Solidarnosc government continues bureaucracy's economic program
"IF THE PRICE RISES continue, it is very likely that we will not be able to calm the workers down," Lech Walesa said on the announcement of the first steps taken by the government of
Tadeusz Mazowiecki. Calling on the new premier to speed up
POLAND ment by General-President Jaruzelski, and which it has accepted, is to pursue the policy of submitting the Polish economy to the demands of the capitalist financial institutions, first of all to the International Monetary Fund (IMF).
the reforms and on the workers to "roll up your sleeves," the
Solidarnosc leader did not hide his anxiety about the possibility of a "civil war" situation developing in response to too long dragged-out austerity measures.
The program of the new government is going to run up headlong against the aspirations of the workers, who see it as a hope for a rapid improvement in their circumstances.
CYRIL SMUGA
THE BROAD COALITION government that was formed September 12 under the leadership of Tadeusz Mazowiecki, editor of Solidarnosc's weekly paper, and with a majority of ministers coming from
Solidarnosc circles,' has aroused tremendous hope among the great majority of the
Polish population. It symbolizes the crisis of the universally-hated regime rooted in
Stalinism. And, in the eyes of the masses, it is the concrete confirmation of the failure of General Jaruzelski's attempt, under cover of the state of war?, to "normalize"
the plants.
Advance of popular self-organization
In this respect, it has reinforced the workers' confidence in their own strength, an effect that will not fail to have an impact on enrollment in Solidarnosc and the advance of popular self-organization.
A series of democratization measures announced by Mazowiecki flow from this situation. These involve, in particular, bringing the penal code and judicial procedure into line with the International Pact on Civil and Political Rights; reforming the courts; systematizing the law on assembly; eliminating the need for the press to get official permission to publish;
creating the legal bases for forming political parties; and bringing forward the local and regional elections. The police are also to be put under court and social supervision, and military service is to be humanized.
In the absence of details, it is hard to say to what extent these measures correspond to the democratic aspirations expressed by Solidarnosc. One thing, however, is clear — preventive censorship will be limited, if not eliminated. The role and personnel of the political police (SB) are also to be changed, although there is no question of abolishing it. It seems, therefore, that in the area of democracy, Mazowiecki does not envisage going beyond the Round Table Accords 3 unless he is forced to by mass mobilization.
The way in which the government was constituted, its makeup - in particular leaving the main levers of political power in the hands of the Communist Party (the army, police, transport and communications and the national bank) - and finally the program it announced to the parliament are in flagrant conflict with the aspirations of the people demonstrated in the June 4 elections*, as well as with the program of Solidarnosc's first (and only) congress.
Wave of strikes across country
This is an attempt by the only institution enjoying popular legitimacy (the bureaucratized leadership of Solidarnosc to hold back an intense popular mobilization, marked in particular by a wave of strikes across the country in June, July and August.
Tne task assigned to the new govern-
Presenting his government to parliament, which elected it by 402 votes against 13 abstentions, Mazowiecki formulated the credo of his policy in particular in the economic and social areas. It has to be noted that the differences with the practice of his predecessor, Mieczyslaw Rakowski are minimal. (See box.)
Mazowiecki is for "eliminating administrative control of prices save in absolutely exceptional cases, increasing discipline in paying taxes" for the enterprises and "continuing the reduction of subsidies" to them, as well as "limiting investments financed by the central budget" and "restricting credit facilities." What is more, "we will be forced to strictly impose tax penalties on enterprises that spend in contradiction to the rules. 'S Severe sanctions imposed on enterprises
These tax penalties were introduced under cover of the state of war. They impose very severe sanctions on enterprises that increase their payrolls over an arbitrarily set ceiling. This tax brought virtual bankruptcy for all the enterprises whose average wage level in 1982 was lower than that of the neighboring plants, since their workers migrated en masse to the plants where the wage level was higher. It has the special feature, moreover, that it applies only to state industry, thereby 1. Of 23 ministers, 12 are close to the Civic Parliamentary Group (OKP, the Solidarosc parliamentary fraction). Four are members of the United Peasant Party (ZSL, formed as a result of the war waged by Stalinist cadres for control of the peasantry, three are from the Democratic Party (SD, formed as a result of the war waged by Stalinist cadres for control of the urban petty bourgeoisie), four are from the Polish United Workers Party (PUWP, the Communist Party). In addition, the director of the National Bank, a member of the PUWP, is an ex officio member of the Council of Ministers. 2. See International Viewpoint, No. 169, September 18, 1989. 3. On the round table, see the articles in /V, Nos. 159 and 163, March 20, 1989; May 15, 1989 4: See TV, No. 166, June 26, 1989. 5. This quotation and the following are taken from the 19, 19 govemment daily, Repospolita, September 3 13, 1989.
