Market Myths and Polish Realities

An interview with Jan Olszewski

 Jan Olszewski gained his reputation in Poland as a human rights lawyer, having defended political dissidents since the 1960s. He was a top adviser to Lech Walesa and the Solidarity trade union movement in the 1980s. Olszewski was Poland's third prime minister after the collapse of the Communist government in 1989. He held the position from December 1991 to May 1992. In Poland's September 1993 elections, Olszewski's political alliance, The Movement for the Republic did not receive the 5 percent threshold vote needed for representation in the Polish Parliament.

Multinational Monitor: What sort of economic system do you envision for Poland?

 Olszewski: There is talk of a free market, a market economy, but a free market can mean many different things. It will mean one thing in Sweden, another in Brazil, and yet something else in Nigeria. Now it certainly has to mean something else if it is introduced to countries held back by the remnants of communism, like Poland, Czechoslovakia, Hungary, not to mention Romania and Bulgaria. We certainly are aiming to build a market economy, but this has to be, out of necessity, something other than a system identical to that, for instance, of the United States, or perhaps even of Western Europe.

MM: Given the external pressures, does Poland have any real chance of creating some alternative system?

 Olszewski: Obviously, we are gravitating to the European Community, its defined economic structure, and ultimately the same model. But attaining this model cannot be done in a single leap, as was attempted in Poland in 1989, specifically the program of the Balcerowicz group [Olszewski replaced Balcerowicz as Poland's prime minister in December 1991], that is, the plan postulated by Jeffrey Sachs. This kind of attempt was undertaken and it has ended unsuccessfully. You cannot do that with one quick, very radical move; this is a question of the entire process of transformation, taking place over a long period, and certain elements in this transformation are preexisting structures. It is not possible to part with these structures overnight. They will determine the method of restructuring as well.

MM: How do you propose transforming the old state-run industries?

 Olszewski: Part of the huge state industry system is completely absurd. Economically, it was tied to the Soviet war system, it worked for the needs of the Soviet military complex. Obviously this part of industry cannot be preserved. But we cannot just abandon the greater portion of heavy industry, nor can we lead it to complete ruin. We have to try to somehow transform what can be saved.

Obviously, this requires a considerable amount of money. Either this money comes from abroad, which makes the transformation easier and quicker, or we have to find money here, which slows down the whole process considerably. But, in any case, the change cannot be carried out overnight.

 In my opinion, the most rational way is to maintain some form of a mixed economy. The state cannot suddenly repudiate its responsibility for existing enterprises. In some instances, like in the city of Mielec [a city in southern Poland with a population of approximately 50,000 people], unprofitable enterprises have to be supported, because entire cities depend on them. We cannot say that overnight we are liquidating them, because we would be liquidating entire cities. That would be an utter social catastrophe.

MM: Could you elaborate on what is happening in places like Mielec?

 Olszewski: The issue is that people in Mielec have been working for the past three years in this enterprise. Theoretically, they are working, since for two weeks they work and for two weeks they are on furlough, and they end up with a third of their wages. This enterprise cannot be closed because a whole city depends on it; but, at the same time, it has no reason to exist in the long term, since it was intended to produce airplanes for the Soviet Union, which no longer needs them. This industry has to be transformed, but it cannot be done instantaneously since there is not enough money. So they are making changes gradually, they are manufacturing different [non-military] products, some of which are being exported to the United States. The state cannot repudiate its responsibility for this enterprise and just pass it off to either the city or the workers or someone else. We simply have to assure these people and this city some minimum of existence. And Mielec is only one of numerous examples.

 If this were a situation such as East Germany, where there had been an inflow of West German capital that takes over those enterprises for free, and West German companies agreed to it, then very well. But here we do not have anyone who would take over these operations for the state. Foreign capital will not do it because, for the most part, our enterprises are not attractive investment options. The problem is not one of immediate changes in ownership, but of changes in the way the economy is run.

 Foreign capital investment is very much needed in Poland. But it is needed in a sensible manner. Otherwise, if it is done in order to drive enterprises to bankruptcy and then buy them out for nothing, and it turns out that Polish industry is bought out in this way, then this is a different kind of capitalism than that in Western Europe or the United States. It is the kind of capitalism you find in Nigeria.

