Dialogue will never entice the regime to give up its nuclear weapons; the nuclear program is tightly linked to its survival. And talks will not lead to change over the long term; the regime sees them only as a tool for extracting aid. High-level diplomacy is no strategy for getting the regime to make economic reforms. The key to change lies outside the sway of the regime — in the flourishing underground economy.

All North Koreans depended for their very survival on a state rationing system until it collapsed in the mid-1990s. Its demise was due in part to the regime’s concentrated investment of funds in a “party economy” that maintained the cult of the Kims and lavished luxuries on an elite instead of developing a normal economy based on domestic production and trade. Desperate people began to barter household goods for rice on the streets — and the underground economy was born. With thousands of people starving to death, the authorities had no option but to turn a blind eye to all the illegal markets that began to pop up.

Around this time, the nation’s workplaces were made responsible for feeding their employees. The only way they could do so was by setting up “trading companies,” which sold raw materials to China in exchange for rice. These businesses became part of the foundation of the underground economy, acting as import-export hubs that in time began to import from China consumer goods like refrigerators and radios.

Likewise, party officials started to take part in wheeling and dealing, profiting through bribe-collecting and prohibited financing activities. Nowadays the party is so deeply involved in the market economy that the “trading companies” are staffed by the children of party officials and openly operate on behalf of the party and military. In short, all of North Korea has come to rely on a market economy, and no place in the country is untouched by it.

The social effect of the rise of the market has been extraordinary: The umbilical cord between the individual and the state has been severed. In the people’s eyes, loyalty to the state has been replaced by the value of hard cash. And the U.S. greenback is the currency of choice.

Trading with their U.S. dollars (many of which are counterfeit) for Chinese products, North Koreans have come to recognize the existence of leaders greater even than the Kims. Who are these men gracing U.S. bank notes? North Koreans now see that loyalty to the supreme leader has brought no tangible benefits; yet currency bearing the faces of American men is exchanged for many things: rice, meat, even a promotion at work.

Today, when North Koreans are ordered by their state employer to take part in political activities, they know their time is being wasted. Fewer North Koreans show up for their state jobs. This growing economic and psychological independence among regular people is becoming the greatest thorn in the regime’s side.