International Viewpoint #171 • October 16, 1989
POLAND allowing private companies to enjoy considerable tax privileges.
Until recently, not only Solidarnosc but almost all the self-management councils fought against this iniquitous tax, which has also been criticized by most Polish
The announcement that it economists.
will be maintained is thus a token of continuity.
The sum of these measures can only lead to bankruptcy for many enterprises, regardless of their potential for recovery.
Mazowiecki is well aware of this, and thus warned about "the failure of some enterprises and the unemployment that will flow from this." He even went further:
"This can lead to a temporary drop in production and, consequently, to a new decline in the standard of living of the society."
With regard to social protection measures, he upset the idyllic image of the life of the unemployed some of that the
Solidarleadernosc ship's ideologues have helped create: "We will also introduce various elements of social protection for those who lose their jobs.
People should be aware, however, that all this depends on the budget, and cannot therefore exceed the limitations set with the fundamental aim of fighting inflation.
This aid will, therefore, be limited."
Transition to modern market economy
As far as structural changes in the economy go, the new premier has announced that "the government will take measures to start the transition to a modern market economy of the type existing in the developed countries...The fundamental principle will be public and open sale to all citizens and institutions interested in economic efficiency. There will also be a place for all other sorts of economically efficient ownership....The legal foundation will have to be established for a stock market....It is likewise necessary to remove the obstacles to creating new private banks."
Incomes policy will be subordinated to this option. The new individual income
4 tax will be progressive "but its progressiveness will not be in conflict with the main goal of awakening the immense potential of human initiative and the spirit of enterprise that is lying dormant in our
The peasants, who mobilized en masse in the preceding months against the policy of low wholesale prices and high retail prices for agricultural produce, will not be spared. Mazowiecki stressed "the need for developing nonagricultural industries in the countryside so as to create conditions for providing jobs and decent lives for persons who have been working up now on uneconomically farms." This is hardly a small matter when you consider that this category includes a third of the Polish peasantry.
In order to carry through this program, Mazowiecki, like his predecessors, hopes to get foreign aid. And he set the terms for this: "We are not asking for disinterested aid but for investments of capital and technology profitable for everyone." He also stressed: "We are aware that getting such aid is conditional through the present implacable program" presented in his speech to the parliament. He indicated that it was inspired by the IMF, the US State Department, the Summit of the Seven Industrialized Nations,
In the statements of the Solidarnosc leaders and the new ministers, we hear a refrain that the reforms cannot be carried through without the assent of the society. But Tadeusz Mazowiecki has maintained a prudent silence about how such consent is to be verified. Basing himself on the undeniable hope that his government has aroused and on the sympathy he enjoys among the workers, he has preferred to stress that "the conditions exist today for overcoming the traditional between the good of the nation and the interest of the state." This was immediately echoed by Lech Walesa: "For the first time in a half a century, Poland has a government that millions of people can consider their own." 6
However, this sort of rhetoric cannot the innumerable pitfalls along cover up the road of implementing this program.
With regard to democratic reforms, the new government will have to take account of the resistance of the state apparatus, which it does not contemplate changing.
This situation was quite well summed up by Polityka weekly
(the of the paper
Communist Party's liberal wing)
in bold type on its front page:"Your premier, our apparatus." The author of the article under this headline revealed, that moreover, the nomenklatura reached its peak in the mid-
1980s. It included 270,000 posts to which appointment had to be approved in printhe ciple by
Communist Party or the three
Rya. DYKA parties of the official coalition and in practice by the officer caste! It was only in the fall of 1988, when a firm grip was regained on the apparatus after the crisis of 1980-
1981, that the list of such appointments was reduced by four fifths.?
What Polityka did not say is that, in the meantime, other mechanisms for control by, and protection of, the apparatus have been put in place not directly linked to the crumbling superstructure of the Communist Party. The recent setting up a virtual shadow government around President Jaruzelski, among other things, should make it possible to maintain control.
Economic situatjon disastrous
In the economy, the situation is disastrous. "For the first time since 1982, we are seeing a rapid fall of production...In
August, prices increased by 50%, and the economists predict a 40% rise for September. If this lasts a year, we will have an inflation rate of more than 4,000 per cent.
6. Statement published in Rzeczpospolita, September
13, 1989.
