Poland’s Unplanned Transition

Compared to the other countries in the region, Poland’s transition to democracy and a market economy seemed to involve a great deal of negotiation. The country embarked on Round Table negotiations in spring 1989 that prepared the way for semi-free parliamentary elections on June 4 of that year. The negotiations also included discussions on economic transformation, and the representatives from the government and the trade unions came to a hard-fought agreement on the indexation of wages. Actually, the fight was largely between the two trade unions. Solidarity wanted wages to rise 60 percent of any cost of living increases; the Communist trade union OPZZ pushed for 100 percent. A compromise of 80 percent was achieved.

This effort to preserve the living standards of workers was perhaps the last effort to plan Poland’s economic transition, and it was almost immediately undermined. Economist Krzysztof Hagemejer participated in the indexation discussions at the Round Table. I caught up with him in Warsaw 23 years after our first meeting in 1990. He explained what happened during the summer of 1989.

“In July, the law on indexation was adopted,” he told me in an interview in August 2013. “And then on the first of August, the Communists freed food prices. This was not part of the plan or the discussion. And then came all the consequences. These freed food prices, combined with indexation, led to something very close to hyperinflation. I still wonder who actually approved this decision and what were the intentions of this decision.”

The resulting hyperinflation served as the threat that required the cure of “shock therapy” – a macroeconomic stabilization program that reduced inflation through the further liberalization of prices, elimination of government subsidies, and other measures. Still, as Hagemejer points out, this program that guided Poland into the market economy could have proceeded consensually. But Solidarity the trade union essentially abdicated any responsibility for the economic transition to the liberal government that it helped to form under Tadeusz Mazowiecki in fall 1989.

“The main mistake at that time was done by both government and Solidarność,” Hagemejer explains. “This was the decision not to have formal negotiations on the program. The government had 99% support in opinion polls, and Solidarność decided to give the economic program the green light without any explicit agreement. It would have changed history if at that time a formal agreement had been reached to the effect that we agreed to this policy, but we would meet after a few months to monitor it. We would monitor the consequences, then discuss again the program and decide how to proceed. This was not done. There was no formal agreement. It was never negotiated. This was a political mistake because it decided the future fate of both the government and the trade union, which eventually lost confidence in the program.”

The economic transition was not, of course, a neutral program that spread benefits and sacrifices evenly among the population. The workers and farmers who made up the bulk of the population had to shoulder the lion’s share of the sacrifice. And a new middle class gained most of the benefits.

“There was this belief that everything should be done to be build the middle class, that this was the priority,” Hagemejer points out. “When in 1992 they were introducing the personal income tax for the first time, the design was very clearly in favor of actually increasing income inequality. When you took into account all the tax breaks and things available mostly for people of higher incomes, the effect was quite flat, if not regressive, from the very beginning. It’s still that way. There’s no country in the EU with such a high income tax rate for low-income people.”

Poland’s trade unions have not disappeared, of course. They eventually refocused on more traditional labor activities. “Both Solidarność and OPZZ in Poland did quite a lot,” Hagemejer says. “How successful those activities were is another question. But they did fight for trade union freedom that was in danger because new businesses and big multinational companies were coming here and practically banning trade unions, which was against the law. With the French supermarket Carrefour there was a long fight. Solidarność and OPZZ did quite a lot to overcome this, and they managed to achieve some success, at least with some of the bigger employers and also with the help of European networks. Joining the EU helped a bit. At the same time they have probably been too political. Solidarność was from day one always linked either to the ruling party or the main opposition party. I don’t think that’s a good idea for a trade union that wants to be seen as independent.”

 

The Interview

 

Do you remember where you were and what you were thinking when you heard about the fall of the Berlin Wall?

 

I was in Warsaw. As you probably already know, for us in Poland it was just the next step in the chain of events that started a bit earlier. We thought, “Okay, this has to happen.” We started to think in 1989, after the Round Table and after the June 4 election in Poland, that this will have to happen sooner or later. Then when we saw what was happening in Hungary and in Czechoslovakia… Of course, everybody was happy, but the fall of the Wall was not all that special compared to the events that preceded it.

 

How did you get involved with Solidarity in the first place?

