The New Absolutism: Communism's Extractive Systems in North Korea and Uzbekistan

Key Insight

The 'new absolutism' of twentieth-century communism, as exemplified by North Korea and Uzbekistan, generated brutal, repressive, and highly extractive institutions, often leading to economic collapse and widespread human suffering. North Korea's 2009 currency reform forcibly wiped out a significant portion of citizens' private wealth by devaluing the won by 99 percent and limiting conversions to 100000 won (about $40). This policy aimed to punish black market users and prevent individuals from becoming wealthy enough to threaten the regime. While the state abhorred private markets, the elite, like Kim Jong-Il, enjoyed luxury goods (e.g., $800000 annual cognac budget) procured through foreign markets, demonstrating a hypocrisy inherent in such systems.

Similarly, Uzbekistan, under President Islam Karimov, maintained an atrociously extractive system, particularly in its cotton industry, which accounts for 45 percent of exports. Farmers were forced to allocate 35 percent of their land to cotton and were paid a mere $0.03 per kilo for their daily quotas of 20 to 60 kilos, while the world price was around $1.40 per kilo. The government's solution to labor shortages was compulsory child labor: 2.7 million schoolchildren, primarily from rural areas, were emptied from schools for two months annually, picking approximately 75 percent of the cotton harvest, often sleeping in sheds without basic facilities.

Karimov, who rose through the Soviet Communist Party, reinvented himself as a nationalist, consolidating power with security forces after Uzbekistan's 1991 independence. He suppressed political opposition, banned free media and NGOs, and orchestrated fraudulent elections, winning 91.2 percent in 2000 and 88 percent in 2007. The regime's repression peaked in 2005 with the murder of possibly 750 or more demonstrators in Andijon. The Karimov family, particularly his daughter Gulnora, amassed immense wealth through crony capitalism, exemplified by the expropriation of Interspan's successful tea business. These examples illustrate how communist-derived extractive political institutions concentrate power, supporting economic institutions designed to extract resources for the elite, leading to poverty despite high literacy rates.