7. Polityka, No. 35, September 2, 1989.
8. Mazowiecki's speech to parliament, op. cit.
Rakowski explains economic policies
October 16, 1989 • #171 International Viewpoint in early July, the outgoing govern-
• Mieczyslaw Rakowski responded to criticism of its price risas by opposition spokesman Jacek
Kuron by summing up the economic reform measures it had laken. This statement lustrates the continuity between the economic palicy of
Rakowski and the new government of Taceusz Mazowiecki,
"Total freedom to undertake and conduct economic activity. Equality of the different sectors as regards employment, taxes and access to bank credite and the means of production, This model leade to freedom of prices and wages
Unification of the conditions for all forms of enterprises, including fot-
Freedom to transfer profits into foreign curtencies, the possibility for foreigners to head companies, freedom to buy and sell products at the market prices.
The possibility to create a curren cy market, freedom of circulation of foreign currencies, a guarantee of holdings of foreign currency, the That would mean that a roll would cost not 40 zlotys but 1,600."8
When Tadeusz Mazowiecki said this to the parliament, not only did rolls already cost more than 100 zlotys (and not 40) but the estimates for inflation in September had already been exceeded. Far from taking a jump and then stabilizing at a point of equilibrium between supply and effective demand, as both the Solidarnosc and Communist experts claimed they would, the prices freed by the outgoing government of Mieczyslaw Rakowski on August 1 have continued their frantic rise.
### Dollar becomes hedge against inflation
Western currencies, whose inflated free-market exchange rates have up until now been based on the existence of heavily patronized dollar-stores, have become hedges against inflation. The dollar rate has gone up to one per 14,000 zlotys, and according to Mazowiecki, unless something changes, it will reach 44,000 zlotys in a year from now. But it is symbolic of the country's economic disorder that even the upward course of the dollar is far from stable. All that needs to happen is for a shipment of scarce goods (or those that can be stocked as a standard of value) to arrive, and the level of the dollar can plummet overnight. For example, on September 11, the dollar fell to 9,000 zlotys after a limited company issued several thousand shares of stock quoted in zlotys. The National Bank was not able to provide possibility for individuals to buy and sell foreign currency.
The possibility to create new banks, based on the principle of competition on the market.
"The division of the assets of enterprises between a treasury share that will form the basic capital and a und of the sell-linanced anterprises, which will favor the gradual development of a capital market.
"A fund for developing the market. that will promote competion in
*A free market in fuel and a part of the means of iransport (elimination of coupons for buying gasoline and automobiles)
"The possibilty of renting or using state assets by private companies and persons engaged in economic activity based on the principles of
*Freedor in ordering, buying and transforming agricultural products preparing the way for free sale of all
Azeczpospolita, July 7, 1989
The inflation is also complicating trading relationships between the country and the cities. In a year, the price of piglets has multiplied by 20, which has upset all the calculations of the pig raisers. A Polish journalist quoted a farmer on this... days ago, I sold a 120-kilo pig for 200,000 zlotys, and I wanted to buy two piglets. It seems that they will cost me 250,000 zlotys, but then I would have no more money for fodder to raise them." The immediate result is a dangerous drop in the number of young pigs being raised, and the shortage of pork will be still graver in the win-
"The farmers lack circulating capital. Inflation is gobbling up everything."* As regards the rest of agricultural production, there is already talk of hoarding by farmers. They are selling off their products very slowly, or else rushing to put their income in dollars, which is the only way
Strikes are resuming at a fast clip. At the moment, these are not large-scale mobilizations or spectacular strikes hitting big plants, where the wage increases won in July and August have not yet been wiped out by inflation (but this will only be a matter of weeks). Elsewhere, the hope that the new government will use its power to bring a rapid halt to runaway prices is widespread. 1°
In these conditions, implementation of the measures announced by Mazowiecki will run into resistance from the workers. The Solidarnosc leaders are aware of this,
POLAND and now reject the idea of a "moratorium on strikes" an idea that Lech Walesa launched at the end of August, before being disavowed by several regional leaders in his team). They limit themselves to hoping, like Lech Walesa, that the new government "will effectively transform our country, that it will win the social support essential for its work, that it will prove to be a government that measures up to our common aspirations and which can take advantage of the opportunities opening up for Poland."
