politburo decided that 'left deviationism" was a greater threat than that of the right. Translated, this means that the efforts to foster elements of capitalism in China and open the country to outside economic pressures will be stepped up. One aspect of these efforts are attempts to do away with guaranteed jobs and food supplies. But this attack on cherished rights and privileges is not going unresisted.
ZHANG KAI*
OVERNMENT propaganda
G on Cracking the Three Irons
(Iron Armchairs, Iron Wages,
Iron Bowls) was enthusiastically launched early this year, but has recently subsided. The term now is seldom referred to, which might have to do with broad resentment against the attacks on workers' rights.
The target of the Iron Armchairs is supposedly the secure positions and privileges of cadres in the enterprises. What was proposed was the election of the leadership by the workers. But instead of bringing about the better development of the economy and workers' seif-management, the campaign was from the start restricted because only medium and low ranking cadres have been reshuffled, and high ranking cadres in general are unscathed, except for a very small number of enterprise managers that are running a big deficit.
The cracking of Iron Bowls and Iron
Wages, however, is a direct attack on the rights of workers in general. Acute competition has been incited by workers who are promoted or demoted according to their labour intensity, skills, responsibility and productivity. Except for the strongest, who get promotion and better wages, workers in general receive lower wages, and the weak are stranded in dismissals and unemployment. In enterprises where such reforms are conducted, about 20% of the workers are dismissed.
According to official reports, the enterprise reforms have been vigorously implemented from the start of 1992. A ruthless slogan was adopted: "To crack the Three
Irons with the Three Irons". The latter, the
Iron Heart, Iron Face and Iron Wrist, are to be employed in cracking the Iron Armchairs, Bowls and Wages. One example of what the slogan means in practice comes
• This article first appeared in the August 25, 1992 journal published in Hong Kong from Zhuzhou City, Hunan Province: here 60 enterprises could not meet the efficiency target set and wages were cut by up to 20%. This means an annual average wage cut of 400 yuan for the 40,000 workers in these enterprises. The China News Agency reported on February 10 that "this act caused serious repercussions across the province". Reuters, on April 14, quoted the English-language China Daily as reporting that the State Council had announced a decision to allow enterprises to manage and decide on wages. This measure is aimed at ending the standardization of wages for workers in state enterprises.
Increase in redundancies
As for the Iron Bowls, Ming Pao reported on April 30 that, according to officials in the Shanghai government, there has been a sharp increase in the redundant staff screened out in the streamlining of 220 state enterprises undergoing the reform. Over one million workers in Shanghai have joined the ranks of those staying in a job without work. This is a startling figure, since there are five million workers in Shanghai, four million of them employed
The China Daily quoted the Bureau on Economy and Trade (BET), which is under the State Council, to the effect that, in order to activate the state enterprises, over 1.4 million workers have already been dismissed this year. This is 1% of the total urban workforce of China. The BET estimated that there are 10 million redundant staff throughout the country (Ming Pao, June 16, 1992). Guangdong Province is also trying to catch up with the reforms. In the Provincial Labour Conference held in late January, it was decided that the labour contract system will be fully implemented throughout the province within three years.
Workers have reacted to these attacks.
said that most women workers in state enterprises in Shanghai felt the same way. Some workers complained that they were forced to sign contracts which did not give them job security and were thus unjust and flavoured with capitalism.
Some workers have responded with extreme actions. Among reported incidents are:
1. In a state enterprise in Nanjing, a woman worker asked for sick leave and scuffles with the manager began. The worker staged a sit-in in the office, was fired by the manager, and the case went before the District Labour Tribunal which directed the management to re-employ the worker since she was indeed ill and her claim had been justified. The management refused on the grounds that the enterprise's autonomy had been infringed. The case was brought to court. The Jiangsu Provincial Labour Union pronounced its support for the worker in this case.
2. In the first two months of the reform in Jinhua City, Zhejiang Province, seven managers and directors were beaten up by workers who were transferred away. A director of a biochemical factory in Hefei was killed by a worker driving a vehicle. A worker in a factory in Yunnan Province did not get a wage increase; he drove a car into pedestrians, causing 34 casualties. A worker in Houma, Shanxi Province, shot the director of his factory because he had been dismissed. There have been other cases of management personnel being beaten up, wage protests and sabotage of productive equipment in Shenyang and Shanxi (Ming Pao, May 1, 1992).
