support, the rations quickly dried up. “My parents told me one day we would no longer be receiving food from the government,” Bomhee recalls. “We would have to struggle on our own from now on.”
Bomhee remembers growing accustomed to the sight of corpses scattered along the ground in her hometown and the mountains, where people would go to forage for anything they could find to eat, including rats and tree bark. When the public distribution system broke down, the starving populace had no choice but to violate the constitution and go into business for themselves.
With access to South Korea blocked by the heavily mined Demilitarized Zone, countless northerners fled over the border to China. The border also became a gateway to survival for those who stayed, with traders regularly crossing back and forth with food, goods and cash, as well as more illicit goods such as DVDs, effectively exposing North Koreans to the wider, wealthier world. Bomhee’s family lived close to a gold mine, and the country was corrupt enough by this point that if you knew the right people, you could buy directly from the miners. Her parents got unrefined gold at black-market rates, refined it at home, then sold the pure gold to Chinese investors over the border at the official rate, yielding a profit. Her father eventually started paying his boss a bribe rather than show up for work — with the economy broken, all industry had ground to a halt, so there wasn’t much to do anyway.
Bomhee’s mother, meanwhile, began selling homemade food in the jangmadang. Video footage smuggled out of the North reveals these early markets as primitive gatherings on the muddy outskirts of large cities or else down discreet alleyways, merchants squatting or standing above their wares spread over tarps on the ground or gathered in homely sacks that could be readily snatched up should an official arrive. Kotjebi, homeless children whose parents had either died or abandoned them, self-organized into Dickensian gangs. They would stalk the market grounds, pickpocketing choice wares from shoppers’ knapsacks and distracting vendors while their comrades stole food, and they were often severely beaten or even killed in battles with warring gangs. Other lone children, some as young as toddlers, could be seen picking kernels of undigested corn out of piles of animal excrement to eat on the spot. When she was 11, Bomhee would ride her bike after school to a wholesale market and buy 100 pieces of candy for 1,000 won (around 12 cents, according to today’s unofficial but universally employed exchange rate), then join her mother in the jangmadang in the deep recesses of the countryside, where she would sell the candy and earn a 10 percent profit.
North Korean socialism would never recover from this intrusion of market-based economics. While songbun has never gone away — a severely bad rating is still a huge hurdle to socioeconomic advancement — it is now becoming possible to work out from under it. Another young defector I spoke with, who asked not to be identified, was able to buy a permit required to stay in Pyongyang — certainly not thanks to her parents’ songbun, which was good but not great, but to their money and business connections. She grew up in a city on the Chinese border. Throughout the 2000s, when the border was much more porous than it is today, the markets there were thriving. The defector, who plays piano, dreamed of studying music in the capital. While her mother was doing very well in the markets, she couldn’t quite afford the $10,000 bribe that would place her daughter in the country’s top music conservatory. Instead, she negotiated a second-best deal directly with one of the professors, who, rather than show up for work, had begun teaching the children of elites privately. For a monthly boarding-and-tuition fee, she could live in the professor’s spare room and study piano in Pyongyang.
According to a survey conducted by Byung-Yeon Kim among recent defectors, the average monthly salary for a state employee is a little under 2,200 North Korean won, around 26 cents; people working in the jangmadang, on the other hand, earned on average 172,750 won, about $21. (To help put those figures in perspective, the current price in Pyongyang for a kilo of rice is 4,200 won, or 51 cents.) And while it has traditionally been the case that defectors in the South send money home to their poor relatives still living in North Korea — a situation that mirrors that of Cuban émigrés living in the United States — I have heard from several defectors of a new phenomenon in recent years: wealthy North Koreans sending thousands of dollars each month to their defector children studying in the South. These people belong to the ranks of the upper-middle and upper classes, who aren’t merely selling goods in the jangmadang but conducting trade at globally competitive prices in industries like textiles and seafood.
An individual employed in a managerial position at a state-owned company can, these days, engage in practically any profit-making endeavor he or she wants. These activities are “approved” by an official in one of the government ministries, essentially a business partner who takes kickbacks and who in turn pays kickbacks to one of his superiors, in a line that extends all the way up to the ruling family and their associates. Some journalists covering North Korea have compared the regime to a mafia protection racket.
As our car crossed the bridge across the wide Taedong River into east Pyongyang, we stopped at a red light in front of a long building with a swerving rooftop. “This is the Ryugyong Health Complex, right?” I asked Comrade K. in the front seat.
“Yes, yes,” he nodded.
