North Korea in the 1950s: Capital accumulation and power struggles

Issue: 111

Han Kyu-han

Originally published in Ta Hamkke 56, May 2005, translation by Owen Miller

In February 1956 the Communist Party of the Soviet Union held its 20th congress at which Krushchev openly criticised Stalin.

This incident brought a great wave of change to Communist Parties in many different countries. As Chris Harman has pointed out, “every Communist Party in the world experienced great difficulty maintaining internal discipline.”

The commotion within the ruling class of the Soviet Bloc even gave rise to popular uprisings in Hungary and Poland.

North Korea was no different. Krushchev’s criticism of Stalin’s cult of personality could also be applied to Kim Il-sung. In fact, the opposition faction within the North Korean Workers’ Party, centred around the old Yenan and Soviet factions,1 used the opportunity of the all-members meeting of the party’s central committee in August 1956 to mount a challenge to Kim Il-sung.

North Korea’s ‘August Incident’ of 1956 was not a simple power struggle. The August meeting actually revealed the structural contradictions of the position that North Korea was in.

At the time, the North was experiencing a severe crisis of capital accumulation. In fact the country was suffering a double crisis because in addition to the contradictions that are characteristic of a strategy of high-speed heavy industrialisation, foreign aid was being curtailed.

The South similarly experienced an accumulation crisis as a result of the reduction of aid from the US, and this led to the collapse of Syngman Rhee’s one-party dictatorship, triggering the series of events that led subsequently to the dictatorship of Park Chung-hee. 2

North Korea’s rapid heavy industrialisation strategy was based on the sacrifices of the majority of workers and farmers. The origin of this accumulation strategy was the pressure of military competition with the South.

Completing the transition from a “machinery importing nation to a machinery producing nation” was seen as the “most important condition for guaranteeing the independence of the state.”

This was something that Kim Il-sung demanded. In a 1958 speech he said, “We can achieve in the course of two five-year plans what the other Socialist nations have achieved in three five-year plans.”

Superficially at least, North Korea’s economy developed rapidly during this period. During the ten years after the Korean War the country achieved an average of nearly 15 percent annual growth.

During the period between 1954 and 1960, investment in heavy industry occupied 80 percent of all industrial investment in the DPRK.

The characteristic ways in which capitalism functions – that is the competitive accumulation of capital – also operated in the DPRK. It is for this reason that the North Korean working class were subjected to superexploitation.

North Korea continued to maintain the harsh labour regulations it had introduced during the Korean War, even after the war had ended. This meant that even though the war was over the ‘wartime labour system’ continued. Workers who left their workplaces voluntarily were subject to strong punishments.

Workers’ control over production was blocked from the beginning and the ‘one-man management system’ was introduced. The government also introduced the ‘contract system’ to encourage competition among the workers.

At the same time, the government boasted that workers’ nominal wages had risen rapidly. Workers’ income in 1956 had risen 158 percent as compared to 1953.

But this rise was purely nominal and was meaningless in reality. The reason for this was that the production of consumer goods, which had been sacrificed to the ‘heavy industry first’ line, had been massively curtailed. There were actually no goods to buy with one’s wages. As Kim Yǒn-ch’ǒl has noted, “It was planned so that the quantity of goods being distributed in many of the workers’ districts could not absorb even half of 50 percent of the wages of the [industrial] workers and office employees at the local enterprises.”

In terms of agriculture, this was the period when forced collectivisation was carried out. Immediately after the end of the Korean War, in August 1953, a policy of creating agricultural cooperatives was decided upon. The collectivisation of agriculture would make it far easier to secure both the raw materials and labour that were needed for industrial expansion.

Although in the beginning private ownership rights were formally recognised and when farmers withdrew or were dismissed from the cooperatives, they could receive back their land that had been absorbed into the co-op, when the problem of ownership rights was discussed at the 1959 National Conference of Agricultural Cooperatives, the principle of private land ownership was abolished.

The process of collectivisation gave rise to resistance from the peasants. In the early period of collectivisation the rate of subscription to the co-ops was very low. The peasants slaughtered their main means of production: their draught animals. They thought, “well, if it’s not going to be mine anyway it’s better to eat it.” In Hwanghae province the farmers left the cooperative en masse and their actions took on the form of an uprising.

