"Looking at Korea: Both the South and the North were smashed in the war. Today the North is dirt poor (and a dystopian nightmare?), while the South one of the worlds most advanced countries. Surely this means the North took an unfortunate path - it would have been better off had the South won the war and the two countries united, albeit falling under the American sphere of influence. No?"
This is incorrect. For one, the destruction North Korea faced dwarfed anything the South faced. There are estimates that as many as 2 million North Korean civilians were killed. Plus, every city in North Korea was leveled and firebombed with napalm. The UN forces also purposely attacked northern dams so the country was flooded. The urban destruction that the North faced was worse than what Japan or Germany faced during WWII. By August 1950 the US was dropping 800 tons of napalm on North Korean cities. Many small towns and villages were simply wiped off the map. This is a forgotten fact that the liberal democracies and capitalist apologists like to forget. Their campaign of absolute genocide against the North Koreans.
Would it have been better if the North had simply capitulated and the whole peninsula came under the dominance of the southern military dictatorship? No. Despite the destruction, the North's economy was doing significantly better than the South's in the two decades immediately following the war. The North's standard of living was higher. This only began to change really in the 1980s, when the South, backed by decades of US military and economic support, combined with its repressive military dictatorship, caught up. The North had a much more (and continues have a much more) precarious security environment, so it has to spend much more of its income on defense. This was magnified 100x over when the Soviet Union collapsed and China became a 'mainstream' power, recognizing South Korea. North Korea is surrounded by Japan, a US armed South, and was caught between the USSR and China. Starting in the early 90s, the North no longer had the Soviets to rely on, so it was surrounded by powerful enemies and had lukewarm "support" from China. Try developing in such conditions. All socialist countries experienced difficulties in the early 90s, even Cuba. North Korea's was amplified by its particular conditions. It has nothing to do with the social system.