 

It started at the beginning of 1970s when I was a student, when the Communists decided to merge the student organizations at the university. There were a few places, including the department of economics at Warsaw University where I was a student, that resisted this unification and also the creation of a socialist students union. That’s how I met people linked to different groups, including the Club of Catholic Intelligentsia (KiK) and groups that had been active in 1968 in the opposition movement. The next step was to join the circle of collaborators of the Workers’ Defense Committee (KOR). And that’s how I became a so-called expert of Solidarność in 1980.

 

At that point you had already gotten your degree in economics?

 

Yes, I finished my studies in 1975. It was a paradox because my first job was in the computer center of the Central Planning Commission, which actually helped me to avoid military service. While I was working in the economic modeling unit in this computer section I already was signing a number of open letters and articles in underground publications. The Planning Commission told me to find another job in 1978. I quickly found another job in a research institute that was marginal enough so that even people with the wrong views could work there.

 

When you started working as an expert with Solidarność in 1980, what was possible, economically speaking, in terms of reform in Poland?

 

It’s not easy now very shortly to describe the history of the Polish economy in the 1970s, including Edward Gierek’s attempt to create “consumption Communism” and other failed attempts at economic reform. The system started to disintegrate slowly, not only with more shortages in the market, but also higher open inflation, which was quite unusual in the Communist system. Even price controls stopped working.

For the workers at that time the main challenge was how to deal with those shortages and that inflation. Those were the main concerns of our discussions at that time. Teams were working on the longer-term reforms, but this discussion actually started to take shape in 1981 around the Solidarność Congress in Gdańsk. Solidarność, as you know, was very heterogeneous in terms of ideas about necessary political and economic reforms, so very different opinions were expressed there.

 

One of the issues at that time at the economic level, which I think was very difficult for people outside of Poland to understand, was this notion of samorząd, of self-management. At that time in 1980-81 how would you have defined self-management, especially in contrast with, say, self-management in Yugoslavia?

 

This idea actually came from the already earlier Polish debates after 1956 in the economic reform debates where Yugoslavia was a model, to a certain extent. In 1981, it was quite interesting that at that time one of the main promoters of these ideas in Solidarność was Leszek Balcerowicz.

 

That’s certainly not something he continued to champion in 1989. I knowsamorząd is an amorphous concept in some sense, but, for instance, at the first Solidarity Congress did it come up as an organizing principle? Or was there debate over what samorządmeant, practically speaking?

 

I don’t think the economic dimension of it really came up very strongly. There was this broad idea of rzeczpospolita samorządnathat, to a certain extent, followed Jacek Kuroń and an earlier call for self-organization as one of the ways to overcome the system. I was one of the enthusiasts of this idea of self-organization in every dimension and also as a way out through reform. But I was actually never very much convinced of how it could work in practice at the enterprise level. I read a lot at that time and before about the self-management debate. The conclusions from this debate didn’t give a lot of hope. I mean, without democracy in general it’s very difficult to have democratic self-management.

Two models were discussed at the Solidarność Congress in 1981, one close to the self-management idea and the democratic socialists with Ryszard Bugaj and a number of others. I was certainly part of this group. And the other was Stefan Kurowski, which believed that there was no third way, that the only solution was really going through the market economy.

 

What would you say happened in terms of economic thinking, to the extent that there were any opportunities to discuss these two approaches during the Martial Law period?

 

No, the Martial Law period was not a good period for this type of debate. During the 1980s, of course, there was an intellectual debate, and there were some documents produced. There were meetings organized, especially later in the 1980s. And there were different circles. One group was led by Balcerowicz, which already started before 1981 and continued discussions afterward. The group that I was part of was ironically called Czerwona Kanapa, or “Red Sofa” (to signal its small size which would fit into one sofa). This was the left one with Ryszard Bugaj, Tadeusz Kowalik, and a number of other people. Some of them (not Bugaj, Kowalik or myself however) after 1989 actually changed quite significantly their views in terms of what economic model was desirable.

 

Let’s jump to 1989 and the debates around economic reform. Did you have an opportunity in 1989 to participate in these discussions inside the Citizens’ Committee? When we talked 23 years ago, you described some of the political maneuverings inside the ministries by people with particular economic views. But I wasn’t sure what your participation was at that time.

 

I was in the economic part of the Round Table focused on very specific tasks. There was the major discussion there on introducing the automatic indexation of wages to increasing costs of living. I was part of the subgroup that reached an agreement on indexation. Of course, I participated also in the plenary discussion of the “sub-table” on the economic model. When I think about it from today’s perspective, unfortunately there was a lack of realistic visions of what could be done. But the reason for this was very obvious because nobody at that time was aware what would happen in the next stage. We still didn’t know what animal we were talking about. I don’t think anyone really imagined what would happen a few months later, and then in 1990, in terms of the options for economic change. We didn’t know what kind of political change to expect. Things were happening so quickly.

