A Case Study on Poland
-Isn ׳I it amazing that the hierarchy o f nations within the old European civilization has changed so little in the space o f millenium? The nations that fo rm ed the European Community are the same ones that emerged in the early Middle Ages as the most advanced areas o f Western Christianity. Empires have risen and fa llen , states have appeared and disappeared borders have been redrawn or erased, everything has changed a hundred times on this small continent, but this arrangement has persisted with only minor changes.
- from Jerzy Jedlicki, a historian
Introduction
The present paper is one-sided in its very concept. Its subject is not only the program o f the great leap into market economy, i.e. the Balcerowicz Plan, but the circum- stances favoring its emergence and implementation. Both political circumstances and psychological motives standing behind such a choice come into play here. An enormous amount o f literature is concerned w ith this experience. The successes and failures as well as the basic points o f the program are well known already. I hope that lim iting myself to the formulation o f the follow ing assumptions only, defining how I look upon the problems o f transformation in the post-Communist world w ill suffice to explain my way o f thinking.
The acceptance o f the idea o f “ Big Bang” , conceived not only as a combination o f anti-inflationary and stabilizing means but also - and in the first period prim arily - as a spring into market, “ into an economy regulated by free market - hadn’ t been at all due to any rigid, ‘ iron’ economic laws or to any historical necessity” offering no alternative. It was a political choice p a r excellence. Political circumstances and ideo- logical convictions - tightly in - had been decisive in this respec1. It was due to them that the prescriptions and advice o f the International Monetary Fund and World Bank had been so easily accepted. And this was joined with a projection o f a sw ift change o f system (regime). I do not maintain that recommendations should have been rejec- ted outright but that they should have become subject to hard, tiring negotiations whose aim would be to determine specific conditions in post-Communist countries (conditions differing from, for example, those in South American countries).
The same may be said about privatization whose shape (form ) had been defined by political choice. It has been accepted and finally proved that the market economy, regulated by the mechanism o f competition, is more efficient - at least in Europe - than the command economy. The assumption that a market economy dominated by
1 Modzelewski, K., Dokąd od komunizmu? (Whereto from Communism) Warsaw, 1993.
the private sector is more efficient than the market economy with a dominating state sector is much weaker in its empirical foundations, but this too is highly probable.
The statement, however, that the private market economy, rapidly introduced by the state, and in the present real conditions o f Central and Eastern Europe, is more effi- cient isn’ t proven, as yet; though it is often accepted as something self-evident. In this case it is, o f course, the question o f greater efficiency in the relatively near future. I f the social and economic activities o f a government are based on this assumption, such policy must bear all the possible features o f a great experiment. Joseph Berliner points to this very aptly, though in a somewhat metaphorical form: “ The fact that it would be better to have had private enterprises rather than state enterprises in the first place is not an argument for rapid privatization or for slow privatization or even for any pri- vatization at all. It all depends on what funny things might happen on the way to the Forum.” 2
The countries o f Central and Eastern Europe are in a state and process o f systemic transformation which - as is now clearly seen - w ill last a whole epoch. The final result o f this transformation isn’t clearly defined and given in advance, and it was pretty generally assumed in the years 1989-1990. In the first half o f the 20th century, new, previously unknown socio-economic systems have come into being, such as the social market economy in the Federal Republic o f Germany, the partnership system in Austria, and various kinds o f negotiated economy in Scandinavian countries, with the Swedish model as the most distinctive. The Japanese system, followed by the “ Asia- tic tigers” system, has come into being in the second half o f our century. What shape the systems o f East European Economies w ill take and how much w ill they differ from the systems known up to now is a matter o f conjecture. It is quite possible that, even after several decades have passed, it w ill be d ifficu lt - even more d ifficu lt than in the case o f the Swedish model - to describe these economies, or at least some o f them, simply as capitalist ones. Thus, speaking about transition from one system to another in such a way as i f we precisely knew in which direction we were going is devoid o f sense. We know that we depart from the Communist system. We do not know, however, in which direction we go except for the most general tendencies, such as: more market, less state and state ownership. It is possible, however, to maintain with all certainty that the final result w ill largely depend on tradition and on the future configuration o f social forces, what has been labelled “ path dependency” 3.