3. In Jinjiang City, Liaoning Province, a worker in an oil refinery stabbed a leading cadre in his factory and was sentenced to death, suspended for two years. The case caused a great stir and quite a number of workers who felt their interests had been damaged by the reform took the opportunity to create a fuss, upbraiding and beating up the leadership, writing blackmail letters or smashing the windows of leading cadres (China News Agency, May 29, 1992). Liaoning is a heavy industrial centre. The Liaoning Daily reported that workers felt rising resentment of the reform because it will cause some to lose their jobs or part of their wages, and all workers will have to spend more on housing and medical care (Reuters, June 10, 1992).
4. Shanghai, the country's largest industrial city, has seen the strongest response from workers. The chief of the Public Security Bureau, in an interview with the Shanghai Law Daily, said that managers supporting the reform met with opposition
War at the summit
September 14, 1992 • # 234 International Viewpoint from the workers. There had been strikes, sit-ins, protests and disruptions of production. "Worker turmoil" and "violent resistance" occurred (AFP, June 15, 1992). Such resistance, according to the Liaoning Daily, had led the authorities to cease promoting the slogan of Cracking the Three
CHINA / POLAND
THE acceptance by the Diet (the Polish parliament) on July 11,
Irons.
1992 of the broad coalition government led by Hanna
Since 1986 the government has been tal-
Suchocka has, for the time being, put an end to the longest king about streamlining the enterprises and and most bitter political crisis that the Polish Third Republic breaking the Big Iron Rice-Boiler, but has been forced to proceed slowly owing to workers' resistance.
The government
"I do not wish to speak of that which was bad. I wish to announced that by the end of February this speak of the national agreement. Ours is an extremely difficult year 17.67 million workers were involved coalition" explained the new prime minister on the day of her in enterprises carrying out reforms of personnel, wages and social security. This
Hanna Suchocka enjoys the support of both the main party amounts to about 16% of all workers in state enterprises.
emerging from the tradition of the Solidarnosc trade union, the Democratic Union, of which she is a member — and by
Patience and prudence extension of the liberals - and of the Catholic right for her support for the law penalizing abortion and her traditionalist
The May 28 editorial of the People's
Daily quoted two instances of worker suppositions. She thus embodies in her own person the port for the reform. One was a worker's compromise that seeks to preserve the institutional speech in support of the general lowering framework that emerged from the collapse of Stalinism and by one point of the wage scale for all worhas been perfected by the new political-parliamentary elites, kers at the Xuzhou Crane Factory. The who have been largely discredited by the recent political other was the positive response of 25 older workers for a campaign to reorganize work for 20% of the workers at the Second
Dyeing Factory in Tianjin. The editorial has experienced.
nomination.1 crises.
JAN MALEWSKI & JAROSLAW WARDEGA — July 15, 1992.* nonetheless added that the reform needed careful, prudent persuasion, and particular attention to the mood and sentiments of the workers; patient ideological and political work had to be conducted in matters that concerned the interests of the masses.
The secretary of the All-China General Labour Union, in a speech to the Work Conference on Conducting Ideological and Political Work among Workers, complained of the difficulty in ideologically persuading the workers (Workers' Daily, June 15, 1992). Workers' resistance has hindered the smooth implementation of government reforms of wages and the labour system. Fiercer resistance can be expected if the attempt is made to privatize state enterprises. The Chinese working class has a tradition of struggles. It is 145 million strong and much better educated than before. However long years of repression under the bureaucratic rule of the CCP have weakened the workers' collective strength and the various attempts to organize independent unions, particularly in 1980 and 1989, have been ruthlessly crushed.
Due to the lack of organized resistance, workers have so far responded to the attacks on their rights by individual assaults on factory managers and directors.
Such extreme measures reflect the workers' lack of channels to defend their rights and improve their conditions. It is urgent that the working class organize itself to become a strong force and intervene in social reforms. *
N ONETHELESS, her task will
not be an easy one. While the main parties in the government are agreed on the need to continue along the road of the restoration of capitalism in Poland, their divergences are nevertheless numerous: they concern not only the delicate question of "de-Communization" , which brought about the inglorious end of the Jan Olszewski government in June 1992, but also relations between church and state; the role of the state in the process of capitalist restoration; relations with foreign capital and its institutions; the respective place of so-called "national" values and the liberal tradition; and finally relations with the trade union movement.