Take the example of indexation, which was one of the things put on the Round Table by Solidarność. One of the things agreed at the Round Table was that wages would be indexed. In July 1989, I was an expert on this issue of the indexation of wages in the special commission in the new parliament working on this law on indexation that was adopted.

 

And there was a compromise at the level of indexation at 80%?

 

I don’t remember now, it’s so distant. In July, the law on indexation was adopted. And then on the first of August, the Communists freed food prices. This was not part of the plan or the discussion. And then came all the consequences. These freed food prices, combined with indexation, led to something very close to hyperinflation. I still wonder who actually approved this decision and what were the intentions of this decision.

 

What’s your suspicion?

 

I don’t know. I really have no information on this. But these two things combined were a bomb.

 

When people think about shock therapy they don’t necessarily think about those two decisions, on indexation and on the freeing of food prices. They think more about privatization…

 

When Leszek Balcerowicz first stepped down as minister of finance, there were all these brutal attacks on him. He was in quite bad shape. This was at the end of 1991. I went to Washington with my colleagues as part of a project done by the World Bank at that time on labor market transition developments in Poland. Balcerowicz had left his government post and was spending a few months in Washington at the World Bank to recover. When he saw me there, he started shouting at me that it was all my and my colleagues fault because of indexation. And, of course, to a certain extent he was right. Of course, these two things combined together, indexation and freed food prices, led to what happened. So, in a certain sense, what he did was unavoidable. The problem is rather in what he didn’t do.

 

The workers, largely the industrial workers connected with the large shipyards and coal mines, paid a pretty high price during those years. From the point of view of economists like Anders Aslund or Jeffery Sachs, that was a necessary price. Thinking back, was there anything that could have been done to either distribute the pain more evenly or to cushion the pain specifically for that sector of the population?

 

At the beginning I was working as a trade union official: I was working with Ryszard Bugaj first as deputy and then, when he left, as the chief of the small research center of Solidarność. In January 1990, it was becoming more and more obvious that we were experiencing “overshot” of the stabilization program, with price increases much higher than expected and wages completely frozen. We were talking to Leszek Balcerowicz at that time trying to persuade him to revise the parameters a bit and allow wages to go up, at least a bit. And he said no. Again, probably he was right in the sense that with anti-inflationary stabilization policies what matters are expectations. So, relaxing the policy at that time probably would have undermined this main foundation of this policy. But, of course, the social consequences of this were very dramatic.

The main mistake at that time was done by both government and Solidarność. This was the decision not to have formal negotiations on the program. The government had 99% support in opinion polls, and Solidarność decided to give the economic program the green light without any explicit agreement. It would have changed history if at that time a formal agreement had been reached to the effect that we agreed to this policy, but we would meet after a few months to monitor it. We would monitor the consequences, then discuss again the program and decide how to proceed. This was not done. There was no formal agreement. It was never negotiated. This was a political mistake because it decided the future fate of both the government and the trade union, which eventually lost confidence in the program.

I participated from the trade union side in June 1990 in the talks between Solidarność and the government. We spent practically the whole night over there in the Council of Ministers building. Mazowiecki came at midnight; Balcerowicz was there the whole time. One of the topics was also how to make the program fairer in terms of distributive effects. The government was still quite weak. One of the things we were asking was why in that situation they were still cutting government subsidies to lower the prices but they were still subsidizing the prices of the small cars, those small Fiats. All the other subsidies disappeared, but this one stayed.

 

You talked about the effort to perhaps show some flexibility on wages. But the other issue, of course, was unemployment. Some people had no wages at all because they were kicked out of enterprises that were closed, privatized, downsized. Were there any any alternatives to this? For instance, I interviewed Joze Mencinger in Slovenia, and his attitude was that privatization simply went too quickly. Had it been a much more gradual process, the dislocation would have been less traumatic. Of course, other people have said that’s ridiculous because if it’s going to happen, it should be done immediately. The Chinese, of course, have maintained state-owned enterprises even if they’re inefficient, largely for political reasons. So which of these three options – privatization as quickly as possible, the more gradual Mencinger approach, or the Chinese approach of maintaining state-owned enterprises even when they’re inefficient – would you favor?