The Polish case may be regarded as particularly interesting not only because Poland was the first country which embarked on the road to radical systemic changes towards a private market economy. There are at least three other reasons which make this case interesting. First, it experienced one o f the largest spontaneously emerging social movements in history - “ Solidarity.” Its sudden emergence and impact on systemic change in Poland, as well as its quick loss o f influence, is an unique pheno- menon which attracted the attention o f many researchers. Secondly, Poland had implemented the most far-reaching “ shock therapy,” called “ Big Bang” , which, for a
2 Berliner, J., "The Gains from Privatization.” In: US Congress, Joint Economic Committee, The Econo- mies o f the Former Soviet Union, Washington D.C. 1993.
3 Stark, D., “Path Dependency and Privatization Strategies in East-Central Europe.״ East European Poli- tics and Society, no 6(1), 1992.
The “Big B ang” as a Political and Historical Phenomenon 117
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while, became the model for the other reforming post-Communist countries. And lastly, a spectacular victory o f the Left in the last parliamentary election (September 1993) and perhaps even a more spectacular defeat o f the parties o f the (ruling) Right, which were practically wiped out from the parliament.
This event may be another pioneering act initiating a new phase o f development in Central and Eastern Europe. This victory puts a big question mark concerning most probably not only the pace o f Central European systemic transformation, but its direction as well. For this reason, historians may see autumn 1993 as a caesura, and the four years 1989-1993 as a closed period. Let’s try, then, to have a general look at these four years o f the Polish experience.
1. Political Background and the “Big B ang” Option
The monocentric social order was always rickety in Poland, coping as it was with daunting obstacles. Three factors in particular must be named in this connection. The first fact to mention is that state ownership o f property, subsuming co-operatives, which were practically state-controlled, never really got the upper hand in agriculture, a vital sector o f the Polish economy which gives a living to more than one out o f every four Poles to this day. Thus, if a kind o f market mechanism continued to function anywhere, it was in agriculture, despite repeated government efforts to clamp down on it.
Secondly, the Roman Catholic Church managed to preserve, indeed even to streng- then, its already great influence, not only spiritual but also political. The Communist rulers could not possibly ignore the Church, the next best organized institution in Poland apart from the Communist party itself. The Church looked back on a long tradition in Poland. For well over a century before the First World War, when Poland had disappeared from the maps as an independent state, the Church came to be seen as the bulwark o f the Polish society’s identity, the guardian o f the nation’s tradition.
In the new situation, after the Second World War, as continued efforts were being made to impose a Soviet-style uniform ity on Poland, the Church became even closer to the people than before.
The most specific feature o f the Polish version o f socialism, however, was the extraordinarily active posture o f the industrial working class. In that respect, Poland was far ahead o f all other Soviet bloc countries. Paradoxically, Poland witnessed one o f the main Communist tenets coming true in a twisted way: the o fficia lly declared leading role o f the working class became a fact in Poland, but not in the way the Communist party had wanted. The working class m ilitancy was directed against the Communist party’s “ leading role” in the state and society.
Worker rebellions in Poland in 1956, 1970, 1976 and finally in 1980, which got broad coverage across the world, had few counterparts elsewhere in the Communist countries. In a way, they fit in a Polish tradition o f insurgency against foreign powers when the struggle for national independence was bound up with a struggle for social and economic rights. The rebellions were only one o f many signs o f the power o f the Polish working class. Inside factories, the shop flo o r was a force to be reckoned with, which government and Party officials could not possibly dismiss. Poland was the only
Tadeusz Kowalik
communist country where pressure for workers’ participation continued throughout the post-war years, even though it rarely resulted in the establishment o f worker’s councils having any serious power. In the 1980’s the workers self-management movement was (in the years o f and after martial law) the outlawed Solidarity union’s legal arm, taking over many union functions. Eventually, it established a national association o f its activists, a research institute, and even its own journal. I use the word “ movement” to stress Poland’s uniqueness in that respect, too, for self manage- ment bodies were not designed or imposed by the authorities but grew (in 1956 as well as in 1981) as a spontaneous movement opposing the central authorities. That was completely different from the Yugoslav workers self management system, which was essentially state-imposed and was, from the beginning, steered ( if not manipu- lated) by the Communist Party.