Moreover, the parliamentary guerilla enthusiastically indulged has left open enmity between the ministers originating from the neo-liberal currents? and those of the Catholic-national right or Christian Детостасу. 3
The first woman prime minister in the history of the country must also take into account the pressure of the President of the from the latent political crisis to strengthen his position and place trusted aides in key posts: Krzysztof Skubiszewski at the
Ministry of Foreign Affairs, Andrzej Milczanowski at the Ministry of Internal Affairs and Janus Onyszkiewicz at Defence.
After having won the "war at the summit" against Hanna Suchocka's predecessors — first by opposing Tadeusz Mazowiecki, in 1990 then in obtaining the dis* An analysis of the recent strikes in Poland will appear in the next issue of IV. 1. Gazeta Wyborcza, no. 161, July 10, 1992. 2. The Democratic Union of former prime minister Tadeusz Mazowiecki has 62 deputies in the Diet and controls four ministries (Defence, Labour, Finance and the Secretariat of the Government), as well as the post of prime minister; the Liberal Democratic Congress (KLD) of former prime minister and current minister in charge of relations with the EC, Jan Krzystof Bielecki, has 37 deputies in the Diet and has been given the ministries of State Administration, Post, Privatizations and Relations with the EC: finally, the Party of the Polish Economic Programme (PPG), the product of a split from the BeerLovers Party (PPP), has obtained the post of minister for the Promotion of Enterprises. There are also three ministers from Popular Agreement, the most pro-liberal of the peasant parties, which originates from Rural Solidarosc 3. The Christian National Union (ZChN) of the president of the Diet, Wieslaw Chrzanowski, has 49 seats in the Diet and 6 ministers (Vice Prime Minister for the Economy, Planning, Justice, Education,
Culture, Transport). Two other small groups are worth a mention here: the Party of Christian Democrats (PChD) with the post of vice prime minister charged with political questions, and the Christian
Popular Pary (SLCh) of agrarian tradition, with the 1 3
ministries of Health and Industry.
International Viewpoint # 234 • September 14, 1992
POLAND missal of Jan Olszewski in June 1992 -
Lech Walesa has tirelessly pursued his goal of reinforcing presidential power. The setting up in early July of a Commission of
Order which brings together, under the presidential thumb, the heads of all the
Polish state's "bands of armed men"4 has underlined the new relation of forces emerging from the recent crisis at the summit of
Police pacify peasants
The first demonstration of the effectiveness of the new arrangement was given on
July 9, when the police brutally "pacified"
peasant supporters of the new organization
Samoobrona (Self-Defence) - simultaneously a peasant trade union, political party and militia - who had blocked roads to demand the cancellation of their
The nomination of the government coincided with a new rise of social tensions. In addition to the peasant mobilizations, which sought to encircle the capital and block its supplies, strikes were announced for July 20, 1992 in the mining sector and the copper works in Lower Silesia, as well as in the coal basin of Upper Silesia.
Without threatening the existence of the new government, such a social climate can only increase its fragility, limit its margins of manoeuvre and diminish the favourable impression that a section of the public accords to new leaders.
The government's goal is to give the pro-capitalist political elites the time needed to find institutional solutions to the crisis and guarantee, in the longer term, the stability of the state. Thus, the Diet is working on a new electoral law which would put an end to the extreme fragmentation of the political scene and avoid a repetition of the "war at the summit" which has characterized the new Polish democracy since the end of the honeymoon period which the first government originating from Solidar-
If the Diet succeeds in deciding between proposals for a proportional system, under which the different political formations on the lists would have to cross a minimum threshold, and for a majority system, elections could be organized before the end of the year.
