Polish democracy is sick
ON May 28, less than one year after the ignominious fall of the rightwing anti-communist government led by Jan Olszewski,' the Polish Diet passed by one vote a motion of no-confidence against its successor
Hanna Suchocka. On the following day, President Lech Walesa announced the dissolution of parliament, while at the same time asking
International Viewpoint #248 September 1993 lion's share of control.
The other method consists of placing the enterprise under legal liquidation and selling its contents, often for a symbolic amount. By the end of 1992, about 650 the government to continue its rule until the general elections scheduled for September 19 — so that it could implement the very policies rejected by Parliament. After one year of parliamentary instability, scattered and growing social conflicts, Poland's young bourgeois democracy is now going through a new and significant crisis — the tourth since the neoliberal orientation of capitalist reconstruction was taken in January 1990 by the first government composed of forces which emerged from the ranks of Solidarity.
JAN MALEWSKI — July 24, 1993
T
HE stated goal of the economic and social policy of the new Polish regime was the building of a market economy in the ruins of the centrally planned bureaucratic economy. The recipes used were of the usual monetarist variety — and had the initial goals of puting an end to hyper-inflation and ensuring the convertability of the zloty. The social costs of such measures were to be lessened by the new government, thanks to its historic and personal links to the anti- bureaucratic revolution of 1980-1981 and the decade of clandestine struggle that followed the imposition of a state of war by the final bureaucratic regime. It was as if history needed symbols: the motion of no-confidence against the government was made by deputies from the Solidarity union at the very same time that the union was making preparations for a general strike in defense of purchasing power. And one month later, during its fifth congress, the union broke away from the person who had for years been its leader and symbol - Lech
Walesa.
It has to be recognised that in spite of the numerous poliical crises, the stated goal has for the most part been achieved.
While in 1989, the private sector's share in the country's non-farm Gross Domestic Product (GDP)2 was only 29%, by the end of 1992 it had reached 45% - that is, as much as in 1939. The private sector's share varies from one sector of the economy to the next: at the end of 1992,
32 it was lowest in industry (31% of business and 24.6% of the workforce). In trade and construction, the private sector dominated (respectively 90.5% and 77.7% of business and 88.6% and 62.2% of the workforce in these sectors). 3
The unequal fiscal treatment accorded to the public and private sectors has led to a great difference in the growth of production between the two. As such, in the last trimester of 1992, industrial production grew by 48% in the private sector (compared to the same period in the previous year) while it actually decreased slightly in the public sector - a difference which can not be explained solely by referring to the growth in the number of private sector enterprises.
### Control
Privatisation in Poland can take several forms. The first stage consists of changing the status of an enterprise from being state-run - in which workers have a considerable amount of control, through the workers councils — to one which belongs to the Treasury and whose status forbids the existence of a workers council. After this, the Ministry of Property Conversions sells shares of the enterprise to private takers (to this date, 70 enterprises have been sold in such a manner or makes a rent-to-own deal (651 cases by the end of June 1993)4 which often works to the advantage of the enterprise's employees, with the managerial layers taking over the enterprises had been privatised in this
Finally, the setting up of a stock exchange in Warsaw, which occupies the former headquarters of the central committee of the United Polish Workers Party (POUP), is the icing on the cake of the capitalist restoration. Eighteen firms are quoted on the boards and stockmarket speculation is growing in leaps and
Janusz Lewandowski, minister of property conversion, did in no way hide his intentions in January when he said, "If we can avoid a political collapse, this year we are going to bid farewell to the formula of the autonomous, self-financing and self-managed enterprise developed in 1981"5 a formula which had been the standard of Solidarity for a decade.
### Acceleration
Over the last few months, the privatisation process has been noticeably accelerated. Shares for some 20 enterprises have been sold, representing an increase of about 30%. On April 30, after nearly two years of hesitation, the Diet approved the mass privatisation programme (PPP), which affects 600 public firms whose shares are meant to be accessible to all Polish adults. It is worth mentioning that this bill could not have been passed without the support of several leaders of the main organisation of the parliamentary left, the Alliance of the Democratic Left (SLD).6
1. J. Malewski and J. Wardega, "War at the summit", International Viewpoint, No 234, September 14, 1992
2. Polish agriculture was about 80% private from 1957 onwards
3. Zycie Gospodarcze, No 8, February 21, 1993. See also Conjoncture, DEEF Paribas, May 1993. For a complete description of the transformation of the legal system to make it the guarantor of the respect for private property, see International Viewpoint, No 234.
