What Kim Jong Un and Ronald Reagan Share in Common: Supply Side Economics Nuclear Style

Pyongyang has told us to look more closely at the resolution of April’s Central Committee plenum. Doing so sheds much light on Kim’s supply side economics.

North Korea just keeps pulling you in even amidst a desire to write of more lofty matters. Doubtless we have been observing the meandering and fast developing diplomatic drama between the United States and North Korea that has gripped the world over the past week and a half. Denuclearisation has been getting all the attention, but when things heated up last week Pyongyang made an interesting statement. North Korea demanded that we read carefully the resolution of the April plenum of the Central Committee of the Korean Workers’ Party.

That demand was made in the context of US promises to provide economic aid to North Korea, to help make North Korea a prosperous society. Should North Korea engage in complete, verifiable, and irreversible nuclear disarmament the road to prosperity and plenty would be paved through western aid. It was not just a sense of wounded pride that led North Korea to viscerally react to this. If one reads the April plenum’s resolution, in conjunction with various North Korean statements following it of an economic nature, one can see what might be at play here.

This requires us to drop our fixation with denuclearisation, as the April plenum was not just about denuclearisation indeed it was not even its central feature. North Korea seeks to concentrate on what the April plenum called “socialist economic development.”

I hypothesise that you get a hint of what that entails in statements that North Korea makes about this or that technological advance, not matter how relatively trivial. For example, today North Korea tells us the chemistry faculty of Kim Il-sung university has developed a dissolved oxygen analyser of great accuracy, in accord with the April plenum, and so “its development provides another scientific and technological guarantee for putting the production process on a modern, IT and scientific basis.”

One comes across statements like this, and they are well worth reading. One shouldn’t skip over them and just concentrate on the nuclear weapons stuff that is attracting the global media.

We have seen some analysts argue that North Korea might be interested in pursuing Chinese style economic reforms, especially those that are based on market reforms. This is consistent with a broader neoliberal reading of the failures of socialism, and the collapse of the Soviet Union. A “socialist” economy can only escape collapse through an embrace of the market. Although such a neoliberal reading is widely shared in the West, one might be reasonable in thinking that it isn’t shared in North Korea.

It may be the case that the North Koreans have a different interpretation as to why the Soviet Union went through an acute phase of economic stagnation. Perhaps it was not a failure to transition to a market based economy, or perhaps it was not a failure to add more market incentives to an otherwise centrally planned economy, that was at issue. Rather the Soviet Union failed to transition from an economy based on obsolete machine tools and a productive system based on uncompetitive and obsolete technology to an economy based on a high technology, high precision system of production made possible by advances in the sciences.

The April plenum, perhaps, means that North Korea wants to engage in economic development in a way that transforms the productive foundations of its economy precisely so that it does feel compelled to engage in broader market based reforms. Such reforms might create a bourgeois class that could get out of control, such reforms would be contrary to the spirit of Juche as deeper integration into global markets increases dependency, such reforms might be viewed as diluting the socialist character of society as they would be accompanied by wider economic inequalities as they have been in China.

More importantly, such a conception of economic development leaves in place the prevailing political and economic hierarchies of North Korean society.

Socialist economic development means developing a more science and high technology based system of production, not so much market reforms. North Korea is not interested in food aid, or oil, or other forms of low level economic aid. North Korea seeks access to the global scientific community and more modern tools of production that radically increase the productivity of the economy. Failure to recognise this, or an unwillingness to open up the vista to this on dual use grounds will see North Korea drag its feet on denuclearisation. Fuel oil might have been good enough back in Clinton’s day, but this conception of economic development means much, much more is at play now. North Korea will want to keep the option of having modern light water reactors, a uranium enrichment plant, a space programme and so on.

If we don’t play ball on any of these, North Korea will see that as a sign that we won’t support the resolution of the April plenum in which case they’ll block denuclearisation.

I think that North Korea’s nuclear and missile programme has shown the leadership what modern high technology computer controlled machine tools can do. This has led to a kind of cult of science that equates to the most pure brand of positivism we have, perhaps, ever seen.

There is some irony here because it has been argued by some that the transformation of the US productive base in the 1980s and 1990s was made possible by the Reagan strategic build up, that in fact that was one of its main functions. That has very little to do with neoliberal ideology and neoclassical economics, notice. It is a type of nuclear derived supply side economics, however. Should that be true, and should the series of hypotheses presented here also be true, that means Kim Jong Un and Ronald Reagan have much in common.

Making one’s state great again through a transformation of the productive base of the economy first begun in the strategic nuclear sector comes straight out of the Reagan playbook.