The election of October 1991 starkly revealed the crisis of the Polish transition. Two years of free market policies, primarily hitting those whose mobilizations had been the architects of the changes, has led to a growing popular scepticism about the new political scene - the strongest expression of this being the massive abstention rate (56.8% of the electorate) and the extreme fragmentation of the votes 14 in winning more than 6% of registered none of the parties on the lists succeeded voters) at the recent elections.5
No stable majority could establish itself in the Diet which emerged from this election. The Olszewski government, formed at the end of 1991 after two months of futile attempts to form an alliance between the parties of the right — the Centre Alliance
(PC) and Catholic Action (National Christian Union, ZChN) - experienced great trouble in finding majority support for its budget and fell into a growing paralysis, its parliamentary initiatives being systematically torpedoed by negative majorities, comprised of both the neo-liberal right and the post-Stalinist left.
Despite being built around the parties which had carried Lech Walesa to the presidency in 1990, the Olszewski government nonetheless rapidly entered into open conflict with the president.
The latter, attacked in the press by his former collaborators, and presented as an incompetent psychopath and a puppet in the hands of his former driver, Mieczyslaw
Wachowski (now a minister of state), counter-attacked by taking it out on the government° - first by dismissing the minister of defence, Jan Parys, then by demanding the resignation of the Olszewski government.
Caught between the pressure of the Diet and that of the president, the Prime Minister chose flight. On May 28, 1992, at the initiative of the deputy Janusz KorwinMikke, spokesperson of the ultra-liberal grouplet, the Union of Real Politics, the Diet voted through a resolution demanding that the Minister of the Interior provide full details on anybody exercising a public function who had collaborated with the political police between 1945 and 1990 Korwin-Mikke did not conceal the fact that he had agreed the text of the resolution with the Minister of the Interior, Antoni Macierewicz, a member of the ZChN.
### Lists of agents
Although a significant minority of deputies immediately challenged the resolution and referred the matter to the Constitutional Tribunal, the Minister of the Interior immediately took the decision to publish the lists of presumed "agents". On June 1, 1992, the press, hostile to the government, made public a draft law on de-Communization prepared in secret by the Minister of the Interior. On June 4, Macierewicz submitted to the presidents of the parliamentary groups a list of 80 names, among them several people who had been historic leaders of Solidarnosc and political prisoners under the old regime, but also Leszek Moczulski (leader of the KPN, political prisoner between 1981 and 1986) and Wieslaw Chrzanowski (leader of Maciarewicz's party, the ZChN and president of the Diet).
The next day, the lists appeared in the press. The same day Piotr Naimski, director of the Office of Protection of the
State in Olszewski's government, put the
Vistula garrisons of the Ministry of the
Interior's forces on a state of alert. 8
In the early morning of June 5, at the request of Lech Walesa and 50 deputies, the Diet voted down the Olszewski government - with the partisans of the latter not hesitating to present the conflict as opposing the "Communists and their agents" to the "true Poles".
But neither this, nor the immediate replacement by the President of the Ministers of Defence and the Interior, nor even the nomination by the Diet in the course of the afternoon of a new Prime Minister, put an end to the affair. The Constitutional Tribunal's decision on June 19 to suspend the famous Diet resolution as illegal defused some of the danger, but it has not calmed
Once the Pandora's box was opened, the accusations flew out. Lech Walesa, himself challenged for having signed some acts of collaboration when he was arrested in 1971 - something he had admitted in his memoirs - counter attacked by making public the deeds of an agent whose code name was quickly recognized as being the pseudonym of Zdzislaw Najder, former director of the Polish section of Radio Free Europe and longtime close collaborator of Walesa in his struggle for control of the Movement of Civic Committees — but who has since become a sup-
Little by little, the whole of the political class and the highest office holders in the state have been implicated in a frenzy of
The old divisions inside the democratic opposition dating from the 1950s and 1970s — which are little understood by the population at large - have come back to the surface like so many phantoms.?
Adam Michnik has written: "The action begun by minister Macierewicz, with the agreement of Prime Minister Olszewski, 4. Namely, in addition to the new ministers of Defence and the Interior, the heads of the Office of Protection of the State (UOP — political police), of the police, the National Security Council, military training and the Vice-Prosecutor general 5. See /V 217, November 25, 1991. 6. See the interviews given by his former spokesperson, Jaroslaw Kurski, with his collaborators and former collaborators, published under the title "The boss - before the last chapter" by Gazeta Wyborcza, no. 95, April 22, 1992. 7. This draft law envisaged banning from any public employment not only collaborators with the former regime's political police, but also all those who had exercised, in the past, any kind of leadership activi ty, even at the lowest level, such as cells of the political organizations of the old regime. The principal oppositionists of the 1960s and 1970s would thus be excluded under this law. Gazeta Wyboreza, no. 128, June 1, 1992. 8. This was revealed later. Gazeta Wyborcza, no 139, June 13-14 1992.