4. Gazeta Wyborcza, No 162, July 14, 1993.
5. Zycie Gospodarcze, No 5, January 31, 1993.
6. The SLD was founded by the Social Democracy of the Republic of Poland (ex-POUP) and some twenty other organisations, including the OPZZ union federation. In June 1993, some leaders of the small Polish Socialist Party (PPS), including its president Piotr Ikonowicz, joined it -thus reflecting an opening of the SLD, in the run-up to the elections, to the left that emerged from Solidarity.
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PoLAND
International Viewpoint #248 September 1993
Even though the dissolution of the parliament pre-empted the nomination of deputies to the monitoring council of the PPP, the government decided to go ahead without it and put the legislation into effect on July 14. It seems that Poland's governing elites are seeking to create faits accomplis which can not be overturned by a new majority government following the upcoming elections.
If the structural changes correspond to the goals set in 1990, the same can not be said about the economic situation.
### Inflation
Inflation, which was 251% in 1989, has clearly been reduced — after hitting a high of 586% in 1990 (the year prices were freed) - to 70% in 1991 and 43% in 1992, but this is still very high. What's more, according to both foreign and Polish experts, the deflationary process appears to have run its course. Forecasts for the coming year vary between 32% (according to the 1993 budget) and 40%, as annouced by the vice-minister of
The causes of this inflation are not to be found in the financial clout of the population, which has seen its standard of living seriously lowered (real income of wage-earning households dropped by 27% between 1989 and the end of 1992). Rather, they are directly linked to the process of structural transformation now underway: the selling off of the most profitable firms at bargain basement prices; the tax free status accorded to new private property owners; unreasonable taxation of the state sector, leading to a massive drop in production and a considerable reduction in public income.
Industrial production stabilised in 1992 at a level 35% lower than that of 1988. But this stabilisation immediately led to the reappearance of the foreign trade deficit - estimated at $2.5m at the end of 1992 and which seems to be growing this year.
Public finances are going through a growing crisis, of which persistent inflation is the most visible sign. At the end of 1992, the state debt had reached the astronomical sum of one trillion zlotys,? which represents 85% of yearly GNP! In spite of the successful negotiation with the Paris Club (public creditors) of a reduction of the foreign debt by one half, Poland's external debt continues to grow. While it was at $40bn in 1989, and $45bn at the end of 1991, it had crossed the $46b mark by the end of
One can understand the significance of negotiations now underway with the London Club (private creditors), from whom the Polish government is requesting a halving of its debt - unsuccessfully thus far. On July 22 the Polish government rejected the offer of a 30% reduction of its private debt. such an agreement would mean that, according to the Gazeta Wyborcza, "we would have to pay about $700m every year, when we can only pay $400m." Poland once again finds itself on the threshold of ceasing payments.
The economic policy chosen in 1990 had been imposed by the International Monetary Fund (IMF). This institution kept a tight control on the government's policy, constantly applying the carrot and stick approach. The first agreement, signed at the beginning of 1990 and to last one year, was broken by the IMF 9 months later. The second agreement, an Extended Fund Facility (EFF) agreement, was signed for three years beginning in 1991, and then broken in July of that year by the IMF due to the growth of the public deficit.
Finally, in April 1993 a third annual agreement was signed. It imposed a 81bn zloty limit on the budgetary deficit,? which is impossible to respect without freezing public sector wages, the measure which led to the no-confidence motion in the parliament and to the current political crisis. The agreement also stipulated that the mass privatisation programme should begin in June and that the rate of inflation should not excede 32% this year. It can already be predicted that the IMF will not have difficulty finding reasons to break this agreement if it feels it useful to do so.