In a broader sense, however, the greatest participatory challenge ever launched in Poland was the Solidarity movement o f 1980-1981, which succeeded the Summer 1980 Agreements. The most important o f them was the Gdansk Accord between the strikers and the government, instituting Trade Union pluralism. Being independent from both the party and the state apparatus, the Trade Unions did not only get the right to strike, but they were assured to have a “ genuine opportunity to express their opinion in public” on the major economic decisions, such as the allocation o f social funds, basic principles o f calculating and determining wages, long term economic planning, the directions o f investment, and even price changes. Needless to say, this
“ genuine expression o f opinion” could have been signified by the power o f a strike.
A ll this was the first fundamental change in the communist system, though the strikers’ demands did not go beyond that system. Moreover, the strikers’ assurances that they would not contest the leading role o f the Communist Party, as well as o f the principle o f social ownership, could be seen as the legitimization o f the Communist system by social contract.
In a short time, Solidarity became not only an alternative society, but, as one socio- logist put it, the “ real” state, whereas the Communists remained only the “ nominal”
one. The program ratified by the first congress o f Solidarity (October 1981), called
“ A Self-Governing Republic,” has outlined a blueprint (utopia) o f participatory social system. It was a program o f radical transformation o f a socio-economic system, though it did not challenge either the state property or - at least explicitly - the domi- nation o f the Communist Party.
During martial law and after it, both government and illegal Solidarity thinking developed towards more marketization, but it was still kept within the same systemic framework. The model which emerged from those agreements could be described as a labour-managed mixed economy. Employee self-management bodies, suspended during martial law and subsequently restored, but curbed in various ways, were to be strengthened. Stressing equal opportunities for all firms regardless o f their ownership status as a matter o f principle, plans were announced for legislation introducing employee companies and fo r favouring autonomous co-operatives set free from their previous dependence on the state. Rationing o f goods and administrative fixing o f prices, exchange rates and interest were all to be lifted or deregulated. Even a stock exchange was to go into service in two years’ time. Thus, the Round Table agreement outlined further changes towards a mixed economy which would still, however, be
119 The "Big Bang ’’ as a Political and Historical Phenomenon
dominated by the public sector. One would describe these guidelines o f reform as the transformation o f a command economy into a some kind o f market socialism.
The first radical step in this direction was the liberalization o f almost all food prices, implemented in august 1989 by the last Communist government. The next step was to be the transformation o f all state enterprises into Treasury owned jo in t stock companies. A ll these steps were discussed by the Polish authorities with International Monetary Fund and World Bank. Many signs could indicate that these two institutions were ready to accept an official economic program, provided that it would find suffi- cient support in the population. One could also assume that society itself was not against the program itself, which was not radically different from that o f the opposi- tion, but that it did not believe the decaying bureaucracy would be able to reform itself.
That was more or less the situation when Solidarity overwhelmingly won the elee- tion in June 1989 and after a while was rocketed to political power. “ We won but this victory is to our misfortune” - this was Lech Walesa’s first comment o f the results o f the election. He was probably convinced that the opposition was utterly unprepared to take power and that it would run the economy in to disarray, and he suspected that Poland would find itself surrounded by hostile countries o f the Soviet bloc, above all by the USSR.
Tadeusz Mazowiecki’s government tacitly rejected the Electoral Platform o f C iti- zens’ Committee “ Solidarity,” which was clearly for a continuation o f Round Table contract, and launched a completely different economic program. Already in his first expose he declared that he would put into practice not only anti-inflationary stabiliza- tion steps, but also a blueprint o f a fast-paced creation o f a Westem-style, private market economy. The projected breakthrough program, which became known as the Balcerowicz Plan, included very dramatic changes, indeed, such as transforming the ownership pattern to restyle it after that o f advanced countries, the establishment o f a market mechanism o f resource allocation, opening up the economy to the world and setting up a real capital market and labour market. And, all these targets o f a real “ Big Bang” were to be put through “ in 1990 and 1991 !”