September 14, 1992 has poisoned Polish political life for a long time. Now, we are going to find for a long time to come suspicions, defamations and calumnies. Nothing has been made explicit. But the Polish state has been made to look ridiculous. I would go further: a certain idea of Poland, which lasted a long time, which we honoured and saw as a title of glory — the ideals of solidarity, dignity and truth - has been dishonoured... The Polish state finds itself in danger and it is for this reason that the reaction of Walesa is justified.
"It is thus that we have entered the new phase of the "war at the summit", which began two years ago. It was then that the method of false defamations, unjustified accusations and hollow promises was for the first time employed, by the common agreement of the president and his current adversaries" 10
The nomination to the post of Prime Minister on June 5 of Waldemar Pawlak, the young leader of the Peasant Party (PSL)!!, who is foreign to the Solidarnosc tradition, bears witness to the disarray among the new political elites. Only someone from outside the magic circle could form a majority and give the illusion of the continuity of state power.
The nightmare of which Adam Michnik spoke cannot be understood out of context. On the surface it appears to be the fruit of a settling of accounts between factions torn by political and personal rivalries, but its roots go deeper. Nor is it simply the heritage of the activities of the Stalinist political police over past decades.
The crisis of the new Polish state, born out of the transition negotiated in 1989 between the anaemic bureaucratic regime of General Jaruzelski and the leaders of the opposition, should not be confused with its surface appearance. The roots of the crisis lie in this state's orientation towards the construction of capitalism on the ruins of so-called really-existing socialism, together with the policies followed for almost three years by the successive governments emerging from Solidarnosc. The many corruption scandals among the new political personnel, their medieval mores, 12 and their very special fashion of conducting political debates only form the decor. Although the new Polish state has been established little by little, it has all the same totally revolutionized society. The gradual character of its installation reflected the Stalinist bureaucracy's awareness of the complete bankruptcy of its regime and its fear of being swept into the streets.
Certainly, the bureaucracy believed itself capable of sharing power for a time with the Solidarnosc elites, and of using the latter to obtain Western aid while preserving the essentials of its own rule.
### Illusions swept aside
These illusions were swept aside by social pressure, itself diverted and confiscated by the new regime. Thus the Polish workers' state, for a long time reduced to its shadow and hijacked by the bureaucracy, collapsed under the combined blows of the Polish working class and the pressure of the Western bourgeois institutions.
The collapse in January 1990 of the Polish United Workers Party - the Stalinist party and the essential cog of the old state apparatus — was both an effect and an accelerator of this process. The state of the old regime was replaced by a new state apparatus step by step: the partially free elections of June 1989; the nomination of a prime minister of Solidarnosc origin at the head of a coalition government in September 1989; the introduction of market economic mechanisms and the total liberalization of foreign trade in January 1990 under IMF and World Bank pressure; the purge of the repressive apparatuses of the state, and finally the dismissal of the ministers who had served under the old regime in summer 1990 and the presidential election of autumn 1990. The parliamentary elections of autumn 1991 put the final touch to this process.
It is clear that the change in the nature of the state does not mean that all the administrative apparatus of the old regime has been replaced. Far from it. But it has been put at the service of a qualitatively diffe-
POLAND rent political, economic and social orientation.
The old apparatus has served first to prettify the new "state of laws" seeking, on the one hand, to guarantee the individual liberties of citizens and, on the other to assure respect for private property.
Two laws, adopted on July 13 and coming into force on August 1, 1990, allowing the privatization of state enterprises and the creation of the Ministry of Privatizations, constituted the touchstone of this edifice. They permit the transformation of state enterprises into private companies with transfer of the shares forming the capital, their liquidation in case of a delicate financial situation or, finally, their hirepurchase.