 

In my view, the privatization of state enterprises actually was not so quick, especially of the bigger ones. Some privatizations happened very quickly: the retail trade, for example, was entirely privatized in a few months at the beginning of 1990. This had both bad and good consequences, but it was a completely uncontrolled process. The big mistake, with very bad consequences, was what was done with agriculture and the state farms. There was not much discussion about this, and you will not find much in the literature. But from the social point of view, we are still feeling the consequences in the form of the poverty in the rural areas. The highest unemployment is there, and the poverty has been continuous for more than 20 years. The farms just disappeared from one day to the other with no program for what to do with the people who were working there. Plus, at the same time the heavy industry and construction sectors – where all the “farmer-workers” were working — were also shrinking. About two million people lost their jobs and had to return to the villages. And there were no programs to help those people find new employment, no programs to create new jobs. There was nothing for years. Now, with EU money, things are happening in many places. But it’s too late for many people.

 

Yes, I went to a small place near Bialystok, a tiny town, and there was this beautiful playground. They told me that it was EU money. Every little town in the countryside has a beautiful playground, which is nice but I’m sure if that money had been available 20 years ago for something like an agricultural extension program…

 

There was really no thinking about this. But when we’re talking about the big industries, the privatization didn’t happen so quickly. What happened quite quickly was the scaling down on production and people losing jobs, but those people were relatively protected because the government introduced quite generous unemployment benefits and other policies, at least at the beginning. You see the results now when you look at the patterns of unemployment in the country. It’s not the big industrial centers that are the worst off. Whole industries disappeared, new ones emerged, and it was a very painful process. But really worrying is what happened in provincial Poland, in the small towns and villages. There might be some playgrounds and sometimes some useful things funded with EU money. But it’s not everywhere, and in some places the decline has been dramatic. That’s the cost of the transition. They were not protected by any of the trade unions.

 

There was the peasant’s party, but they didn’t really represent the interests of all farmers.

 

Yes, mostly the bigger farmers.

 

You made an interesting point about Solidarity’s failure to ask for some negotiating framework, which would have been in some sense a kind of continuation of the Round Table. Was there a discussion of maintaining trilateral discussions along the ILO model?

 

This came later, the ILO type of tripartite social dialogue. Eventually employers’ organizations emerged, but at the beginning it could be only government and the unions.

 

What about the role of OPZZ at that time? If I remember correctly, OPZZ took a somewhat more militant approach. There were some OPZZ strikes, for instance, at that time.

 

Yes, certainly, they had no reason to support the government, so they worked around it. There were strikes. The government probably somehow also took advantage of this situation of the two union confederations and the lack of coordination between the two, which lasted very long. This September, we’ll have for the first time since 1989 a strike and big manifestations in Warsaw organized by all the trade unions together against the government.

 

What are the specific demands?

 

In general, it’s a critique of the government policy on all aspects of social policy, high unemployment, and the economic crisis. It’s very political. The main demand is a change of the government.

 

That’s a popular demand, much more popular in some sense than narrow economic demands. Let me ask you about social policy. When I talk to people here, they’ll say that in terms of macroeconomics things aren’t so bad. Poland, of course, showed some growth even during the financial crisis. Their concerns really are focused on social policy, especially the so-called “trash contracts.” It’s a real challenge for people who don’t have health insurance or enough money to rent a flat. So it seems that people’s grievances are focused on social policy. Are these problems rooted in policies from 20 years ago, or are they of more recent origin?

 

I think it goes back to the beginning of the whole transition. None of the governments – not the first one and not the later ones – really spelled out what should happen over the first decade in terms of economic, social, or political models. Maybe the political model was the best discussed and debated. But certainly not social policy and what kind of social model we wanted to have. I stopped working for Solidarność in May 1991 and moved to the ministry of labor, invited by the minister. There was a series of ministers starting with Jacek Kuroń, then Michal Boni, and Kuroń a second time, and then Jerzy Kropiwnicki. I left the ministry when Leszek Miller came in just after the elections in 1993 won by the former Communists. I left the post to go to Geneva, for a job that very conveniently opened up at the moment.

In 1992, under Kuron, we tried to develop documents on social policy to create a kind of a vision, but it was very difficult to get anywhere. There was blockage, because economic necessity dominated the debate. Even Kuroń was later very sorry about this. At the end of his life he started to understand that he had believed too much in the priority of defending unconditionally the market economy. That was the belief at the time: that the first objective was to build the market economy and the time for social policy would come later.