### Restoration
The decision to go down the road of capitalist restoration was tolerated by the population because it was put forward as the sole possible way out of the crisis. But the fact is that in spite of (or, rather, because of the success of capitalist restoration, the economic crisis has not been
The price the population has had to pay has been particularly high. Aside from the considerable reduction in salaries, there has been a striking increase in unemployment, which has already affected 2.6m people - some 14% of the workforce — and will cross the 3m mark by the end of the year according of government forecasts. The unemployment rate in certain regions is just above 25% of the active population. At the end of December 1992 47.7% of the unemployed were receiving no form of benefit. The overhaul of the tax system — with, on the one hand, the generalisation of income tax in January 1992 and, on the other, the levying of a tax on goods and services - has deepened social
According to a poll taken in mid-January by the CBOS Institute, 10 one quarter of the population say they are living on the threshold of misery, half the population cannot make ends meet, 20% say thay have to borrow to pay for food and 10% borrow to pay rent, gas and electricity.
But there have also been those who have benefitted from the changes. There are estimated to be 10,000 Poles who have more than $100,000 in savings and, though few in number, the new national capitalists make a lot of noise in the media. For example, the Polish Business Council, which only has 22 members,' was front and centre in June when several political parties were courting it for support. It managed to get Walesa to issue a Charter of Economic Principles on July 1, which stipulates, among other things, that "the foundation of the system of the Polish Republic is private property and free contracts" and that "the fundamental form of economic activity is private enterprise and private farming."12
However, this is a group with no real social weight in the country. Privatisation specialists 3 estimate that national capital can hope to acquire no more than between 10 and 15% of the share of privatised firms. This reveals the weakness of this new bourgeoisie, and has led one commentator to conclude that, "we can expect a new national paradox: a capitalism without Polish capitalists. "14
It is not surprising that the social base of the regime has shrunk in view of the social and economic balance sheet of the policies adopted over the last four years. Juliusz Gardawski, author of regular studies on the lives of working people, explains that between 1991 and 1992 there was growing frustration among workers who supported the reforms. In 1992, 50% of workers (against 20% in 1991) wanted their firm
7. At the current rate of exchange, $60bn, but the zloty is quickly losing value. The rate was set at 9,000 to the dollar in 1990; it is now at more than 18,000 to the dollar.
8. Gazeta Wyborcza, No 168, July 21, 1993.
9. About $4.5bn, which is 5% of GDP.
10. Quoted in Zycie Gospodarcze, No 12, March 21, 1993.
11. To become a member, you have to have at least $2m in private capital and do more than $10m in business annually!
12. Gazeta Wyborcza, No 152, July 2, 1993
13. For example, G. Majcher-Magdzik of the BAA office, quoted in Polityka, No.10, March 6, 1993
14. Piotr Boczynski.
33
International Viewpoint #248 September 1993 to remain public, even though 80% accept the idea of developing national capital. The majority of workers, 57%, reject the privatisation model pursued by the government. 15
Another study, carried out by Leszek Gilejko, highlights the crisis of political and union representation among workers.16 Carried out last November in four big public firms, the study reveals that more than one half of workers (59.9%) do not feel they are represented at the workplace, while only 25.9% list the workers organisations (Solidarity 11.1%, the OPZZ union 3.2% and the workers council 11.6%) as their representatives. Nationally, the figures are similar: 56.7% of workers say they are not represented nationally; only 16% mention the unions (Solidarity 10.1% and OPZZ 5.9%) while the various institutions are only cited by 8.4% of respondents (the Diet 3%, the government 3.4%, the political parties 1.5% and the Church 0.5%). These figures confirm and deepen the phenomena observed during the last two elections, which saw abstention at 47% in the December 1990 presidential elections and at 57% in the October 1991 legislative elections.
### Continuity
The current government based its legitimacy on the struggles of workers against the bureaucracy in the previous decade. Its principle leaders, beginning with President Walesa, personally represented this continuity. The main union and political organisations support the government. As a result, the base of the government was composed for the most part of workers in the big state firms. But it is this same social layer which has paid the highest price for the reforms.
Over the last year, this social base has started to rebel. The strikes of the summer of 199217, led by the OPZZ union (historically linked to the old regime), represented a first sign of this rebellion. In December, this time on the initiative of Solidarity, the strikes spread and the miners of Upper Silesia carried out a long general strike. In February, in response to a call by Solidarity supported by the OPZZ, a general strike of 48 hours against unemployment paralysed industry in Lodz. Finally, the dissolution of the Diet has provisionally ended preparations for a national general strike organised by Solidarity. While all these strikes have been portrayed as being the products of manipulation by small political groups, this does not change the fact that they have been massive, thus provi34 ding ample evidence of the growing rejection of the government's policies.
