Poland: Stagnation and Strikes Warn of Stormy Seas Ahead

The Polish economy was the only European economy to avoid a technical recession in the wake of the global collapse in 2008. But the whirlpool of capitalist crisis continues to grow and as its pull on the creaking ship of the Polish economy intensifies, the strain is beginning to show. From the capitalist point of view, the Polish ship of state appears to be in good working order – the Polish left is weak and neo-liberalism dominates. But below the waterline social unrest and eye-watering inequality reveal the real state of the rotting capitalist system.

A Model Capitalist System?

In 2009, when most European states were suffering the undignified descent into recession, Poland’s GDP growth only dropped as low as 1.6% (down from 5.1% the year before), and by 2010 it had increased to 3.9%.[1] These are not particularly impressive figures compared to the boom years of other European states, but at a time when everyone else was falling like dominos into negative growth or stagnation at best, Poland was sitting pretty with a growing economy. 

How did Poland manage to navigate its way through the economic chaos surrounding it on all sides in 2009? If Leszek Balcerowicz, Poland’s central bank governor from 2001 - 2007, is to be believed it’s because Poland is a model capitalist system, and its ruling class are devout and skilled disciples of the free market. In an interview with the Wall Street Journal in December 2012, Balcerowicz argues forcefully for the virtues of limited government and the self-regulatory power of the free market.[2] He paints himself and the rest of the Polish bourgeoisie as taking hard decisions when times were good so that they would weather the storm when times were bad. His central argument is that by being faithful to ‘pure’ capitalism and letting the market decide everything, Poland has resisted temptation and thereby avoided crisis.

Frankly, this is nonsense. It is true that Poland avoided inflating a credit bubble in the same way as a number of its European neighbours in  the years leading up to the crisis. But this is not due to faithful adherence to the principles of capitalism, rather it is because Poland was incapable of keeping up with capitalist development and thus remained an unattractive place for investors to park their money. For example, from 2004 to 2008 private credit growth in Poland was considerably slower than other comparable economies due to the complex and burdensome conditions for creditors.[3] In other words, it was not because Balcerowicz and his ilk were skilful capitalists that they avoided a debt bubble, but precisely because they were incompetent capitalists.

Furthermore once the crisis hit, two measures were fundamental to Poland’s continuing economic stability. One was the aggressive devaluation of the zloty (a currency that is not tied to the Euro) by around 33%[4], and the other was the Vienna Initiative – a policy that encouraged Western banks to maintain their exposure to Central and Eastern European banks early on in the crisis.[5] Both of these mechanisms are notable by the fact that they are externally implemented measures that seek to modify the operation of the free market in order to protect the economy. In other words, it was not free market policies that protected Poland, but external intervention that insulated the economy from the full force of the free market in crisis.

The reality is that modern global monopoly capitalism is tied to individual nation states by a thousand threads. If the major industries fail, the state has no choice but to intervene to save them. In a period of boom the thirst of the capitalists for privatisation and limited government is unquenchable, but as soon as the crisis breaks the banks and big businesses insist on no-strings attached bailouts from the government. Both during the boom and bust, capitalist governments have no choice (although in most cases are quite happy to oblige) but to do as instructed by the financiers and the bosses. Balcerowicz’s idea that ‘pure’ capitalism always requires limited government belongs to Adam Smith’s understanding of 18th Century capitalism, not to 21st Century Imperialism.

Poor Economic Outlook

But even if Balcerowicz is correct, and Poland is indeed a model example of capitalism, how would he explain the current outlook for the Polish economy? In the first quarter of 2013 GDP growth was half what was expected, at just 0.4%.[6] Construction and assembly production fell 18.5% in the same quarter, and industry and transport sectors also posted decreases in production with the Purchasing Managers Index falling to its lowest level since July 2009. Average employment in the enterprise sector was considerably lower than last year, and unemployment overall has reached 14.3%, with some areas hitting unemployment figures of 34.8%.[7]

Poland is currently reliant on its export markets to sustain its economy as domestic markets (responsible for 62% of GDP) have collapsed to just a 0.5% increase in consumer spending. 78.2% of Poland’s exports are to EU member states, with 52% of its exports going to Eurozone members.[8] As the crisis in Europe gets worse with the German economy (a major trading partner for Poland) mired in stagnation[9], the outlook is not good for Polish exports. Coupled with the fact that EU subsidies, of which Poland is a major beneficiary[10], have dried up until at least 2014, the Wall Street Journal and others are predicting contraction for the Polish economy in the coming period.[11]

The fact is that, whatever the truth about Balcerowicz’s claims about Poland’s limited state intervention in the economy, the Polish ruling class has accepted capitalism. And if you accept capitalism you must accept the logic of capitalism. In a globalised capitalist economy a world crisis of overproduction will suck every single national economy into its depths sooner or later. Poland relies on exports to sustain it, but every other nation has run out of money to import commodities. The Polish capitalists will have no choice but to rein in public spending, close down production and create mass unemployment in order to protect their profits. This process is only just beginning in Poland, but we only need to look at Greece, Spain and Portugal to see its future.

The Dominance of the Right

Lenin once observed that politics is concentrated economics and nowhere is this clearer than in Poland. In 1989/90 Leszek Balcerowicz (the same man discussed above) oversaw the transition of the Polish economy from state planning to the free market. His plan is referred to as ‘shock therapy’ and it plunged Poland into a three year recession that lasted until 1993. In just one year 1.1 million workers lost their jobs, pushing unemployment to 20%.[12]

Those who defend the plan point to the hyperinflation in Poland in the late 1980s, the shortages of basic commodities and the 64.8% debt to GDP ratio.[13] They argue that an abrupt switch to the free market may have been painful in the short term but in the longer term Polish GDP grew at a much faster rate than that of its Eastern European neighbours who tried to transition away from state planning more slowly.