This was very often explicitly said. There was a conference in 1994 organized on social policy by people from Unia Wolności, and this was the first year for Mazowiecki and all the Solidarność people to be again fully in opposition to the government led by former Communists . Balcerowicz was again saying that we have first to build the market economy and only when this is done we could start thinking about trade unions, tripartite structures, social policy, and things like this. There was this belief that everything should be done to be build the middle class, that this was the priority. When in 1992 they were introducing the personal income tax for the first time, the design was very clearly in favor of actually increasing income inequality. When you took into account all the tax breaks and things available mostly for people of higher incomes, the effect was quite flat, if not regressive, from the very beginning. It’s still that way. There’s no country in the EU with such a high income tax rate for low-income people.

 

I remember when Kuron’s soup kitchens were the only thing put forward as a social policy.

 

That’s an exaggeration. There was much more. When it was decided that Kuron would be minister, he called me and two of my other friends, and we spent the whole night in his flat telling him what we thought should be done. He was really one of these rare people who listened to others. But he was listening to many people, of course, and he started at that time to believe that his main role was to help cushion this Balcerowicz program. But in the last phase of his life, he realized he made quite a mistake in this. Still, it was not just the soup kitchen. There were unemployment benefits, which hadn’t existed before. The first version was very generous because nobody at that time expected how high the unemployment rate would get or how long term the unemployment would be. Later they had to change the system because it started to cost a lot of money.

There are many people who didn’t like Kuroń. I always admired him, for many reasons, from the first time I met him when I was a student, somewhere in an empty flat in Stegny. It was 1973. He’d just left prison, and some people organized an unofficial meeting for young people who entered the opposition world to listen to him. He talked a bit about politics but mostly about his pedagogical experience and thinking. He told a lot of anecdotes. Despite the mistakes he made at the beginning of 1990s, he was until now the best labor minister in the whole history of post-1989 Poland.

 

He’s certainly been extraordinary influential. From what I understand, and please correct me if I’m wrong, the public opinion of trade unions in the country is rather low and membership is falling. What can trade unions do in this country to regain status, influence, members?

 

One of the problems, which has been a problem for trade unions as well, is that we never managed to develop a vision of the social model for the country. None of the political parties or the trade unions had such a vision. And it’s not just Poland. It’s probably most of the countries in the region. I saw this also with trade unions when I was working in the ILO Budapest office and also later at the ILO in Geneva. They don’t have the capacity, they don’t have the expertise to actually monitor and develop a view on what’s happening.

It’s not true that they aren’t doing anything. Both Solidarność and OPZZ in Poland did quite a lot. How successful those activities were is another question. But they did fight for trade union freedom that was in danger because new businesses and big multinational companies were coming here and practically banning trade unions, which was against the law. With the French supermarket Carrefour there was a long fight. Solidarność and OPZZ did quite a lot to overcome this, and they managed to achieve some success, at least with some of the bigger employers and also with the help of European networks. Joining the EU helped a bit.

At the same time they have probably been too political. Solidarność was from day one always linked either to the ruling party or the main opposition party. I don’t think that’s a good idea for a trade union that wants to be seen as independent. And unfortunately they have been unable to detach themselves politically. At the beginning of the 1990s Solidarność was a social movement. It was also a trade union, but it was established as a big mass social movement, which only partially was converted into trade unions. OPZZ, on the other hand, has another heritage, and they also never managed to break their political link to the former Communists. But I’m optimistic because in Geneva I have met people from both confederations who are young, or relatively young, and want to do real trade union work. One of the problems is the leadership, which doesn’t listen and partially destroys this work because of their political connections and ambitions.

Plus they need much more capacity. When I look at the proposed changes in laws on social policy on the web page of the ministry of labor — and the comments coming from different organizations including the trade unions — it’s very disappointing. The trade union responses indicate that they don’t have anything different to propose. They don’t have the capacity to do the real analysis and research to look at the consequences and propose alternatives. Now we have again this discussion about the next phase of pension reform. The comments from the employers’ confederation show a very well done, extensive analysis of the impact. It’s very well argued. And on the union side it’s just some slogans with no backing.

 

At the ILO you have been responsible for social policy throughout Europe?

