North Korea- A Totalitarian State

Totalitarianism is a concept in which the government has complete authority over the society and
has active control over all aspects of its citizen’s life. North Korea is definitely a totalitarian state
as its citizens have no freedom of expression or freedom of choice.
North Korea is a strictly controlled autocratic state in which the regime dominates all business
activities. In recent years, however, the government has had to tolerate the emergence of limited
markets and informal entrepreneurship to stave off economic collapse. The country’s monetary
regime is completely controlled, leading to price distortions.
North Korea’s economic freedom score is 5.9, making it the least free of the 180 economies
measured in the 2019 Index.
It is one of the world’s most centrally commanded and least open economies, North Korea’s
despotic military regime has tolerated modest development of markets and limited private
entrepreneurship in order to boost government revenue. While certain industries are permitted to
sell some of their output in the marketplace and seek private investment.
Almost all property belongs to the state. Government control extends even to chattel property.
The ruling Workers’ Party, the Korean People’s Army, and members of the cabinet run all
companies earning foreign exchange.
The government commands almost every part of the economy and directs all significant
economic activity. The military runs its own extensive underground economy, taking the bulk of
scarce resources. No effective fiscal policy is in place. The state sets production levels for most
products, and state-owned industries account for nearly all GDP.
Trade and investment flows are controlled by the government and negatively affected by
multilateral economic sanctions. The regime may be attempting to start modest economic
opening by encouraging limited foreign direct investment, but the dominant influence of the
military establishment makes any meaningful near-term change unlikely. Access to financing is
very limited and constrained by the repressive economic system.

Hints of change
But, even in a totalitarian state, there are degrees of control. In today’s North Korea, small-scale
private business is being tolerated by the government – and being embraced by a new generation
of North Koreans.

 North Korea is developing a private business sector.

 The regime is now allowing small-scale markets and even a nascent financial system.

 Pyongyang has banks. Citizens can even earn interest by placing savings there – although
our guides explained that most citizens still keep their cash in their own homes.
  Even the controlled atmosphere of North Korea’s escorted tours for Westerners shows the
country’s citizens are learning about sales. Pyongyang has any number of identical,
government-run souvenir shops, where tour guides will spruik products to visitors.

Helped by trade with China, North Korea’s (loosely) estimated GDP is recovering from its
disastrous 1990s plunge. According to South Korea’s central bank, Bank of Korea, the past five
years have seen consistent if still sluggish growth of around 1 per cent a year. North Korea has
been a controlled society for almost 70 years, but in the modern world, boundaries grow ever
harder to keep.