MM: So what you fear is neocolonialist relations between the West and Poland?

 Olszewski: Exactly. A country dominated by neocolonialist capitalism could not enter as an equal partner into the European Community. It would simply be unqualified; it would remain as a kind of marginal area of Europe, a kind of hinterland.

MM: In this scenario, Poland would relate to Europe the way Mexico relates to the United States?

 Olszewski: Right. Just as Mexico will always be for the United States both a source of profit for certain corporations and at the same time a danger, since masses of poor, uneducated people flow in [to the United States from Mexico]. This would be the same kind of thing on the border of the European Community. But [foreign investment] is just one aspect of the transformation of the public sector. It cannot take place on the principle of uncontrolled privatization, because it would then lead to this kind of Mexican structure.

MM: What kinds of problems does Poland face in transforming other elements of the economy?

 Olszewski: The second problem besides industry is agriculture. In Poland, it looks different than in other socialist countries. Private ownership was preserved here and the situation is a little better. We do not have to break up collective farms and rebuild the entire agricultural system. The basic infrastructure is already there. But it is extremely backward. For 40 years private farming was treated as something that should disappear. Now it has to be rebuilt and to be brought up to the same level as the West.

 However, this cannot be achieved on the basis of free trade - direct competition between our farmers and Western farmers - since our agricultural sector would be ruined immediately. It will not withstand this competition. It has to be protected and simultaneously the state has to plan its gradual reconstruction. There must be a plan as to the optimal size of these farms, what kind of model we are aiming for, and for gradually eliminating, through appropriate policy, the smallest farms, while finding other work in the country for these people, in servicing the larger farms, for instance.

 There is also a third problem facing the economy: the base for an authentic free market is not huge capital, it is the middle class. But small business was destroyed here, and this social class has to be rebuilt. The Balcerowicz plan has a different emphasis; it is as if huge speculative capital came to be preferred, making itself rich through swindles, in part with the cooperation of the former nomenklatura, which, taking advantage of its influences has also been taking possession of state property. Policy toward small and medium-sized business has been and continues to be restrictive.

 Once a middle class arises, we will be able to say that a market has really been recreated. Then, even the entry of big foreign capital will not be such a danger.

MM: You met with World Bank representatives in April 1992. How did they view the situation you have just described?

 Olszewski: They were clearly aware of the failure of the Balcerowicz plan. But I did not have the impression that they were entirely clear how the economic reconstruction process should proceed and what kind of model is most rational for Eastern Europe. I did not come away with the impression that they had any vision of such a model, but it is difficult to demand it of them, since really neither the World Bank nor the International Monetary Fund have ever dealt with this kind of problem.

 I have the impression that it is as if they look at these countries the same way they look at the underdeveloped countries of the Third World. But this is a mistake. Because this is a completely different kind of society and a different kind of economy. In one sense we are in a markedly worse situation; for instance, even in the poorest Latin American countries there has always been something in the way of a market infrastructure, buyers, artisans, a certain group with private initiative. It may have been very primitive, but it was there.

 Here, we do not have this. And we do not have people with the mentality to immediately begin these kinds of activities. We still have to build this, in a certain sense.

 On the other hand, we have an industrial base, although it is partly useless. And we have a working class that has a certain degree of professional competency and some general level of education - which is lacking in the Third World. This labor force, at the moment, is confronting a situation where it is not useful. But it can and somehow must be utilized, because it has completely different social ambitions than, say, the peon class in Latin America. People from the World Bank and International Monetary Fund do not seem to grasp these specifics of the situation in Eastern Europe; they do not seem to understand that you have to find a completely different solution. That was my impression.

MM: But this leads back to the question: how do you escape from the World Bank and International Monetary Fund?

Olszewski: This depends precisely on how the multilateral institutions and the West understand their interests here. They have to decide on one thing: whether they support their economic interests here or whether they support a democratic system. The two are incompatible. If it is exclusively their economic interests, then they have to consent to a dictatorship here. If they want political democracy, then they have to agree to a market system that is built gradually so that every fundamental and important social class gets a share. This means that Western capitalists have to understand and they have to agree that they will not extract huge, immediate profits from Poland.