Author: Darcie Draudt
This policy paper was published in collaboration with The Wilson Center Hyundai Motor-Korea Foundation Center for Korean History and Public Policy and the National Committee on North Korea as a part of the "Understanding North Korea" roundtable series. This paper reflects the views of the author alone and not those of the National Committee on North Korea, the Wilson Center, or any other organizations.
Over the past thirty years, the rise of black and gray markets in North Korea have unmistakably transformed social relations between citizens and the government. What began as a survival strategy during a period of severe shortages of food and goods during the Great Famine in the 1990s has grown into a bona fide class of entrepreneurs who maintain the stability and development of the state economy. Commonly known as donju—“masters of money”—North Korea’s new entrepreneurs have risen in ranks from small-time smugglers under Kim Jong Il (r. 1994-2011) to elite financiers and suppliers of goods and services essential to Kim Jong Un’s economic development plans (r. 2011-present). The result has been an informal socioeconomic class system that intersects the historically rigid political caste system, leading to new lifestyles, the pursuit of social status, and incentives based on wealth rather than only political loyalty.
This paper explores two simultaneous trends in the state’s management of ersatz capitalists. Analysis simultaneously looks at three indicators vis-à-vis the role of donju: economic development patterns, ideological incorporation, and punishment. The paper draws from state media and secondary sources with information from author interviews with experts to explore how Kim Jong Un has responded to the growing entrepreneurial class in North Korea. First, I analyze the roots of donju market practices. I examine how this new unofficial and illegal class of moneyed elites simultaneously intersects, challenges, and upholds the official political classification system that undergirds the country. The paper then outlines how Kim Jong Un coopts middle-class wealth. Kim Jong Un’s Pyongyang-centered development draws on the ersatz capitalist class in North Korea. These changes have contributed to improved quality of life for the middle class and elite North Koreans while also driving income inequality in one of the world’s poorest countries.
About the Author
Dr. Darcie Draudt is a postdoctoral Fellow for the George Washington University Institute for Korean Studies at the Elliott School of International Affairs, a nonresident fellow at the Korea Economic Institute, and a nonresident fellow at the National Bureau of Asian Research. A political scientist and foreign policy analyst, Dr. Draudt publishes broadly on South and North Korean domestic politics, social issues, and foreign policy, inter-Korean relations, and US-Korea policy. She has previously held research positions at Yonsei University, Pacific Forum (formerly Pacific Forum CSIS), and the Council on Foreign Relations. Dr. Draudt was a 2019 Korea Foundation dissertation fieldwork fellow and was named one of the 2021 Next Generation Korea Peninsula Specialists by the National Committee on American Foreign Policy. She holds a PhD in political science from Johns Hopkins University, an MA in Korean Studies from Yonsei University, and an AB with Honors in Anthropology from Davidson College.
About the "Understanding North Korea Roundtable Series"
The Understanding North Korea roundtable series is a joint program of the National Committee on North Korea and the Wilson Center’s Hyundai Motor - Korean Foundation Center for Korean History and Public Policy. The roundtable series was established to enable emerging scholars of North Korea to share their research ideas with peers and experts in the field, and to publish their findings in a format accessible to a general audience.