Economics Class Notes: Command vs. Market Economy

Introduction

• Comparison of real-life examples: North Korea (command economy) vs. South Korea (market economy).
• Focus on economic decisions and outcomes.

Historical Context

• Post-World War II: Emergence of superpowers (U.S. - capitalist; Soviet Union - communist).
• Division of Korea based on economic ideology (communist vs. capitalist).
• Korean War (1950-1953): Resulted in the division of Korea into North and South.

Key Statistics (as of 2016)

• Population:
  • North Korea: 24 million
  • South Korea: 49 million
• GDP:
  • North Korea: $40 billion
  • South Korea: $1.7 trillion
• Exports:
  • North Korea: $3.8 billion
  • South Korea: $572 billion
• Imports:
  • North Korea: $4.6 billion
  • South Korea: $525 billion
• Life Expectancy:
  • North Korea: Just under 70 years
  • South Korea: Just under 80 years
• Cell Phone Ownership:
  • North Korea: 1.7 million
  • South Korea: 54 million
• TV Stations:
  • North Korea: 4
  • South Korea: 57
• Internet Access:
  • North Korea: None
  • South Korea: 3.4 million

North Korea: Command Economy

• Closed society with limited information available to the outside world.
• Economic Decisions: Made entirely by the government.
• Living Conditions: Poor; lack of basic supplies (food, healthcare).
• Military Spending: High investment in military, including nuclear weapons, despite poor civilian conditions.
• People's Rights: Limited; presence of labor camps and public executions for dissent.
• Perception: Repressive society, but citizens may believe in the leadership's benevolence.
• Unique Aspect: Extreme version of communism.

South Korea: Market Economy

• Wealthy nation; 11th largest economy in the world.
• Investment in Education: Leads to a highly skilled workforce.
• Dominance of Chaebols: Large family-controlled multinational businesses (e.g., LG, Samsung, Hyundai, Kia).
• Global Impact: Significant production in technology, shipbuilding, LCD screens, mobile phones, and computer chips.
• Economic Growth: Notable resilience during global downturns (GDP growth during 2009 crisis).

Comparison of Food Production

• Historical Self-Sufficiency in North Korea: Public distribution system until widespread famine (1994-1998).
  • Famine resulted in an estimated 200,000 to 3 million deaths.
• South Korea's Economic Miracle: Innovation and technology drive growth, even during global economic challenges.

Conclusion

• The comparative analysis of North and South Korea illustrates the stark differences between command and market economies.