“But what about the one across the street?” I pointed to a newer building with a shiny blue-mirrored-window facade. “Is that also the Ryugyong? Or does it have a different name?”
K. turned around to face me. “You’ve been there?” he asked incredulously. It is not a normal stop on the tours his company operates. In fact, he wasn’t aware that foreigners were allowed to visit.
Indeed I had been there, on an earlier visit arranged by one of Comrade K.’s competitors. The amenities of the new health club were impressive. On the ground floor, a shop sold luxury goods: tailored suits, silk ties, fine leather wallets, glittering Rolex watches. A snack bar vended an array of imported soft drinks, including a range of Coca-Cola products with Vietnamese packaging. Contrary to the notion spread by some commentators that such sites are merely stage sets to impress foreign visitors, the two dozen customers in the men’s locker room that day appeared genuinely startled by the sudden appearance of me and the other male foreigner in my group who chose to partake of the facilities, which included a traditional Korean jjimjilbang, or sauna, far more luxurious than any I had chanced to visit in Seoul, and an indoor swimming pool replete with artificial waterfall.
K. nodded pensively. “That is … an extension of the Ryugyong Health Complex.” He chose his words carefully. “But the main building here with the sloping roof and indoor skating rink … have you been there, as well? That one is for ordinary people.”
I had begun to hear this term “ordinary people” with increasing frequency on my last two visits. Usually deployed with a twinge of derogation, it clearly connoted the underclass: the working poor, farmers and laborers, those not fortunate enough to be employed in an arena that would otherwise be considered gainful and prestigious, that might allow them entry into a place like the one across the street; people lacking the savvy and connections that might help them make it big in the gray-market world of the jangmadang or the managerial gentry of the state-owned enterprises.
We pulled into a parking lot. A staircase between a shop selling imported prescription medicines and another offering a mishmash of clothing, furniture and household goods led up to our destination, Comrade K.’s favorite gastro pub, Taedonggang Beer Bar. It’s all polished wood, brass and chrome fixtures, tastefully dim lighting, bartenders in tuxedos. Were it not for the concert by Moranbong Band being broadcast on the flat-screen television in lieu of a ballgame, I might have imagined myself to be in an upmarket sports bar somewhere in Chicago or Boston.
The reasonably robust crowd consisted of North Korean yuppies, their ties and Mao collars loosened after a long day at work. There is a local name for these people: the donju, or money masters. These are certainly not “ordinary” people, though they represent an increasingly sizable segment of the Pyongyang populace, on a tier just below the elites: the nouveau riche. They are not likely to be manning market stalls but collecting rent from them, as well as engaging in other jangmadang economic activity while nominally employed in the official sector: from overseeing the logistics of transporting goods smuggled in from China to running shops and businesses through which such goods might be distributed at a profit.
My minders and I commandeered a table while Comrade K. went to the bar to order beers and a kimchi pancake. Though still nominally a tour guide, S. was recently promoted to a managerial position. I asked her what she did all day when there were no tours to lead, which, these days, was pretty much always.
S. smiled coyly and said: “Oh, sit around, figure out new ways to kill time. Some of the guys in the office are becoming very skilled at World of Warcraft.”
Like most North Koreans I met, she didn’t want to go into too much detail about what she did at work all day, but I had patched together my own hazy picture based on what she let slip on my previous visit to the country, as well as her endlessly buzzing smartphone. S.’s family was far from ordinary. Her father, whom she described as a “businessman,” had spent many years living abroad at a North Korean Embassy (as had Comrade K.). Both she and her father made occasional trips abroad to China, Africa and Latin America (as did Comrade K.). Her mother, a chef, ran her own restaurant, specializing in European and American cuisines, and offered catering services.
At one point, S. asked me flat-out if I knew any businesspeople in Germany, where I currently live, of a riskier disposition who might not totally mind violating sanctions. I asked her what line of business she was interested in pursuing. Off the top of her head, she mentioned French cosmetics, I.T. services (her brother, she told me, was a genius programmer), human hair for wigs. “Anything, really,” she said.
After Kim Jong-un inherited the throne in 2011, the central policy of his government was the so-called byungjin line: the simultaneous development of both the economy and the military (i.e. nuclear weapons). This was in many ways a continuation of his father’s military-first policy, which not only increased the size of the country’s standing army but elevated its top brass to a position of unprecedented power. But in April of last year, at the Third Plenary Meeting of the Central Committee of the Workers’ Party, Kim made a startling announcement: The byungjin line was officially dead. The development of nuclear weapons was complete and had been “victorious.”