It is worthy of note that a state enterprise can be transformed into a single private company, of whom the sole shareholder is the state, by the unilateral decision of the prime minister; a maximum delay of two years is then envisaged for the transfer of the shares held by the state to third parties.
On June 14, 1991 a new law on companies with foreign participation harmonized the legislation concerning private enterprises held entirely or partially by foreigners with that of the enterprises held by national capital and liberalized the rules concerning the repatriation of profits. Henceforth profits, after the payment of taxes, can be transferred abroad without any particular limitation.
With the introduction of Value Added Tax (VAT) in January 1992, and the changes in tax legislation in January 1991 the Polish tax system has been rendered coherent in terms of a neo-liberal economy. Finally the 1927 Labour Code has been changed to authorize collective dismissals and the old Code of Commerce (1934), of German inspiration, has been dusted off and restored. Thus, the legal edifice which constitutes the indispensable basis of "free enterprise", ', whose introduc9. In 1956 a conflict emerged between Jacek Kuron and Antoni Macierewicz inside the scout movement, the first seeking to make it a "red" organization linked to the October Left, whereas the second wished to organize an independent scout movement, linking up with the wartime tradition. In 1977, another divergence emerged between them inside the Committee for Workers' Defence (KOR): the first supported a strategy of "Finlandization" of Poland, while the second rejected any idea of negotiation with the regime. 10. A. Michnik, Gazeta Wyboreza, no. 133, June 6-7 1992. 11. Originating from the fusion of a minority of militants of Rural Solidarnose with the "renovated" apparatus of the old satellite peasant party, the ZSL. 12. On this, it is necessary to mention an affair that made front page news recently. The Vice-President of the Diet, Andrzej Kern (PC) mobilized the police and the forces of justice to stop his 17 year old daughter from living with her boyfriend. The parents of the latter were arrested at night, subjected to a search and accused of kidnapping. Kern explained living with a young man "who will be no better than 1 5 publicly that he could not tolerate his daughter a trader".
International Viewpoint # 234 • September 14, 1992
POLAND tion had begun prudently in 1989 under the last government originating from the Stalinist stable, was completed in 1991.13
Economy opened up
Parallel to these legal transformations, the successive governments of Solidarnosc origin have put the finishing touches to the opening up of the Polish economy to foreign trade.
The monopoly of foreign trade as well as central administrative planning had already been abolished, in essence, by the last government of Stalinist origin. It sufficed to streamline customs duties - which led to several scandals - and to assure the convertibility of the national currency, the
This was done with the support of the IMF in January 1990. The rate of exchange was fixed at 9,500 zlotys to the US dollar, and maintained for one year, despite a rate of inflation which hit almost 600% in 1990, allowing intrepid speculators to realize enormous profits by playing on the difference in interest rates between European Community and Polish banks.
Readjusted in 1991, then freed in 1992, the rate of exchange is currently 13,800 zlotys to the dollar, reflecting the differential inflation rates between Poland and the countries of the dollar zone.
Finally, the Polish banking system was reformed by the law of December 1989, which confirmed the separation of the National Bank of Poland, the central state bank, responsible for flotation and the central credit institution, and the other banks. These last are autonomous and self-financed units, granted a legal status and personality. This extremely liberal law had to be revised in October 1991 to reinforce central bank control, as the danger of bankruptcies began to darken the horizon.
Despite all these changes, one can still argue that the bulk of industrial production remains in the hands of the state, which is 16 tem, the state enterprises can be (and are) true. But, unlike under the preceding sysdeclared bankrupt when their economic results do not permit them to continue activity.
The neo-liberal blindness of the new
Polish leaders, combined with the state's budget difficulties, has pushed them to act in an even more decisive manner in relation to their state sector than has generally been the case with
Thus, if the private sector, in the strict sense, still plays a secondary role in the Polish economy, the current transformation of the rules of the game and the replacement of an industry producing in great part use values by an industry oriented to the production of exchange values constitutes the beginning of a qualitative change of social relations and the relations of produc-
Thirteen industrial and commercial enterprises are, for the moment, quoted on the Warsaw stock exchange, and a very much larger number of bonds put out by public and private companies have also been exchanged there for four years now.
