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Perspectives on Poland's Transition to a Market Economy

Transition Economy in Poland

Poland's transition to a market economy cannot be understood using only a single view of the occurrence, because it was an event that affected people at so many levels. Naomi Klein, author of Shock Doctrine, David Kay, author of "A Vast Right-Wing Conspiracy", and Stanislaw Wellisz, author of "Poland Under Solidarity Rule", have very different perspectives on Poland's transition to a market economy. The key difference between these three critics is their interpretation of the influence of other economic powers in Poland's market entry. One explanation for this difference is the authors' respective ideological perspectives, which are anti-globalism, Neoliberalism, and pragmatism. A very different view is offered by Andrzej Stasiuk, author of Nine, who situates the worsening economic conditions in Poland during this period as part of a novel about a young man who is suddenly set adrift during the transition period. Wellisz's economic view and Klein and Kay's political views provide broad-based external and historical views of the transitional period. However, Stasiuk's description of what it was like to live in Poland during this period also has a lot of value in terms of personalizing and humanizing the problems in the Polish economy during the transition period. These four texts together represent a range of viewpoints that add a multiplicity of meanings to the bare historical facts – personal experience, economic analysis, and interpretation from differing political viewpoints.

Poland Economy

Klein regards the transition of Poland to a market economy as a transition that was largely engineered by the United States and International Monetary Fund (IMF) capitalist interests in order to gain access to state holdings and enforce Chicago School economic structures on the country. She built a historical narrative that began in the early 1980s, with the rise of the Solidarity party, continuing through the events of the early 1990s. This argument was intended to demonstrate the increasing importance of the Solidarity party, as well as the influence of external political and economic factors on Poland's internal conditions.

Klein's argument began with the founding of the Solidarity party, which would eventually take responsibility for the transitional period. The Solidarity party had its origins in post-war Poland, but was kept in check by the Communist government until the early 1980s. By 1988 the Solidarity party had once again emerged. With the moderation of the Soviet government the Solidarity party was allowed to step into the gap in government left by the failure of the Communist government. This takeover occurred during a period when Poland's economy was suffering. The new Solidarity party government inherited a public debt of $40 billion, 600% inflation, food shortages and a black market activity. These conditions were worsened by the lack of debt relief and emergency aid forthcoming from the IMF and the US. Instead of the financial assistance that the IMF and the US could have offered, and which the party expected, Klein remarked, "An economic meltdown and a heavy debt load, compounded by the disorientation of rapid regime change, meant that Poland was in the perfect weakened position to accept a radical shock therapy program." Klein's point was not only that the IMF and the US did not offer this assistance, but that it had been offered to other countries undergoing the same transition. She argued that Poland was chosen as a test bed for the so-called shock doctrine rather than being offered the same assistance as other countries.

The "radical shock therapy program" offered was as follows. While the IMF and US governments encouraged the disruption of the Communist government, they did not offer debt relief to the country. Instead, they encouraged a course of action that included rapid privatization of state companies and resources as well as other structural adjustment policies. These policies were positioned as the course of action designed to turn Poland's economy into a "normal" European economy. They would also cause economic pain to the country including unemployment, inflation, and increasing public debt, as well as extreme measures on the part of the Solidarity government in an attempt to control the situation (such as kidnapping union leaders). While Klein's writing is comprehensive and well researched, it does seem to be supported by the political analysis more than the economic analysis. For example, she relates Lech Walesa's assertion that "Poland was going to find a more generous third way... It will [sic] be a system that is better than capitalism, that will [sic] reject everything that is evil in capitalism", and seems to indicate that this means that Walesa did not intend to implement the system that was put into place.

Kay's writing regarding Poland's transition to a market economy is not so much a discussion of the transition itself as a response to Klein. Kay addresses Poland only in two places in his writing. First, he discusses Klein's positioning of the Solidarity government as a government that wanted to undertake a "more authentic vision of Socialism" through the use of workers' cooperatives. Kay ridicules Klein's stance that social justice is a natural occurrence within society. He writes that the lack of existence of large numbers of small-scale worker cooperatives (as Kay positions Klein's arguments) serves as proof that Klein's argument is incorrect and that the capitalist economic structure is optimal. Kay's repeated claims of Klein's irrationality and digs at "leftists who… believe that a mysterious right-wing cabal rules the world," combined with lack of any substantive effort to address Klein's claims or actually describe the circumstances regarding Poland's market entry, greatly reduce the legitimacy of his discussion regarding Poland's transition. Nevertheless, Kay is correct in his assertion that Klein has chosen a specific viewpoint with a political view, rather than performing a strong economic analysis without political bias. Kay does make a good point that Klein's argument regarding Walesa's Solidarity government and its position regarding Communism is weak. This assertion is difficult to support, given that the Solidarity government did comply with the IMF structural alignment process according to Klein's own relation of the events. Like Kay, Klein's arguments have been formed by a specific political view, and that view does weaken the economic arguments involved.