Why did the Solidarity leaders so rapidly give up the program o f a self-governing Republic to trade it for a full-fledged private market economy? Why was all this to be implemented so hastily?
Haste was to be, in this case, a socio-economic factor o f great and far-reaching consequences. As we see now, the hasty way o f introducing the program was much more important than a blueprint o f a full-fledged private market economy, from which Poland is still - at least i f we think about it in terms o f Western style market economy - very far. Just hastiness made the shortest way not only to fu ll shops and convertible money, but also to mass unemployment along with idle production capacity, glaring inequalities and marginalization o f a great part o f society living blow the poverty line (in 1990 - 20%, 1991 - 25% and 1993 - 39%). Part o f this pathology was, o f course, hard to avoid, but it would be d ifficu lt to deny that the depth o f crisis was the result o f shock therapy as usually recommended by the IMF, and in this case perhaps first o f all, from an attempt to jump into the market private economy in the shortest time.
This purely constructivist approach to the great systemic transformation, as well as the subsequent, current policy o f authorities promoted by Solidarity sharply
contra-dieted the set o f values for which Solidarity fought. This poses a lot o f questions demanding explanation: what was the rationale o f the new non-communist authori- ties? Why was the Solidarity movement giving the authorities free hand fo r such a radical turn to the Right? It spread, moreover, a protective umbrella over the govern- ment’s reforms.
I have tried to answer these and related questions elsewhere4. Here, it is enough to mention that the Solidarity trade union has been transformed in the years o f martial law and after it into an illegal, hence highly centralized, political (anti-communist) organization. Having emerged once again as a legal organization, it was, for quite a long time, absorbed in efforts o f reorganization and searching fo r programmatical self-identity in a radically changed situation. A ll this happened in a situation when many activists and advisors have left the trade union for government and state admi- nistration. That is why Solidarity - as a trade union - was almost absent, in 1989 and at the beginning o f 1990, on the political and social scene. In a sim ilar stage o f con- fusion, i f not disarray, was another trade union (OPZZ), labelled as post-communist.
Thus, in this condition, the government had got free hand in launching its program.
What were the main motives and the inner and external determinants o f the new authorities’ socio-economic policy?
First, an easily acquired success usually creates strong temptation for another even greater and more spectacular success. The easy “ toppling” o f Communist power bred among the new rulers a feeling that the old economic system could be equally easily exchanged for the new one. A change o f economic system was perceived by the new authorities as the most important way o f legitim izing the new authorities. As research has shown, the Parliament members felt they were not so much the representatives o f their constituencies’ interests as the missionaries o f modernization5.
Secondly, the new cabinet was already, in the moment o f its formation, publicly de- nounced as dependent on the trade unions and dominated by left-w ing politicians, hence too weak to implement any radical economic program. Quite naturally, Mazo- w iecki’s team wanted to show their independence o f trade unions and their freedom from left-w ing tendencies.
The radicalism o f the new rulers was also determined by their perception o f a Polish economy inherited from the communist past. Leszek Balcerowicz spoke in 1990: “ We began that year with sweeping away the rubble that remained o f the polish economy after decades o f ideological experimenting... We had to start with... dilapi- dated factories, disorganized distribution, humiliating lines before shops for all goods.6 W ith that kind o f vision o f the economy, the development o f a new order was seen as a job to build somethying on the ruins o f the old one. Recession was seen as a
“ sweeping away o f the rubble.” Schumpeter’s concept o f crisis as “ creative destruc
4 Kowalik, T. and Bugaj R., New Options after the Big Bang: Poland at the Crossroads. 1993, mimeo.
5 Białecki I. and B. W. Mach, "Orientacje społeczno-ekonomiczne poslow na tle pogladow spoelc-
5 Białecki I. and B. W. Mach, "Orientacje społeczno-ekonomiczne poslow na tle pogladow spoelc-