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Thursday, September 22, 2022

Nationalism Is Rising in Poland, and It’s Undermining the Market Reforms That Followed the Fall of Communism

Poland owes its economic success to capitalist reforms—but the current government has stopped privatizations and is pursuing a policy of redistribution.

Image: Main Market (Rynek) square in the Old Town of Poznan

September takes me to Warsaw in Poland and Hanoi in Vietnam, two countries that have far more in common than most people think. They are two countries that suffered terrible wars—in Poland from 1939 to 1945, and in Vietnam from 1955 to 1975. In each case, millions of people were killed and the country was devastated. And after the wars, each had no chance to recover and rebuild their economies because socialist planned economies were established. In these two countries, the planned economy system led to misery, poverty, and soaring inflation. In both countries, the ruling communists first tried reforms in the existing system until people understood that it was only the introduction of private property rights and a market economy that would help their countries. No countries of comparable size have gained as much in the Index of Economic Freedom as Vietnam and Poland in recent decades, and in both countries the lives of ordinary people have improved dramatically.

Daily Life Under Socialism

Whenever I travel to a country, I first look into its history in order to understand it better. That’s why in Poland I started out by meeting Alicja Wancerz-Gluza, co-founder of the Karta Center, a non-governmental historical archive. Alicja initially became active in the Solidarność trade union movement and later – after the declaration of martial law in Poland – joined the anti-communist underground. On January 4, 1982, together with her husband and a small group of friends, she founded the underground newspaper Karta. Over time, the newspaper, which she wrote on a typewriter and then mimeographed, became a publishing house that published illegal newspapers and books.

Today, the Karta archive has 5,000 books and brochures, about 35,000 newspapers, 300 posters and 1,000 postcards from the underground anti-communist movement. The collection also includes the largest collection of documents from the Solidarność trade union. Alicja proudly shows me a document from UNESCO, confirming that this collection was entered into the international register of world document heritage of UNESCO’s “The Memory of the World” program—together with the wooden boards on which the workers who took part in the strike in August 1980 in the Gdansk shipyard wrote down their 21 demands. Karta collected 6,000 interviews with contemporary witnesses (including 1,000 interviews with former prisoners of the Soviet gulags) and about 400,000 photographs.

During our conversation, Alicja explains the realities of everyday life in the socialist planned economy in Poland. She shows me the pile of ration cards Polish people needed to buy food and other products until the collapse of the socialist regime in the late 1980s. The first ration cards were for sugar in 1976. But these cards were still around until the end of the 1980s—for all kinds of products, such as meat, fat, butter, detergent, soap, cigarettes, gasoline, and even shoes. There were also so-called replacement coupons on the cards, which had numbers on them. For example, it was suddenly announced that you could buy school supplies for children or sanitary pads for women using card Number 3.

In the shop, the saleswoman would use scissors to cut small coupons from the cards. And to get such a card, in turn, you needed other cards, on which every month your employer registered all the cards you had been issued. It was a real tragedy when someone lost one of their cards.

Alicja: “It was a truly special occasion when I got a card from the registry office that would allow me to buy white tights for my wedding. I was also given a certificate stating that because we were getting married we were allowed to buy gold wedding rings in a jewelry store. But we didn’t have the money for that, and we didn’t want rings anyway. So, there were special cards for all occasions, for example, for a funeral you could get a card for black pantyhose.”

But just because you had the cards didn’t mean you could simply go out and buy the product.

For the children there were cards for powdered milk and sweets (so-called “chocolate substitutes”). To buy furniture, a washing machine or a television, people had to stand in what were known as “kolejkach społecznych” (social queues). Sometimes, they had to come every day for a month or two and stand in line for hours at a time. Family members waited in line and then swapped places with other family members every few hours. Every couple of hours, names were called out – and if someone wasn’t there, they lost their place in the line and the time they had spent waiting was for nothing.

It was also difficult to get a telephone. “In my neighborhood, in 1986, there was only one phone booth for all of the streets and buildings in the new district,” Alicja explains. “It was a public phone, no one in my neighborhood had a private phone.”

Her parents moved into their cooperative apartment in 1960 and immediately applied for a telephone line. The phone was eventually connected—13 years later in 1973. And that only happened so “quickly” because her father was a member of the Polish United Workers Party. In any case, international calls could only be made at the post office, where people had to book their calls several hours in advance. And it was only because Alicja’s father was in the party that he also got a special voucher for a car, a Fiat 126p. But he still had to wait until 1980 for his vehicle, despite having received the voucher as a reward for becoming First Party Secretary at his factory.

