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Source link: http://archive.mises.org/8709/north-korea-a-land-of-milk-and-honey/

North Korea: a Land of Milk and Honey

October 6, 2008 by

Bulgogi! Kimchi! Galbi! Kamsahamnida!

The competing vendors shouted at the top of their lungs as parents, children, seniors, monks, soldiers and foreigners meandered shoulder to shoulder throughout the packed grocery store.

No aisle is left unattended. On both ends stand young women in mini-skirts and gogo boots gleefully extolling the selling points on the product du jour.

Taste test? Don’t mind if I do, as I follow the other patrons in feasting on a buffet of mouth-watering beefs, porks and pastries.

If there is one generalization that is universal about Koreans, it’s that they are passionate. And today they are passionate about shopping.

And while the history of 20th century Korea is filled with schisms, stigmas and sorrows, the peninsula offers outsiders a chance to see the outcome of two passionate experiments: pure socialism versus relatively free-markets. FULL ARTICLE

{ 8 comments }

Book 'em Danno October 6, 2008 at 2:12 pm

“And because socialism cannot calculate, because central planners have no organic pricing mechanism to determine how to distribute the sickles and scythes, millions of its residents still live at the brink of starvation.”

Come now, Tim. Didn’t Bryan Caplan say that it is overwhelmingly an incentive problem rather than one of calculation? (even though Caplan granted the impossibility of econ calculation under socialism)

Ball October 6, 2008 at 4:29 pm

Uh, yea, and Caplan is wrong. Isn’t a gun to the head incentive enough?

The reason why, for example, the Soviet Union didn’t collapse immediately is because:

1) They abandoned the moneyless economy after two years, after which the New Economy reforms were enacted.

2) They based their internal accounting on market prices literally gleaned from the Wall Street Journal. This is not unlike how a vertically integrated company calculates production, as explained in Man, Economy, and State.

Deflationnist October 6, 2008 at 5:28 pm

Reply to Ball,

In other words, socialism “worked” because it used money and copied Capitalism.

Krazy Kaju October 6, 2008 at 7:31 pm

The bigger reason why socialism worked was because managers created a black market to more efficiently allocate resources. Without those black markets, the USSR would have collapsed.

gene berman October 7, 2008 at 1:33 am

In comparing the two Koreas, it’s even more illustrative to note that, historically, North Korea was the dominant
industrial, commercial, educational, and cultural portion of Korea, while the southern portion was almost exclusively rural and agrarian. The difference between the two was so pronounced that Korean nationals who’d fought in the Japanese armed forces and become our POWs overwhelmingly (9-1) chose
to be repatriated to the north. This was going on as late as the mid ’60s. Even Seoul is somewhat of an anomaly; though it was below the 38th parallel and therefore in South Korea, geographically, it’s simply the southermost the northern urban centers.

By and large, the north had all the economic resources—minerals, hydro-capable rivers, forests, and almost all of the educated classes of people–before the division. It is, perhaps, the most dramatic illustration of the plain and evident differences of the opposing economic systems of “planning” and “anarchy.”

Tim Swanson October 7, 2008 at 3:38 am

Gene, that is a really good point. I briefly discussed that in one of the footnotes (#10), but it really deserves many more articles:

One understated reason for why the North has been barely trudging along since 1994 is that it no longer receives subsidies from Russia — and China didn’t step in to bail them out, just like the Chinese did not bail out Cuba after the Soviets stopped footing the bill. The dilapidated state of the North infrastructure is also puzzling considering that prior to its independence in 1945, the Northern regions of Korea were heavily industrialized by the Japanese occupation into Manchuria.

As you said, not only did the South have very little industrial capabilities after independence but the vast majority of fighting during the civil war took place there — in fact Seoul changed hands three times and was pretty much gutted.

A book called “North Korea Through the Looking Glass” discusses the aspect regarding assistance from the USSR. That despite decades of free loans and subsidies, the North would eventually be unable to pay for the millions of gallons of oil needed to run the Soviet-built factories. And similarly, around the same time (’89-’91) the North defaulted on the loans from Japan. Lots of free stuff and support, yet their zealous belief in central planning doomed them.

Michael Smith October 7, 2008 at 7:02 am

Another reason why socialism appeared to work for a time in the Soviet Union was the vast amount of material aid provided by the west, especially by the U.S. See, for details, the illuminating book, “East – West = Zero” by Werner Keller.

Rob Heusdens August 10, 2010 at 8:05 pm

Yeah, and this brilliant and genuine “free market” system, has lead us into a major collapse of the entire world economy, unless of course massive state interventions and bailouts could prevent that from happening. In other words, without socialist interventions, without central government bailing out the financial institutions that ran into gigantic depths, there would not be any more capitalist economy to speak off.

Technically speaking, the US is a dead chicken, with an astronomical debth (over 13 trillion dollars), it can never ever pay back, the depth wil likely only grow. The US economy is on a dead end, we know it is. Only through world scale interventions, effectively stealing Iraqi oil, and blowing up it’s military force and intimidating and threatening other countries (DPRK, Iran, Venezueala), can it keep itself somewhat alive, although the economy is irrevocably in a deep crisis, it can never get itself out again, with the only escape route open to open dictatorship and/or global warfare. We know it’s a dead end; oil economy is coming to an end sooner as expected, and most of the capitalist countries would not be able to survive it.

As fas as that is considered, I think DPRK is alive and well, has no foreign debts. Yes, it receives foreign aid.

But don’t forget that unless China keeps the money infuse in place, the US economy would already be bankrupt. It is only a matter of time, as other consumer markets (for example domestic markets) emerge that can replace the US market, and the need to sustain the US any longer will be over.

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