While outsiders continue to debate to what extent Kim intends to denuclearize, it’s notable that his spring announcement was followed by a reshuffling of military personnel at the top, implying a certain discord within the ranks around Kim’s decision, as well as a general downgrading of the military apparatus. Kim went on to declare that the sole focus, moving forward, would be the development of the economy, while engaging in a diplomatic process to maintain peace and stability on the Korean Peninsula. Besides his brief meeting in Singapore with Donald Trump, Kim has to date met three times for lengthy meetings with the South Korean president, Moon Jae-in. Moon has stated, repeatedly, that he believes Kim’s intentions to be sincere.
It is notoriously difficult to know what the regime wants, but between the economic liberalization and the shifts in foreign policy, the upbeat interpretation is that Kim wants to open up North Korea. Bruce Cumings, a professor at the University of Chicago who has written a number of books on modern Korean history, is particularly sunny on the matter. “For the first time in North Korean history, I’m starting to believe that Kim Jong-un is moving in the direction of what Deng Xiaoping did in 1979 in China,” he told me. “I think his aspiration is create a secure environment in which North Korea can open up to the world economy in the way that China and Vietnam have. That’s very much behind the diplomacy with South Korea that’s been going on since January and the diplomacy with the U.S. I think this has actually been the North Korean goal for the last 25 years, but they found it very difficult to articulate it: some way to bring the U.S. in to solve their strategic problem after the Soviet Union collapsed.” For the economy to grow meaningfully, the North Koreans would need the United States and the United Nations to lift economic sanctions, allowing the country to access goods and, crucially, capital. But for this very reason, many are deeply skeptical of Kim’s motives, with hawkish North Korea watchers believing the United States is being suckered into lifting sanctions in exchange for nothing.
The question remains whether the monolithic North Korean political system can survive the disruptive force that a market economy poses. The key to the equation might be the donju, who have made themselves an integral part of a complex financial system. Given the paucity of hard data released by North Korea, it is difficult to gauge just how many belong to this rising economic class. One thing is clear, however: Just as Kim has come to rely on the donju, the donju rely on the survival of Kim’s regime. The Russian-born North Korean-studies scholar Andrei Lankov believes that, unlike the upper-middle classes whose discontent with the system played such a pivotal role in the Soviet Union’s downfall, the donju fear that the collapse of the North Korean government and subsequent reunification of the Korean Peninsula would mean having to compete with the global economic behemoths of South Korea, leaving the Northerners with second-class status, or worse. Fully cognizant of the poverty that surrounds them — and the fact that many of them started off as “ordinary” people — it is in their interest that the current status quo be maintained. In this situation, the donju can hardly be thought of as a dissident class; they just want the state to lay off them so that they can get rich.
After a round of beers, Comrade K. apologized and said he had to cut the night short. He had to leave the next morning on a business trip to Nampo. Before we all got up to leave, he presented me with a gift: an expensive lighter emblazoned with the Chollima, a winged horse from Asian mythology renowned for its amazing speed of flight. It was invoked by Kim Il-sung in the Chollima Movement of the late 1950s. Similar to the Great Leap Forward in China and the Stakhanovite Movement in the Soviet Union, the Chollima Movement was a mass labor campaign meant to spur rapid economic advancement via “ideological incentives,” such as Chollima Rider titles bestowed on those who exceeded their quotas. Among other tactics, the government encouraged workers to drink less soup so as to take fewer bathroom breaks. The Chollima Movement was lauded as a historical milestone in North Korea, but some outside observers have claimed that it resulted in little more than an exhausted, undernourished populace and an array of shoddy, inferior products and that it was yet another example of the government’s legacy of economic ineptitude.
K. also handed me a green carton of cigarettes. “This is the new trend brand here in Pyongyang,” he said with a smile, then, lowering his voice: “The brand that the elites smoke.” I read the name of the company that makes them aloud: “Naegohyang.” My hometown.
At the cash register, I tried to pay, but Comrade K. waved his hand, removed a thick wad of $50 bills from the breast pocket of his Dolce & Gabbana shirt, peeled one off and slapped it down. The hostess’s fingers danced across her pocket calculator, and she returned his change in a combination of dollars and a few thousand worth of won notes featuring Kim Il-sung’s smiling face. With a scowl, Comrade K. pocketed the dollars, slid the won across the table back to the hostess and sauntered out to the parking lot, where our driver was waiting.