The result of this was that even up until the mid-1950s grain production did not recover to the level of the wartime year of 1953.

Although North Korea has long called the South a US colony in its propaganda, after the war Soviet aid made up the largest part of the North Korean economy. Aid money came close to making up 30 percent of North Korean state finances, almost the same percentage as US aid in South Korea. The US provided the basis and direction for the South’s economy through aid, and the Soviets of course did the same thing north of the DMZ. “Let’s turn to the Soviet Union and learn from her” became one of the slogans of the time.

But in 1956 the Soviet aid money began to be reduced. To make matters worse, the fragile North Korean economy encountered a severe crisis.

The so-called ‘factional affair’ at the all-members meeting of August 1956, occurred against this sort of background. Differences of opinion were expressed over the speed and direction of accumulation and conflict arose over the way in which workers and peasants should be controlled.

For example, vice premier Ch’oe Ch’ang-ik criticised Kim Il-sung, saying, “The heavy industry first policy is causing hardship to the people.” Chairman of the Workers’ Confederation, So Hwi argued that “the right of workers to strike” must be guaranteed and called for concessions to be given to the workers. This reflected the fact that despite the Korean War and the strengthened control over them, North Korean workers continued forms of resistance such as walking out of their workplaces and carrying out ‘go slow’ strikes.

However, the opposition faction failed. Kim Il-sung’s position within the party was solid. Already, during the Korean War, he had purged Pak Hon-yong and the rest of the South Korean Workers’ Party faction3 and replaced them with his own supporters.

Pak Yong-bin, who was a member of the Soviet faction, recalls the occasion: “When Yun Kong-hum made a speech criticising the problem of Kim Il-sung’s cult of personality, the public gallery erupted into shouts of “get off!” and “bastard!”

Among the opposition faction Yun Kong-hum, So Hwi and others, sensed the personal danger they were in and sought exile in China. Kim Il-sung stripped the rest of the opposition of their party membership and forced them out of their positions. China and the Soviet Union put pressure on him to reverse this decision and if they had needed to they might have tried to remove him.

However, they had no alternative to Kim Il-sung and on top of this the uprisings in Poland and Hungary were once again increasing the pressure on them to maintain their systems. The Soviets did not want the North Korean leadership, which was on the Northeast Asian frontline, directly confronting the Americans, to become unstable.

As soon as Kim Il-sung had overcome the political crisis of August and September 1956, he began a wholesale retaliation. The opposition faction was almost completely purged and the system of one-man dictatorship was created.

This political and economic crisis was one of the pressures that made Kim Il-sung emphasise North Korea’s independence from the Soviet Union and stress his new Juche ideology of self-reliance. The conflict between China and the Soviet Union, which began in earnest in 1957, also granted Kim Il-sung considerable autonomy.

The response to the reduction of Soviet aid could not fail to express itself in the emphasis on ‘salvation through our own efforts’ and the ‘will’. But with the limited supply of natural resources and the unstable economic situation, systems of control like the one-man management system and material initiatives like the ‘contract system’ prevented even the settling down of the economy.

The mass mobilisation movements that began in 1958, like the ‘Chollima Movement’, and the system of ‘on-the-spot guidance’ by the leader, reflected the contradictions that were besetting North Korea. The rapid economic development of this period harboured the seeds of today’s economic ruin.


1: The Yenan faction consisted of those Korean communists who had formerly been members of the Chinese Communist Party during the latter years of the Japanese colonial period (1910-1945), operating with Mao’s guerilla forces in northern China. The Soviet faction were Korean communists who had lived in the Soviet Union and often become ‘Sovietised’, taking Russian names and so on. Kim Il-sung himself was from a third faction: the Manchurian faction, which had carried out a guerilla war against the Japanese in Manchuria during the 1930s.

2: Syngman Rhee was overthrown in the April Revolution of 1960, but the weak democratic government that succeeded him was deposed in General Park Chung-hee’s coup of May 1961.

3: This was the fourth main faction of Korean communism centred around communists who had been active domestically during the years of Japanese colonial domination. As the US military government and subsequent pro-US regime of Syngman Rhee suppressed the left in the late 1940s many of them fled to the North where they ended up being purged as a threat to Kim Il-sung’s power.