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.Thelatter rate was set at NKW 6,000 per month while the average wage wasraised from NKW110 to NKW2,000 (approximately US$22).5 The Start of a Sort of Reform 141The price reforms clearly provided a real incentive for producers toincrease their output of rice.The price of rice was now comparable tointernational levels and the economy became somewhat monetised, thoughat various rates, as the widely varying percentage increases showed.Thoughmonetisation was presented as a way to rejuvenate the economy and improveliving conditions, the new system actually further impoverished citizens whilebenefiting the government in direct financial terms, for with the consumersubsidy gone Pyongyang now made a profit on all rice sold to the public,with the procurement price for farmers rising only 5,000 per cent while theretail price rose 55,000 per cent.The large cost to the state of the rice subsidydisappeared overnight.Meanwhile for consumers the price of a kilogram ofrice rose from NKW0.1 to NKW40, while a kilo of pork rose to NKW170,up from NKW8 before the reforms.Hence the subsidy to consumers waseffectively terminated, and the government now made a profit on all ricesold.It was not a magnanimous way to treat an undernourished population,but it certainly helped patch up the government s parlous finances, as vastamounts had been spent on rice subsidies.One immediate effect was a form of economic shock therapy: the de-valuing of the NKW against the US$ by between 6,500 and 7,000 per cent.Yet the adjustments to wages, to stimulate additional monetisation, werealso a revision of traditional political thinking.Historically wages werefixed (except for the elite) in the spirit of socialist levelling rather than as amotivational tool.Despite some small-scale attempts at introducing bonusesand a few other financial incentives to higher-level SOE managers, motiva-tion largely depended on political tactics such as inculcating the Chollimaconcept, Speed Battles and other mass motivational campaigns.By this pointin the DPRK s economic cycle it was clear that such forms of economiccompulsion were no longer sufficient and increasingly begrudged as peopleenthusiastically embraced their private plots, cultivating them intensively,rather than expending surplus energy on any new Chollima campaign.Yet,despite the fact that private plots are considerably more productive than thecollective farms the government has refused to sanction their expansion.SOEmanagers were urged to manage better, although the systemic reasons whythey don t have been left untackled.Jettisoning the RationThe partial ending of the PDS went hand in hand with the price reforms,meaning that for the first time many people were now dependent on aform of market economy for an increasing array of goods.North Korea 142 North Koreahad introduced its food rationing system in May 1952 in accordance withthe State Food Ration Rules.6 The government banned all grain sales andindividual commercial transactions in 1957 and thereafter all foodstuffsincluding meat and fish had been strictly rationed, the only alternativebeing the fledgling farmers markets (jangmadang) or home-grown produce.The rationing system was justified politically by Pyongyang as designedto guarantee equal distribution of grain, of which there were by the 1960salready signs of shortages, to ensure that minimum levels of need weresatisfied.This is still a problem, as rice, the preferred grain, has been in-creasingly substituted with less popular corn or barley.Of course, rationingof food also functioned as an instrument of social control and labour forcemobilisation through the promise of additional rations for achieving statemandated targets.Pyongyang has spoken of its view of socialist distributionin a period of new circumstances and conditions.Officially labour is the only yardstick in distributing products.7 While the rhetoric is socialist andegalitarian, since the inception of rationing a hierarchy had operated, withmilitary personnel and cadres entitled to larger rations.In part the PDS hassurvived and been accepted because citizens see sense in rationing given theirexperience of free markets.When goods sell for more than ten times thestate price it is perceived as speculation, which arouses public anger.Severeshortages invariably produce speculation; hence rationing is seen by many asan equitable way to share hardship and as a buffer against all-out scarcity.The PDS, like North Korea s collectivised agricultural system, was virtuallya copy of the Soviet blueprint, with prices traditionally acting as little morethan a form of accounting.Overseen by the Food Administration Ministry(FAM), it was designed to provide the basic needs of people, known as PDSdependants and numbering approximately 15.5 million, and then channeladditional amounts to select social groups cadres, military, the elite andpotentially to those sectors of society deemed either temporarily valuable ormost likely to challenge the party-state, such as industrial workers, miners,and so on.This ultimately led to the creation of twelve hierarchical ranks,later reduced during the famine to just three.Cadres and the militaryhierarchy were able to increase their rations through connections; farmerswere able to increase their share through private plots and better access tothe source of supply.Consequently these two groups are underrepresentedin the refugee flow as being the least likely to suffer from famine and alsothe least likely to leave, due to considerations of perceived political privilegeand informal land rights.The system functioned through the issuing of ration coupons distributedby cashiers at the workplace twice a month; most rural workers, approxi-mately 6.7 million people, received rations during harvest distribution in The Start of a Sort of Reform 143November and December.Each county and city district, and many largerinstitutions, established a central warehouse that delivered food to PDS dis-tribution centres at community (ri and dong) levels.For the rural populationthe allocation in the late 1980s was 219 kg per person, or 600 grams per personper day, considered roughly equivalent to the urban PDS ration.Produceleft over after the rural disbursement was sold to the government at setprices.According to the Consolidated Appeals Process document, know asCAP2004, issued by the UN Office for the Coordination of Humanitarian Af-fairs (OCHA) in 2003, children in some regions began receiving lower rationsand the monthly average ration was reduced to 250 380 grams per adult perday.The 2003 WFP/FAO Crop and Food Supply Assessment (CFSAM) notedthat following the reforms 50 per cent of PDS-dependent households havebeen unable to cover their daily calorie requirements, with a consequentlydeclining protein intake.8 The situation is even worse for rural dwellers out-side the PDS, where rations have reportedly fallen to even lower levels.The government attempted to anticipate the ways people might find tocircumvent the rationing system.For instance, the authorities required travel-lers to produce coupons (yanggwon) when they bought food.Yanggwon werethen exchanged for regular ration coupons to prevent repeat use.Rations,particularly of food, have fluctuated since the first shortages in the early1970s.In 1973 monthly rations were reduced by four days worth of portionsunder the stated government pretext of stockpiling wartime supplies
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