Just read a fascinating report on North Korea’s outsourcing industry, written by GPI Consultancy Dutch IT sourcing consulting firm out of Rotterdam, (big h/t to China Rises: Notes From the Middle Kingdom). A few months ago, I sat next to

I think you misunderstood my post more generally as being uncritical. I don’t think you will find that I am uncritical of either of North Korea or the South Korean government’s policy toward North Korea. You should be able to see from the post above and others I have written about Kaesong in the past that I am not a cheerleader for exploiting Korean workers in the name of peace and unification. The fact that I accept what Mr Song has said about how wages are paid to be true (barring someone providing me with evidence to the contrary) does not mean that I think this is a particularly good thing - these workers are still being exploited just as Vietnamese garment workers are. What interests me is what this revelation shows us about how the political economy of North Korea is changing.

Would you be this uncritical about taking, say, the Chosun Ilbo’s interview with a chaebol executive saying Korean capitalists treat their garment workers in Vietnam according to international standards? Didn’t think so.

Weirdly, this mixed payment system is very similar to the one used under the Choson dynasty to pay wage workers and merchants for the goods and services they provided. It can be highly advantageous to the recipient in an economy where currency is either very unstable or not in widespread use.

Something I didn’t put into the main post but I’ve been thinking about is the question of who is actually doing most of the exploiting here. I have no doubt that the North Korean state is grabbing a chunk of the surplus value created by the Kaesong workers, either for the purpose of maintaining certain welfare systems (as they claim) or for their own devious ends (creating a doomsday device to destroy planet earth as we know it). But just how much of the value being created is taken by the South Korean companies? I would hazard a guess and say that it is considerably more than the North Korean state is taking.

Even if the numbers stated here are correct (a big if), we know that the regime keeps all the dollars gained by the workers and pays them a fraction of that value in overinflated NK won. Whether they get that in goods or cash does no change the fact that they are getting nowhere near what the South Korean companies are paying for their services.

Of course, we could despense with the guessing game if the two sides would just agree to a guest worker program and let North Koreans take the 3D jobs in South Korea that are currently going to SE Asians.