People had to wait for everything, including an apartment. Alicja remembers: “When my future husband was 5 years old, his parents started paying money into a cooperative, so that 25 years later they would have the right to buy a small apartment. My parents started saving a little later because they had previously been saving for my sister.” Twenty-five years later, when she was 29 and her husband 30, they were then able to pool their entitlements, acquired over many years of saving, and move into a small three-room apartment, which was nevertheless far from debt-free and still had to be paid off.

Right and Left Doesn’t Mean Much in Poland

Today, Poland is a country with an exceptionally successful economy. But there are also negative developments. Adam Szlakpka, the leader of the liberal Nowoczesna party, is worried about his country. His party cooperates with a number of other parties, including Donald Tusk’s Civil Platform (PO), the Greens and the Inicjatywa Polska party in the Koalicja Obywatelska (Civic Coalition). The terms “left” and “right” have come to have a very different meaning in Poland compared to other Western European countries: Szalpka believes that 80 percent of the 130 deputies in the Koalicja Obywatelska are free-market, while the ruling Prawo i Sprawiedliwość (Law and Justice) party is very etatist. The PiS party is considered right-wing, but the supporters of the market economy I met in Poland regard that party as socialist because it stands for redistribution, nationalization, and bigger government.

These explanations were important for me, because in a survey on the opinion of market economy and capitalism I commissioned Ipsos MORI to conduct in Poland and 26 other countries, our findings were somewhat strange. In almost every surveyed country, we found that respondents who classified themselves as left-wing were critical of the market economy and capitalism. In contrast, almost everywhere we conducted our survey, respondents who classified themselves as right-wing were more in favor of the market economy and capitalism. In Poland, however, the situation was partly reversed.

At the time, I remember calling Dr. Thomas Petersen of the Allensbach Institute, who is also my liaison at Ipsos MORI and certainly the best expert on opinion polls in Germany (for a time, he was even chairman of the World Association for Public Opinion Research). I recall telling him: “Well, I have significant doubts about the data from Poland. Overall, they are plausible, but something must have gone wrong with the right-left allocation, perhaps an error in the coding.” Dr. Petersen asked Ipsos MORI to meticulously check everything—the translation of the questionnaire, the coding, etc.—but there was no doubt: the data were correct.

If I’m honest, I still didn’t quite believe it. It was only after my conversation with Szlapka that I felt more reassured: “What applies in Western Europe absolutely does not apply here. In our country, the former communists are more free-market than the PiS party, which Germans would classify as right-wing,” he said. The PiS party, he explains, combines nationalism with anti-capitalism and has been particularly successful with voters by claiming that the privatization of state-owned enterprises is a sellout to foreign capitalists.

PiS has radically stopped and even reversed a number of privatizations, some of which were previously carried out by the “left.” For someone from Germany, who considers leftists as anti-capitalists and (moderate) rightists as pro-capitalists, this can be confusing at first. Yes, sometimes you first have to go to the country where a survey was conducted in order to properly understand its results.

The next day, I met Tomasz Wroblewski from the Warsaw Enterprise Institute, which promotes the market economy and especially small and medium-sized enterprises in Poland. He takes a very critical view of the EU: in the beginning, he says, it played a positive role for Poland, but it is now moving more and more in the direction of state interventionism and restricting economic freedom.

Poland Welcomes Refugees From Belarus With Open Arms

Poland is often criticized by other countries for its refugee policy. However, Poland has not only welcomed a great many war refugees from Ukraine with open arms, it has also accepted refugees from Belarus. Looking at the total number of applications for residence in Poland as well as temporary work permits, Belarusians have been the second largest migrant group in Poland after Ukrainians since 2019.

I met six entrepreneurs from Belarus who fled the country after dictator Lukashenko rigged the August 2020 presidential election, a move that sparked a wave of mass protest. More than 33,000 people were arrested and more than 250 injured in the daily protests. Alexey was a top manager for several companies in Minsk before he joined the protests and led a group of 4,500 opposition members in the Belarusian capital. It was clear that he too would have been jailed if he had not fled. In Poland, he founded an organization that supports the families of political prisoners in Belarus and refugees from the country. With his business savvy and his excellent language skills, he has no doubts that he will also be successful professionally in Poland in the future.