This rejection, however, is accompanied by disarray. For while the monetarist and neo-liberal recipes themselves are criticised by certain parliamentary forces - primarily those with origins in the former regime (the SLD and the peasant party, the PSL) but also those from the left of Solidarity regrouped within the Union of Labour (UP) - the same cannot be said of the "system of market economy founded on competition", that is to say capitalism.
No alternative
Taken together, all parliamentary forces declare themselves in favour of the market economy and reject the idea of a planned economy, equated with what existed under the former regime. As such, there is still no alternative to the choices made by Solidarity during the handover of power in 1989. It is therefore not surprising that the essentially mythical idea of developing a national capitalism continues to enjoy popular
The stakes in the 19 September elections will not involve fundamental choices for society. At the very most, the current leadership teams, supported by the IMF, may see their monopoly contested by forces considered less worthy of confidence - those with origins in the former regime. Polling institutes, 18 while predicting a significant level of abstention, speak of progress for forces considered to be leftwing (SLD, PSL and, to a lesser degree, UP), a weakening of the prime minister's party, the Democratic Union (UD), and the collapse of the other government parties.
Moreover, the new electoral law — which requires that parties have 5% and coalitions 8% to enter the Diet - could shut out a large number of the smaller formations which helped form the government in the last parliament.
Thus the primary concern both of the current government and the presidency is that of finding a way to keep the elites which emerged from Solidarity in power. In June, Walesa, who during the presidential campaign did not hesitate to promise 100m zlotys to every Polish citizen, came up with a new project: the Non-Party Bloc in favour of the Reforms (BBWR). The logo of the new formation recalls that of Marshall Pilsduski!? and its composition is supposed to guarantee the representation of all social layers.
Walesa has managed to win the support of the leaders of the Solidarity Network of Large Enterprises, a minority tendency of the union, composed of the union committees from its main historic bastions. He is counting on the support of the new capitalists (who, however, have opted for pluralism - some of them figuring even in the lists of the SLD), and on that of the regional political elites and the peasantry. The programme of the BBWR reflects its social composition: in addition to Walesa's Charter of Economic Principles, there are promises for every social group.
Speaking on television on July 13, Walesa introduced his initiative in the following way: "In proposing the formation of the BBWR, I had in mind the need to protect the reforms. [...] There are many people who see the reforms as the source of disarray. But the majority is not aware that there is no other way. It is not the reforms that are responsible for our difficulties, but rather the errors and delays in their implementation. [...] We need an agreement from all sectors concerning the economy: workers, businesmen, farmers and local elected officials. [.] I proposed the formation of the BBWR not to see it dominate the political system, and not for it to push aside the other parties. I want the Bloc to press them into action, to convince them to find agreement. [..] The Bloc has been proposed for all those who are unconvinced by the slogans of the parties and who are tired of the ideological differences and all the talk..."20
Left bloc
On the following day, during a press conference Walesa did not hide his fear of the election results: "Kwasniewski and Miller [two SLD leaders] first, Pawlak [PSL leader] and his group, UD and KPN",21 which in his view would not constitute a coalition but "only a bloc of the left". He has made it known that he has no intention of respecting such a
15. Quoted in Zycie Gospodarcze, No.7, February 14, 1993.
16. Quoted in Polityka, No.13, March 27, 1993
17. See International Viewpoint, No 234
18. As a general rule, these institutes underestimate the votes for parties originating in the former regime.
19. Jozef Pilsduski, leader of the Polish Socialist Party (pro-independence) at the beginning of the century, founder of the Polish legion during the First World War, supreme leader of the first Polish Republic in 1918 - returned to power in 1926 thanks to a military coup d'etat supported by the left. He set up a strong state, in which the non-Party Bloc of collaboration with the government (BBWR) provided the parliamentary support.
20. Gazeta Wyborcza, No 162.
21. Confederation of Independent Poland, led by Leszek Moczulski, is a nationalist party that was founded in 1979 in opposition to the old regime. It runs the small "Kontra" union which came out of Solidarity, and is credited with 10% of votes in the polls.
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