Polish monetarism
Geoffrey Stern
`T regard myself as spokesman, teacher 1 and follower of the social line of Catholicism and not of capitalism or socialism. My devotion to truth, justice and equality stems from the Gospels and from Papal Encyclicals. My actions are inspired by the teaching of the Church. The Catholic line of thought is above ideology.' The words are not those of Archbishop Glemp, or of some parish priest, but of one of Poland's seven Deputy Prime Ministers, Jerzy Ozdowski. That Poland's govern- ment is a coalition including several non- Communists is not the least surprising aspect of the martial law regime. Perhaps even more unexpected is the commitment of many of its ministers to something resembl- ing monetarism. From Professor Sadowski, Deputy Minister for Economic Reform, came phrases which would clearly have struck a chord in Downing Street: ... pay- ing ourselves more than we can afford', ... essential to reduce overmanning',
have to allow inefficient firms to close', ... need for greater flexibility on the part of management and workforce alike...' The Government clearly hopes to effect a thorough-going restructuring of the economy. The 300 per cent rise in the price of foodstuffs, fuels and other essentials earlier this year, was the first step in the painful process of cutting subsidies and br- inging prices into line with costs. Then there was the devaluation of the zloty, and even though, at roughly 82 to the dollar; its cur- rent rate is still about one-fifth of its black market value, it is a significant move towards economic realism. There have also been minor adjustments in wages, presaging a much more radical arrangement in which earnings are related to productivity and profits, and at least some 'lame duck' in- dustries are allowed to 'go to the wall'. As Professor Sadowski put it, 'if people thought that the Government would bail out any firm on the verge of bankruptcy, our economic strategy would have been ex- posed as a fraud.' In his view, the reduction of overmanning would in the short run necessitate some four per cent unemployed (one million, well in excess of the current total of jobless in Poland).
While some aspects of the reform could prove popular, such as the plan for workers' councils (already introduced, ac- cording to Professor Sadowski, in the fur- niture industry), in which the workers or their representatives debate wages, work conditions, production plans and the quali- ty of management, most of the other measures proposed are clearly unpalatable in a country cushioned for years against the vagaries of market forces. After all, it took only an announcement of a 20 per cent rise in the price of essentials to produce bloody riots and the end of the Gomulka regime in December 1970, while the Gierek ad- ministration was fatally weakened by the unrest following his attempt to raise prices by more than 60 per cent in 1976.
So, would the Government have the courage to persevere? Past precedents are not very encouraging. The ambitious reform programme of 1956 fizzled out within a couple of years, e:•en though it left agriculture and small-scale service in- dustries largely in private hands. And although Yugoslavia and Hungary have more or less successfully grafted market techniques on to a state-run economy, their governments enjoyed a modicum of trust, wholly lacking in Poland. On the other hand, Poland's leaders seem convinced that drastic economic surgery is essential if Poland is to find financial stability and the wherewithal to repay its heavy -debts, in whole or in part. But since what they intend would, on past form, have been widely resisted, it has clearly needed some extra in- gredient to discourage opposition. I came back from Poland convinced that .the im- position of martial law last December had at least as much to do with his perception of the country's economic needs as of Poland's susceptibility to pressures from its Communist neighbours.
But can economic reform be successfully carried out under martial law conditions? Professor Sadowski had mixed feelings. On the one hand, people are now subject to greater discipline than before, and to that extent it was now possible to introduce the unpalatable without massive strikes and demonstrations. On the other hand, people resented the restrictions under martial law and a sullen workforce was not likely to be a very productive one. Moreover, the West's hostile response in denying the country the means to purchase much- needed spare parts and raw materials, oblig- ing Poland to reinforce its economic ties with its Communist neighbours, further compounded the problem of successful im- plementation. Nevertheless, like the other officials I interviewed, Professor Sadowski saw martial law as a temporary expedient and hoped that a gradual relaxation of restrictive measures would produce at home the requisite spirit of cooperation and from the West greater understanding of Poland's predicament and an easing of sanctions.
But had there been any significant relaxa- tion of controls already? Not enough to im- press President Reagan, perhaps, but in Warsaw both government and anti- government sources testified to a gradual easing of conditions, save for the temporary reimposition of severe restrictions following the riots in early May. Though Warsaw is still saturated with gun-toting forces, the tanks and water cannons remain well out of sight. Curfew has been suspended, and even if telephones may be tapped, at least they are working again and people may move freely from one city to another. Although a fine of up to 20,000 zlotys, or £145, could await anyone caught without identity papers or engaging in 'hooliganism', the security police maintain a low profile. In early June in Victory Square armed militia stood on the alert but did not attempt to in- tervene as hundreds staged a series of silent vigils for the miners killed by police action on December 16th.
Grudgingly, moreover, the Poles admit that the authorities have scored a few modest successes. For the consumer, in- creased rewards to farmers, combined with the abundance of the summer vegetable harvest, improved distribution and ration- ing by coupon and by price, ensures fewer queues and more food to go round. And if coal is piling up at the ports, looking for buyers with foreign currency, at least pro- duction is well up on last year.
But of course, there is the cost — a score or more dead martyrs, upwards of 2,000 in- terned, the surveillance and censorship and Solidarity, the hope of more than ten million Poles, under suspension. Though Solidarity's fate remains undecided it can have no future, according to the govern- ment press spokesman, Jerzy Urban, `unless it is organised as a trade union, not as a political party, and respects the socialist systeM. If the right to strike is to be restored, Solidarity must take account of economic realities in its demands.' As for Walesa, 'if we release him too early, the op- position might rally round him.'
On the other hand, government officials accept the need for dialogue with foriner members of an organisation which once embraced nearly a third of the population. Such talks, I was assured, have already taken place and are to continue. But whether they can bear fruit is uncertain. However, it is possible that General Jaruzelski, by all accounts a reluctant con- vert to martial law, still sees a role for Solidarity and can persuade the doubters that, shorn of excessive political ambition, it can contribute to the economic progress on which Poland's future depends. If this is the case, then Western policy could well prove decisive. For although sanctions en- courage Poland to stand on its own feet in the long term, they cause severe economic dislocation now, providing a justification for government controls and greater reliance on Comecon. Conceivably, therefore, it might be more helpful to the Poles, and ultimately ourselves, if instead of treating their government as a pariah more odious than any of the other authoritarian regimes with which we deal, we provide short-term loans to tide Poland over the next crucial couple of years while the economic reforms continue to take their toll in living standards.
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