 

Yes and no. I was working, for example, in the department dealing with social protection and social security — globally and not only Europe. But we have also a regional structure, so we discussed a lot about European policies, not only central/eastern Europe but also now we’re very involved in the debates in Greece and Cyprus.

 

You talked about the disappearance of any discussion of a third way in Poland. Given the European economic crisis, as well as the dissatisfaction with economic development, have you heard of a revival of discussions of a third way?

 

I don’t know if this is about a third way, but I’m optimistic when I see a movement among young people and other groups having serious discussions against the TINA [There Is No Alternative] concept. There’s more going on around Krytyka Polityczna. That’s positive because at some point it seemed that the Left had restricted itself completely to non-economic issues. That’s because the so-called Social Democrats – the former Communists – have not focused on the economic dimension. And journalists too are starting to look at these issues, which is good because for quite a long period the media were completely taken over by neoliberalism. Young journalists have different views.

 

Aside from Ryszard Bugaj and the late Tadeusz Kowalik, is there something coming out of the economics profession that challenges this neoliberalism?

 

Well, at least the Krytyka Polityczna circle understands the problem, and they invite non-neoliberal economists from the West to come and talk about things and translate their papers. I hope that will change things.

On the one hand I’m fascinated about coming back here. On the other hand I’m a bit afraid. The economic thinking is very individualistic. You can see this even when you talk to taxi drivers. It’s not only intellectuals. Even with the friends with whom I worked for many years in Solidarność, with some of them it’s quite difficult to find a common language. But there are exceptions.

Have you read David Ost’s book on Solidarity? I think he exaggerates because it’s very dramatic, this betrayal of Solidarność. But at the same time there’s quite a lot of truth in it. There was a moment in the beginning of 1990 when they should have done things differently.

 

Have you had any second thoughts about your own thinking from that period from 23 years ago?

 

Yes, certainly, I hope so! At that time, in 1989, I was younger than 40. Now I’m 62, so I hope I learned something during that time. But frankly speaking, my thinking has not changed dramatically. I had a lot of new and significant experiences particularly in the first years of transition. But then I also worked in other countries in the region. For three years I was in the Budapest office and I was also in Ukraine and the Balkans. And I also worked in the other countries around the world on different things. So I got a more certain knowledge about different kinds of transitions and how they can be shaped and what is beyond control. I still believe that it’s a pity that when the change came in 1989 we were not ready with something more thought out – but there was no time for this. The change was unexpected. That first year was dominated absolutely by a particular kind of economic change, but the lack of vision concerning the social dimension was a big problem.

 

When you were looking at other countries in the region, was there ever a point when you said, whether it was in Hungary or in Czech Republic, that they did it better in terms of transition and social policy or some aspect of economic policy? Is there any time when you felt a twinge of envy that they had more vision or even just on a very technical level did a better job?

 

I don’t think they had more vision. Some of them were in a different situation. For example, we were always proud that in Poland agriculture was never made fully collective. But this turned to be one of the main problems in transition. Czechs and Hungarians had an easy task from that point of view because they had only the state farms or collective farms to smoothly convert into companies. There was not such a social cost in the process as in Poland.

But everywhere it was a spontaneous process with a lot of mistakes and errors. And actually Poland was not doing badly compared to the other countries. It’s characteristic for Poland, for Polish people, to always complain. When I started to live abroad and then came back here and heard these complaints, it made me very angry. I would say, “Why are you complaining? Look at the other countries around here. It can be worse.”

 

When you look back to 1989 and everything that has changed or not changed in Poland from 1989 until today, how would you evaluate that on a scale of one to ten, with one being most dissatisfied and ten being most satisfied?

 

The question is for whom. There are winners and losers, big winners and big losers. I’m certainly a winner.

 

The second question is about you personally. But the first question is for you to make an aggregate judgment that includes both winners and losers.

 

It’s always relative when you compare it to other countries. Ok, five.

 

Second question is your own personal life over the same period of time.

 

I’m very satisfied, so I hope this will continue now when I’m back here. Ten.

 

Looking into the near future, the next two or three years, what do you evaluate the prospects of Poland to be, on a scale from one to ten with one being most pessimistic and ten being most optimistic?

 

Eight.

