What Is Causing North Korea’s Food Crisis?

[Market Economy Op-Ed] The Limits of the Rationing System and the Denial of Individual Rights

The principles of a market economy are based on voluntary exchange ... and through this, our lives become more prosperous.

In 2017, a North Korean soldier who had fled from North Korea to South Korea shocked the entire world. This was because dozens of parasites poured out of his body when he was placed on the operating table to treat the gunshot wounds he sustained during his escape. Among them was even a large parasite measuring as much as 30 cm, horrifying the medical staff in charge. This disease, in which internal organs are filled with parasites, appears under conditions of severe malnutrition and unsanitary environments. The horrific condition of this soldier, which makes it impossible even to imagine how long he had suffered from food shortages, once again reminds us of the gravity of the situation. Only about 70 years ago, the people of North Korea shared the same history as we did—what on earth pushed them into the agony of food shortages?

North Korea is founded on a communist economic system. The most representative institution of this system is the rationing system. The rationing system is one in which agricultural products are priced at low state-set prices and distributed uniformly to residents. At first glance, it may sound like a system that conveniently provides cheap agricultural goods, but in reality it is not. From the farmers’ point of view, they are forced to sell the crops they worked so hard to grow not at a fair market price, but at bargain-basement prices set by the state. No matter how hard they farm, they cannot properly receive their fair share, so farmers no longer have much incentive to endure hardship in order to produce more crops. As agricultural output steadily declines while the same number of people must still be supplied, the amount available for distribution inevitably becomes far too small. Having been driven into food shortages in this way, North Korea has continuously pursued agricultural reform policies in an effort to increase agricultural production. However, to the very end, it fundamentally refused to recognize farmers’ right to dispose freely of the share they themselves had produced. As a result, all agricultural reform policies failed to break out of the vicious cycle of failure, and residents were left struggling under food shortages to this day.

So what was the problem? The greatest limitation of the rationing system was its lack of a basic understanding of human nature. Human beings are, so to speak, “self-interested animals,” and when they are placed in a situation where they cannot justly enjoy the fruits of what they produce, productivity drops sharply. Of course, people may possess the altruism to share the results they have rightfully obtained with neighbors in need. But if from the outset they do not even have the right to keep or share what they themselves have produced, they will no longer try to produce diligently. Nevertheless, countless socialist experiments were attempted in the hope that such human self-interest could be eradicated, and the result was complete failure, with tens of millions starving to death.

Conversely, what would happen if farmers were guaranteed a fair share in proportion to their efforts? They would now work hard in order to increase their share. After all, everyone wants an abundant and comfortable life. This is precisely what the private property system does. Simply put, the private property system guarantees that what is yours can be called your own. The share earned through one’s hard work returns wholly to oneself without being violated by others. Under this system, if someone wishes to use or possess another person’s share, that person must first obtain the owner’s consent, and this process is called voluntary exchange. Today, all the principles of the market economy are founded on this voluntary exchange, and the private property system is the basis of voluntary exchange.

In summary, the private property system is an efficient institution that channels innate human self-interest in a productive direction. Not only agricultural products, but also many necessities of life—such as houses, clothes, and water—are steadily produced by people whose private property is protected and are provided to us through voluntary exchange. Furthermore, when even intangible ideas, such as the music we listen to and smartphone designs, continue to be protected under the private property system, our society becomes more diverse and prosperous.

Siyeon Yoo, Intern, Center for Free Enterprise (CFE)

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Original title: 북한 식량난의 원인은 무엇일까?

Author: Si-yeon Yu

Date: 2020-04-17

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=21&idx=22580