According to the Central Office of Planning (of which only the name remains of the old institution) privatization progressed in 1991. The share of the Gross National Product (GNP) produced by this sector is now 33%. In retail trade 82.8% of sales are realized by the private sector; 24.1% in industry against 16.2% in 1989. In 1991, the private sector accounted for 55.2% of production in building and 23.7% of the value of transport services. 14
These figures should, without doubt, be revised upwards, for it is estimated that nearly half of consumer goods are sold on the black market, and are thus not taken into account in statistics. Moreover, state monopoly in foreign trade has been partially broken by these [private] enterprises, as is shown by a boom in imports by private enterprises, small as well as medium-sized. This concerns, in particular, the rapidly developing consumer goods sector" writes Zycie Gospodarcze, reporting on a recent enquiry into the private
The new private enterprises are, in general, run by small — indeed very small -capitalists. The average capital of the enterprises set up in 1990 and 1991 was hardly more than $15,000 and came for the most part from new entrepreneurs. Of these latter 41.5% were former leading managers of the statized economy, while 21% were proprietors of other enter-
Finally, in July 1992, the Bank of Export Development (BRE) issued shares, which are now available on the Warsaw stock exchange. Thus, the process of privatization of the banking system, which had already begun with the growth of banks of foreign capital (eight, in June 1992)16 and of small private banks (13 in June 1992), has experienced a new impetus with the quotation of the first of them on the stock exchange.
Up to the end of 1991, around 14.5% of state enterprises had been affected by the process of privatization. Three quarters of these were privatized by being put into liquidation. It seems that the number of enterprises privatized in this manner is growing, whereas the sale of enterprises by issuing shares is tending to diminish.!?
Tendency to privatization
There is a general tendency towards privatization in Poland, which goes together with a very grave economic crisis and is perceived by the new elites as a categorical imperative. The state is seeking to divest itself of its property at any price and there is serious discrimination in the conditions of functioning of those enterprises which are still state owned (in particular, heavier taxes than the private enterprises).
Such a situation is inevitable in a context of a deficit of disposable capital on the internal market and a weak inflow of foreign capital, and where successive governments have measured their success in terms of the number of enterprises passing into private sector hands.
Foreign capital is not rushing into Poland. And when it does, it is into particular sectors where each Western multinational seeks, in the first place, to occupy the terrain, even it means a temporary loss, so as to block access to potential competi-
In Poland foreign capital has been involved more in securing potential market shares than in investments based on a calculation of immediate profitability. Thus, in 1991, Phillips bought the Polish constructor of light bulbs and neon lamps, Polam. And Fiat has just acquired, for a handful of dollars, a big stake in the car firm FSM, with which it has had cooperation agreements since the 1970s which envisaged, in particular, that FSM deliver its products to Fiat at prices inferior toits 13. See D. Heimeri, U. Plowiec, "Textes législatifs et réglementaires relatifs a l'économie polonaise de 1989 à 1991", in Le Courrier des Pays de l'Est, no. 367, March 1992. 14. Gazeta Wyborcza, no. 152, June 30, 1992. 15. According to the results of an analysis carried out by KIG in collaboration with the IBGR, the University of Lodz, the AWF of Cracow and the American University, reported by G. Garlinska, Zycie Gospodarcze, no. 27, July 5, 1992. 16. It is necessary finally to mention that three foreign banks - American Express, NMB Bank and the Société générale — have begun to open branches in Poland, limiting themselves, for the moment, to serving clients who possess accounts abroad. 17. According to W. Karpinska-Mizielska and T. Smuga, The process of transformation of property, in the IRISS report, quoted by Zycie Gospodarcze no. 22, May 31, 1992.
September 14, 1992 own costs of production.
Fiat, in its generosity, has agreed, in the context of this contract, to honour FSM's foreign debts, a good part of which are constituted by its debt to Fiat itself!18
Joint ventures accelerate
The entry of Fiat onto the Polish market has however speeded up the joint venture accords between the military industry and Mercedes and between the automobile factory FSR and Volkswagen, in both cases for the assembly of vans. Finally, negotiations are underway for the sale of the FSO car factory in Warsaw to General Motors. The interest of the car multinationals in the repurchase of Polish factories has been increased by the fact that the customs agreements signed between Poland and the EC mean that car manufacturers who invest a certain sum in Poland can benefit from a lifting of taxes on the import of