 

Warsaw, August 12, 2013

 

 

Interview (1990)

 

Krzysztof Hagemejer is the deputy director of Solidarity’s research unit, the Center for Social and Vocational Studies. The Center, headed by Ryszard Bugaj (economist, left parliamentarian, head of parliamentary commission on economic restructuring), was founded alongside Solidarity in 1980. Its circumstances in 1990 are somewhat different, however, since Solidarity is not as well-off as it was a decade ago (because of falling membership, diversion of funds toward political purposes and so on). There are 20 people who work at the Center including economists, political scientists and sociologists. The previous National Commission of Solidarity trade union was not, according to Hagemejer, terribly interested in the research but, since the last convention in April and the decision to act more as a trade union, the Center’s role might become more important.

But the Center does not see its role simply as an arm of a trade union. It also wants to conduct research into economic policy in order to find alternative solutions to present to the government. Therefore, the Center conducts research into Solidarity as a movement, changes in the social and political climate of Poland (via, for instance, public opinion polls), various privatization plans.

I asked if any viable political force shared the Center’s economic goals. No, Hagemejer replied, not yet. The opposition, he noted, didn’t have much of an economic program (by opposition, he meant Centrum Porozumienie as well as the Christian nationalists). Nor did the government really have a real economic program. It simply has a stabilization plan and a couple of privatization options. What about the rage for rapid marketization? Now the Balcerowicz team appears dogmatic but he suspects that this is only political behavior. These economic wizards must maintain good relations not only with international institutions such as the IMF but also with the Polish public. They must therefore present their economic program as the “only” program to inspire confidence. During the round table negotiations, there had been a general unwillingness on the part of both the free marketeers (e.g. Balcerowicz) and the samorzadists (e.g. Bugaj) to settle their differences. Balcerowicz complained that his faction had been excluded from the round table negotiations. “I hope that what has happened since is enough compensation,” Hagemejer mused.

How did the free marketeers jump from the margins of Solidaarity the trade union to the center of Solidarity the new government? Hagemejer thinks that the answer lies with Waldemar Kuczynski. A deputy editor of Tygodnik Solidarnosc in 1980-81 under Tadeusz Mazowiecki, Kuczynski was called in from France (where he spent the martial law years) to choose the ministers of finance. Since Kuczynski was of the rapid marketization variety, he chose ministers of like minds.

In terms of his own work, Hagemejer is especially interested in inflation. During the 1980s, he conducted theoretical investigations into centralized planning, focusing on the question of shortages and whether adjusting price policies would improve the situation. The usual equation looks like this: inflexible economies avoid the risk of inflation but also have shortages. Free up prices, you eliminate shortages but cause inflation. These days, Hagemejer is looking at the response to this problem in Poland, the GDR and Hungary but considers Poland “the best clinical example.” Prices, he points out, have been relatively flexible in Poland now for fifteen years (as compared to only recent flexibility in the other countries of the region, except Hungary). He is also looking at the anti-inflationary policies of Latin America and Israel, trying to point out that differences in economic systems might mean that measures successful, say, in Israel might not be successful in Poland.

 


2 Comments

  1. Bruce E. Woych

    http://monthlyreview.org/2013/10/01/lessons-iceland/
    Lessons from Iceland : Capitalism, Crisis, and Resistance
    by Martin Hart-Landsberg
    [Excerpt]
    ” 1991, the Icelandic government began an aggressive program of liberalization and privatization which gave rise to the hyper-expansion of three Icelandic banks. Their highly leveraged growth fueled massive stock market and housing bubbles, all of which combined to make Iceland’s per capita GDP one of the world’s highest by the mid–2000s. Iceland’s economy collapsed in October 2008 when the three banks were forced into bankruptcy; the country suffered one of the deepest downturns in the world. In a response that remains unique in Europe, the Icelandic people forced the political leaders responsible for the neoliberal program to resign. They then elected a social democratic coalition government which aggressively intervened in financial, currency, and housing markets, and engaged in a targeted expansion of key social programs. As a result, Iceland has experienced one of Europe’s most rapid and broad-based economic recoveries.”

    It does act as a model for Poland & Hungary, but time will tell if “Rationalization” can manage “Nationaliztion” in a unique Eastern European model, and emerge as an authentic Democratic Capital model for the rest of Eastern Europe.
    At this time neo-liberalzation takes on the look of neoconservative realism. The anti-west / pro-Putin rhetoric distorts any real perspectives of who is pulling strings and for what interests at large. It reeks of real politik and deceptions…manipulations abound!

  2. http://www.johnfeffer.com/reinventing-republicanism-in-poland/#comments

    Apparently ‘reinventing transition’ may be the proper course for Poland ?

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