It is this argument that has shaped political and economic discourse in Poland for the last two decades. State planning quickly became synonymous with inefficiency and corruption. Those who attempted to offer even critical support for the old system were politically and culturally sidelined. This hegemonic idea was reinforced by the fact that Solidarity, the biggest trade union that had previously fought and won in the genuine interests of workers, joined the post-communist government and became an enthusiastic cheerleader for free market policies.

Today in Poland there is not a single serious organisation, let alone political party, putting forward coherent socialist ideas. The ideas of neo-liberalism are reinforced at every possible opportunity by political parties, the powerful Catholic Church, and even the trade unions. Poland has benefitted from a period of capitalist upswing and from its membership of the EU and the subsidies that come with it. Despite the yawning inequality gap that has opened up since 1990 which now means that the poorest in society have a life expectancy 15 years lower than the richest, the boom has kept anti-capitalist criticism at bay and allowed the unadulterated championing of the free market.

The governing coalition is dominated by the Civic Platform (PO), whose savage neo-liberal economic ideas and social-conservatism make an unpleasant reactionary mixture in favour of increased privatisation and opposition to abortion and same-sex marriage. Meanwhile, the largest opposition party is the Law and Justice Party (PiS) whose policy is also broadly in favour of mass privatisation (albeit with a few stated exceptions) and its stance on social issues, although shrouded in anti-corruption rhetoric, is almost indistinguishable from that of the PO.

The total dominance of free-market ideology in Poland since 1990 is reflected by the monolithic right-wing in Polish politics. But, like a rabbit caught in the headlights, the Polish ruling class seems paralysed in the face of the economic crisis careering towards it. While the Polish establishment is engulfed in conspiracy, corruption, manoeuvring and incompetence, those on the Left in Poland can rekindle the ideas of socialism to present a serious alternative to capitalism and crisis, to which working people can rally.

The Weakness of the Left

The last time a ‘left’ government was in power was 2001-2005. The Democratic Left Alliance (SLD) had a disastrous four years in power, during which time they implemented unashamedly pro-capitalist policies and a number of high ranking government officials (including the then Prime Minister, Leszek Miller) became embroiled in a massive corruption scandal. Needless to say the SLD were unceremoniously booted out of power in 2005 to be replaced by a short-lived PO/PiS coalition.

Since then the SLD’s share of the vote has steadily declined from 30% in 2001 to 8.24% in 2011. Although it enjoys the cautious support of the All-Poland Alliance of Trade Unions (OPZZ), the party decided, after the 2011 election defeat, to reinstate the pro-capitalist, corruption tainted Leszek Miller as its leader in an attempt to win back some of the ‘centre-ground’ from the PO and PiS.

Solidarity, the trade union that led the struggles of workers against the suffocating bureaucracy in Poland during the 1980s, renounced its left-wing militancy in 1990 when its leader, Lech Walesa, became President of Poland with Balcerowicz as his finance minister. In the early 1980s Solidarity represented 10 million Polish workers, but its membership has now declined to around 400,000.[14] The extent of the betrayal of the workers by the leaders of Solidarity is demonstrated by their open support for the conservative PiS.

In general the state of trade unions in Poland is poor, with 97% of workplaces having no union representation at all. In total just 2.1 million workers are members of a trade union, a figure that constitutes just 8% of the overall population.

What is clear is that these organisations are weak because they are failing to act in the interests of workers by putting forward socialist policies. According to the Polish media and right-wing commentators, the left is weak because Polish people either do not want or do not understand left-wing policies. However, the evidence suggests otherwise and the dominance of the right-wing in the polls is rapidly being counterbalanced by the rise of the left-wing on the streets.

The Leftward Instincts of Workers and Youth

Although the global crisis has not yet hit Poland as hard as other nations, its effects have been felt by certain layers of workers and youth. Some of the more advanced sections of the working class have flashed onto the political scene a few times since 2008. For example, in October 2009 the city of Poznan witnessed 4000 people demonstrate against the sacking of 500 workers from the Cegielski Factory. A mark of the militancy of this protest was the slogans being chanted by the demonstrators, most significantly “Capitalism isn’t working! Factories under workers control!”

Similarly, in September 2012 a demonstration of 15,000 people took place in Wroclaw following a meeting of EU finance ministers in the city. The demonstration, called by the European Trade Union Confederation, was to highlight opposition to neo-liberal economics. One hospital worker on the demo pointed out that “we are the ones who have to pay the costs of the crisis” despite not having played any part in causing it.

In March 2013, the heavily industrialised province of Silesia saw a series of four hour work stoppages by workers demanding better job security, higher pensions, a strengthened Labour code and better healthcare provision. This was a coordinated movement of steel, rail, health and mine workers backed by a variety of trade unions and served to flex the muscles of the labour movement in this area.

Finally, a recent CBOS poll commissioned by Kozminski University in Warsaw found that just 33.4% of Poles think that the free market is better than a planned economy. This is a significant statistic and suggests that the neo-liberal economic paradigm that has dominated for the last 20 years in Poland is now being undermined. Other statistics found in the same poll suggest similar things: 85% of people think that the government should provide jobs and 85% expect free healthcare from the government.[15]

The instinct of the working class is to turn to the Left for a solution to capitalist crisis. As the crisis deepens, the need for a solution will become ever more pressing. In the past, the Solidarity trade union was born out of independently formed workers’ committees. If the unions and left parties are to effectively harness the leftward movement of workers in the coming period, they must build themselves out of their present weakness by putting forward clear socialist demands to which the workers and youth of Poland can rally.