Even before the events of 2020, Serg had repeatedly considered emigrating, but the brutal suppression of the mass protests tipped the scales and he too emigrated to Poland. He cannot understand anyone who still wants to live in the country where Lukashenko rules. Serg was a top manager in Minsk for 20 years and today he has a project in Warsaw to finance start-ups. Before moving to Poland, he lived in Denmark.

“In Copenhagen, I met a lot of happy people with a smile on their lips,” he says. “I also met a lot more happy and friendly people in Poland than in Belarus, although not as many as in Denmark. In Belarus you see many sad and bitter people and very little laughter.”

Incidentally, his subjective impression is in line with the World Happiness Index, which happiness researchers compile on the basis of surveys. Denmark is in second place, Poland in 48th place – and there are no data whatsoever for Belarus.

Mikhail is an alarm and security systems specialist. He emigrated from Belarus to Poland in November 2021. He wants to build his successful company here before expanding to other European countries, such as Italy. He is optimistic because Poles, he says, are fond of Belarusians and appreciate their fast work. But many Polish companies are a bit slow, he says, and he hopes to make speed one of his USPs (Unique Selling Propositions)—and the need for security systems is huge everywhere, including Poland.

I used to think that many Poles do not like the Russians for historical reasons. After all, they—like the Germans—have repeatedly invaded and divided the country. Today, however, I learned that Poles make a very clear distinction between Russians and Belarusians. Belarusians, everyone tells me, are held in high esteem in Poland. People in both countries feel connected by history, and unlike with many other neighbors, Poland has never been at war with Belarus. Today’s Belarus was part of the Polish-Lithuanian Commonwealth. Belarusians and Poles fought against Moscow during the January Uprising (1863-1864) and in the Polish-Bolshevik War (1919-21).

Balcerowicz, the Great Reformer

On the last day of my stay in Poland, I met the legendary Leszek Balcerowicz, the man to whom Poland most owes its economic success. He was twice finance minister and later head of the central bank, first fought inflation and stabilized the country economically, and then introduced the free-market reforms that allowed Poland to become one of the most economically successful countries in the world in recent decades.

Probably the most important insight Balcerowicz had, and the reason for the success of his reform program, was that step-by-step reforms would not help Poland overcome the problems it was facing. Only rapid, comprehensive and radical reforms in all areas could change things for the better. Balcerowicz, unlike many other economists, also possessed a finely tuned political intuition that told him: in this troubled situation, there is only a very short window of opportunity for reforms. He knew that he must either use this window of opportunity with decisive, rapid reform measures, or hesitate, and accept that it would then become more difficult or impossible to implement the reforms.

Balcerowicz is ten years older than me—he’s 75—but just as active. He is the founder and Chairman of the Council of FOR, Civil Development Forum, which promotes a market economy. Balcerowicz is worried about the future of his country. Instead of continuing the reforms he initiated, the PiS party, which has been in power since 2015, is pursuing policies that, he tells me, are more etatist than those of any other government since the end of socialism in Poland. The reforms that were implemented then are now criticized, with nationalists tarnishing privatization as a sellout to the Americans or Germans, and painting a distorted picture of Polish history.

The blame for the problems Poland experienced in the 1990s was allegedly not the communists, who had run the country into the ground, but the reforms. Yet, Balcerowicz notes, people in the 1990s did understand how important the reforms were and how much their situation improved as a result. Otherwise, he would not have won the 1997 elections with his party in Silesia, Poland’s most industrialized region.

During our conversation, I realized what I had already noticed when reading his books: he is not a typical theoretical economist. In fact, at one point he tells me that a theoretical economist is a contradiction in terms, since economists have to deal with reality. This reminded me a little of Marx’s well-known saying that “Philosophers have hitherto only interpreted the world in various ways. The point, however, is to change it.”

Balcerowicz changed Poland just as Margaret Thatcher changed Great Britain. For me, he is one of the greatest economic reformers of the twentieth century. I hope the people of Poland don’t forget that it was more market—and not more state—that made them so successful.

  • Dr. Rainer Zitelmann is a historian and sociologist. He is also a world-renowned author, successful businessman, and real estate investor.

    Zitelmann has written more than 20 books. His books are successful all around the world, especially in China, India, and South Korea. His most recent books are In Defense of Capitalism published in March 2023, The Rich in Public Opinion which was published in May 2020, and The Power of Capitalism which was published in 2019.