The reason why is because the government is very scared and they are very poor. Transitioning to capitalism is tough, especially when you've been following a Soviet-Style Command economy for a long time. When the Russians did it, it was a disaster because they moved waaaaaaaaaaaay to fast. The Russians literally went from being a nation in which the butcher told the customer what was for sale and what to buy, to a nation in which the customer told the butcher what they wanted to buy, in about one year. As a result? The economy collapsed because virtually no one in Russia was equipped to deal with capitalism and trade.
The Chinese went slowly, and as a result, the government still stands. But China had some help - good US relations after Nixon, a very large population and they were willing to be pragmatic and adopt and experiment with different economy styles. North Korea has a dwindling population and they are not exactly pragmatic, and the leadership literally feels as if the rest of the world will eat them alive should they ever get the chance. They don't want to open up, because of their paranoia.
There is also the problem that the North has dug itself into a deep hole. There's a reason why the North Korean government has such oppressive laws - they know that the majority of the population hate them. They know that their people are starving and would overthrow them in a heartbeat if they ever felt they could. Transitioning to a capitalist economy requires opening up their borders and relaxing some of their more totalitarian laws - they feel that if they do this, they'll be killed in a heartbeat. They don't think they could successfully pull off what China did - open up slowly and gradually to allow trade but nothing else. They are scared that if they relax even a little bit, it'll set off a tidal wave of change that will result in them being destroyed. It is, afterall, what happened to the USSR.
The North Korean regime is also legendarily racist. They literally believe that the North Korean people are the "sacred" people of the world, who must find their own way. They're not even communist anymore - after the fall of the USSR, they changed their constitution to omit all mentions of Marx or Lenin or Communism. Instead, the North Korean regime preaches an ideology of "Juche" - "self reliance". This ideology holds that the North must be self-sufficient in every single way. Of course, their utter dependence on China makes a joke of their philosophy, but that's the official line. They don't want to be Capitalist because they see that as "foreign" and not "Korean", and so they believe it to be fundamentally flawed, because modern capitalism wasn't invented by a Korean person.
It's also because that's just the way things are and no one is brave enough/suicidal enough to risk asking for change. It's not just a matter of Kim Jung Un declaring "We're capitalist now, bitches!" Realize that the North Korean government actually has a number of powerful factions. When Kim Jong Il was still alive, he had to contend, for years, with his Uncle, his Aunt and other military leaders for control. Just because you're a dictator doesn't mean you get to stay dictator - people near you will try to overthrow you. This new guy, Kim Jong Un, is a young guy with barely any military experience whatsoever. The generals of the North Korean Army know this. They don't like his youth or his inexperience. It is entirely conceivable, that if he doesn't put on a good enough show of following in his father's footsteps that his Party may attempt to dispose of him.
The Current Leaders of the North have a good life. Their people are starving to death, but THEY aren't. They want to hold onto power, and change is always risky for those in power. Moving towards Capitalism is a big, big, big, big, big risk for them.
It's also probably a matter of stubborness and pride, as well as a mentality of "This is the way things are done!".
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