Unlike both Klein and Kay, Wellisz engaged in substantive analysis of the transition beyond the initial "shock" point. He indicated that even though the initial problems of hyperinflation and debt had eased by 1991, there were still significant economic problems in Poland including low real incomes and increasing subsistence expenses such as food and shelter. Wellisz identified the specific mechanisms by which price increases occurred, including reduction of subsidies for farming and fuel, and the continuance of Communist-era policies that encouraged the growth of inflation.

Wellisz's discussion included specific economic and structural issues that arose during the transition. One such problem was statistics and record keeping. These problems included unemployment statistics that reflected people that had never been employed, instead of the more common accounting of unemployment, which includes people in the active workforce that are currently unemployed. Wellisz identified the liberalization and stabilization components of the structural adjustment plan designed by the Solidarity government in order to reduce the budgetary deficit and bring inflation under control. However, he was clear that prices continued to rise even though hyperinflation was no longer a problem. This was due to undervaluation of the Polish currency, which was set at an official rate lower than the free market exchange rate. As Wellisz noted, a decline in consumer demand, combined with uncertainty in employment conditions, caused a shift in the balance of imports and exports. The privatization process began as a means of increasing the efficiency of the production market when it became clear that the state-owned enterprises were not efficient enough to compete within this market. Wellisz describes Poland's entry to the world market as painful, but seemingly initially successful. The economy's stagnation in the early 1990s, which led to increasing consumer prices combined with falling income, placed these reforms in danger.

While Wellisz's discussion is the most useful of the three economic discussions, he does not focus significantly on what these economic changes actually meant for the Polish worker or citizen. He discusses the impact of the macroeconomic changes in depth, including differences in the current account and inflation cycles. However, there are only a few mentions of the impact of the economic turmoil on people. For example, the problem of unemployment is only discussed in the abstract, in terms of unionization changes and unemployment resulting from privatization. This means that while the economic understanding offered by Welisz's analysis is good, there is little understanding of what this actually meant for Polish citizens during this time.

The gap between economic analysis and personal experience is filled by Stasiuk's intensely personal view offered in Nine. Stasiuk's view is markedly different from any of the economic writers because his work centers on what it was like to live in Poland during that time. His treatment of the economic conditions is more a treatment of a facet of life than as an area for study. Rather than quantifying the falling employment rates, growing inflation, and uncertainty that took over the Polish economy during its transition period, he personalizes these conditions in a way that really shows how it was to live in this period. In this story, everything the protagonist uses is tagged with a price, showing the new importance of money, as well as a growing consumerism. He writes:

On the last day of that summer he worked till sundown. The next day the job would end. From time to time he'd squat and take out a pack of twelve-zloty Albanian Arberias. In another pocket he had blue Caros that cost sixteen, but the Arberias had a stronger and better smell, so they did a better job of masking the stench of the cages.

In this scene, the protagonist, who is working in a slaughterhouse, carries two packs of cigarettes of different types (along with a Chinese lighter that he had bought a few days before) in order to hide the smell of the place where he works. In a single paragraph, Stasiuk communicates the uncertainty of work, the unpleasantness of manual labor, and the new importance of the price of everything.

The protagonist also tells the reader the cost of bottle returns (one zloty); a bonus from an employer pleased with the young man's performance (one thousand zloty, a single bill); a refillable lighter made in China (sixty five zloty); the take for a grocery store robbery (three hundred zloty); and number of other prices for various items. These different prices demonstrate not only the importance of money in general during this time, but also the uncertainty in pricing of these goods. The protagonist's condition of unemployment and lack of consistent work, as well as his employment in work that is generally unpleasant, also is indicative of the conditions of this time. Stasiuk does not provide an explicit economic or political analysis like the other three authors. However, the conditions of Poland during this time are central to his work in a more personal and intimate fashion, and they are integrated into the story of life during this time.

All four of these works provide different, yet valuable, views of the transitional period. Wellisz is the only one of the three non-fiction economic writers who examined the Polish transition to a market economy from the viewpoint of the internal Polish economic needs, rather than as an outsider. He also examined it as a consumer and producer, rather than simply a receiver of external aid. This made his view the most persuasive of the three economic views discussed in the paper. The other two writers, Klein and Kay, were both more interested in their own political views than analysis of the Polish economy per se. This weakened their economic arguments, but did not provide a coherent political argument in exchange. However, Stasiuk's literary treatment of the market transition is more descriptive and provides a better understanding of the human experience during this period than the bare figures are capable of providing. All four of these different views provide valuable, though incomplete, insight – Wellisz for solid economic analysis, Kay and Klein for varying external political viewpoints, and Stasiuk for an understanding of what it was like to live in Poland during the transitional period. Taken together, these four pieces provide a more complete understanding of the transitional period from a variety of views – political, economic, and personal.

Works Cited

Kay, Jonathan. "A Vast Right-Wing Conspiracy." Commentary 124.4: 82,84,86.

Klein, Naomi. Shock Doctrine: The Rise of Disaster Capitalism. New York: Picador.

Stasiuk, A., & Johnston, B. Nine. New York: Hougton Mifflin.

Wellisz, Stanislaw. "Poland Under "Solidarity" Rule." Journal of Economic Perspectives 5.4: 211-217.