Kim Jong Il & Václav Havel: The China Connection

12/20/2011 11:20 am ET | Updated Feb 18, 2012

In the days following the strange coincidence of December 18 -- the deaths of both Kim Jong Il, North Korea's totalitarian "Dear Leader," and Václav Havel, the Czech dissident turned president who oversaw his country's move to capitalism -- many articles on Kim's death noted that the Chinese government, Pyongyang's closest ally, had been encouraging Kim to implement market reforms to North Korea's command economy in his final years.

What China evidently advocated to Kim was, broadly, the same path that the Beijing followed in reforming its own socialist command economy. Curiously, the very ideas that China likely proposed for North Korea came to China from Havel's Czechoslovakia, now the Czech Republic -- a case of socialist systems passing along emerging ideas about improving their economies by adding market elements in a historic line of transmission. Of course, the three countries' fates have been very different, but to varying degrees all have had to engage with these ideas.

China's story is well known around the world. After nearly three decades of limited economic gains and general chaos under Mao Zedong, the country's second generation of leaders declared in the late 1970s that China must "reform and open" itself. Deng Xiaoping, the paramount leader in this period and successive decades, declared: "Socialism does not mean shared poverty." In the 1980s, under the guidance of Zhao Ziyang and other reformist Communist Party officials, China steadily implemented market mechanisms in different areas of its economy, while maintaining that the Party was only, in Deng's words, "drawing on some useful capitalist methods" to achieve its socialist objectives.

Deng's notion of "drawing on" market mechanisms within a so-called socialist framework, codified in a 1993 amendment to the Chinese Constitution as a "socialist market economy," was not a Chinese invention. Rather, these ideas came from the experience of several Eastern European command economies, mostly beginning in the late 1960s (though descended from the "socialist calculation debate" between Oskar Lange and Friedrich Hayek in the 1930s), that sought to fix their economic problems through "useful capitalist methods" while maintaining a socialist system -- in particular, Czechoslovakia and Hungary. The primary Czech thinker whom the Chinese reformers drew on was Ota Šik, who played a major role in advocating for economic reforms in his home country before the Prague Spring of 1968, and briefly served as an economics minister under the short-lived government of Alexander Dubček.

The ideas found in Šik's masterful Plan and Market Under Socialism (1968) bear remarkable similarities to what the Chinese leadership would implement in the 1980s, which position market mechanisms as "corrective" forces that help address the many inefficiencies, irrationalities, and errors of the planned economy. In addition to the writings of thinkers like the Hungarian-born U.S. economist János Kornai, Šik's work became crucial to Chinese debates around the reform. His essay "On the Mode of the Socialist Economy," for example, was published in Chinese in 1982, and some accounts even relate that Šik personally recommended several Czech economists to the Chinese leadership to assist in econometric analysis. And here we can return, too, to Havel, whom Šik would serve as an informal adviser after the Velvet Revolution, even as the Czech Republic moved wholeheartedly toward capitalism.

So when the Chinese leadership urged Kim Jong Il to consider market reforms to North Korea's autarkic command economy, they were in many ways advocating the ideas of Šik and others. Of course, Kim appears to have rejected this advice--though a fascinating 2007 article in the Korean Times reported, "North Korea is eager to learn about capitalism" (although, unsurprisingly, Pyongyang was "extremely worried that efforts to open its economy could result in destabilizing its closed society"). Even more remarkably, the article claimed, "In 2000, the Ministry of Foreign Trade established the Centre for the Study of the Capitalist System, and the Pyongyang Business School," set up with Swiss help, "graduated its first students in 2005." Even so, a Chinese-style "socialist market economy" seems a far-off dream for North Korea.

Of course, the Czech historical experience cannot be reduced to Šik's writings, and Šik and Havel are far from synonymous. Indeed, others in China have laid claim to Czech legacies for very different ends. The recent Charter 08 movement, which sought to implement major reforms to China's political system, recalled with its title Czechoslovakian reformers' Charter 77, an effort that Havel helped to lead. The crackdown on the Charter 08 intellectuals (including Liu Xiaobo, who won the Nobel Peace Prize in 2010 but was unable to attend the ceremony because of his imprisonment) has left that Czech-inspired phrase forbidden in China. But the primary impact on China of the Czech reforms (and eventual peaceful revolution) remains, so far, the intellectual influence of critics of the socialist command economy like Šik to China's economic reforms of the past 30 years.

So we begin where we started, with Kim and Havel opposed--but, having traced this history, we find China lurking unexpectedly between them. In the obituary-headline juxtaposition of December 18, the Middle Kingdom appears closer to the middle than we might have expected.