This statement came after Walesa said that he would undertake every possible action to help the government to accomplish its difficult task," while stressing that the union he leads "is concerned about living standards today and tomor-
This does not at all mean that the Solidarnosc leadership is prepared, even partially, to oppose the measures announced by Tadeusz Mazowiecki. They have been part of the union's program since 1985, and in this respect, they consciously broke with the program adopted at the union's first congress in August 1981. However, they will be sensitive to pressure from the ranks, especially as the new congress scheduled for the beginning of next year
In fact, unlike General Jaruzelski's team appendages (the OPZZ), the Walesa leadership of Solidarnosc draws its strength from the organization of the working people. It can hold back or divert mobilization, but it cannot break it without sawing off the branch that it is sitting on.
Given the de facto wage freeze and high cost of living, workers' mobilizations may occur in the coming months and cause differences and fractures inside Solidarnosc. Over recent years, the political evolution of the union leadership has been one of an apparatus largely independent of a base reduced to silence by state repression. Thé bureaucratization process has thus been able to advance without provoking a major crisis. But rebuilding a legal union is changing this situation.
The crisis that appeared within the group of historic leaders of the union a year ago, with the formation of the Working Group of members of the National Commission, which opposed the team around Lech Walesa head on, got a limited response in the country because this was largely a battle of chiefs without Indians. Today, it may re-erupt, although in a different form. in response to the threat that Tadeusz Mazowiecki's projects represent to the workers' dignity and standard of living. * 9. Jozef Kusmierek in Gazeta Wyborcza, No. 92, September 14, 1989. 10. On this subject, see the discussion with Solidarnosc leaders at the POLAR plant in Wroclaw, p. 20. 11. Reczpospolita, September 13, 1989.
----- photo credits and running heads -----
5
Union activists
International Viewpoint #171 • October 16, 1989
POLAND prise, that "between May 1 and August 1 this year, the enterprise lost 600 workers, who left to look for better paying jobs."
Along with those at the Hutmen and
Hydral factories, the Solidarnosc local in discuss Mazowiecki
POLAR is one of the union's strongest and most dynamic branches in Wroclaw.
trade-union membership
The level of there far exceeds the regional average.
government
Malgorzata Calinska, chair of POLAR
Solidarnosc, saw this as the result of "the effective work of the underground union after 1981, of a continuity never broken by the repression," and also of "the work
WHAT IS the attitude of Solidarnosc's rank-and-file union activists to the new government? What do they expect from
Tadeusz Mazowlecki? What Immediate steps do they propose?
On September 13, in ine wake of the formation of the new government, International Viewpoint put these questions to members of the Presiding Committee of the Solidarnosc local in the POLAR enterprise in Wroclaw - Malgorzata Calinska,
Zygmunt Klatka and Ryszard Chaszczewicz, union full-timers in the enterprise.
CYRIL SMUGA
SOME PEOPLE criticize the
Walesa group. But who else was able to take advantage of the social pressure to arrive at a situation where everyone, including the critics, can express themselves freely?
Who has opened the way for the legal rebirth of Solidarnosc? Who has enabled us to get the power that we have today? It is Lech Walesa. On the other hand, those who criticize him fostered distrust and thereby undermined the relationship of forces favoring us.
You can't change everything at one stroke, by decree, it takes time," they said.
With 8,000 employees, of whom 4,900 are concentrated in Wroclaw, POLAR,
Poland's main producer of refrigerators, freezers and washing machines, is one of the country's major enterprises.
Some
40% of its workforce belongs to Solidarnosc, and 8% to the official union confederation, the OPZZ. The Self-Management
Council, dominated by Solidarosc activists, has just appointed a new director, who is not a member of the Communist
Party, to replace the old one, who was forced out after he tried unsuccessfully to use his position to gain the chairmanship of a limited company that was to be based on the enteprise.
other Polish enterprises,
Like many
POLAR is in bad shape. Some 60% of its machinery is obsolete and worn out. The structure of its workforce is typical of bureaucratic management. Out of the
4,900 wage earners in Wroclaw, 3,150 are workers (of whom 1,700 are directly involved in production and paid on a piece-work system). About 900 perform various supervisory functions, and 930
6 work in she offices. The average wage in
August was 173,000 zlotys, to which you have to add 50,000 zlotys in bonuses and 15,000 to 17,000 zlotys compensation for inflation.
With around 240,000 zlotys at the beginning of September, the average worker at POLAR had little chance of feeding her or his family up until the end of the month. According to the calculations published in Tygodnik Solidarnosc (No. 15, September 8, 1989), based on August 20 prices, the minimum cost of food alone for a month for a family of four was 281,120 zlotys. Since then, prices have continued to climb. So, there was nothing surprising in the statement by Zygmunt Klatka, a member of the presiding committee of Solidarnosc in the enter-