The lack of a proper system of representative government resulted in an increasingly unenthusiastic citizenry. In recognition of the political danger that this situation posed the Gomulka regime (1956–70) under- took to increase the level of political legitimacy. However, this was not to mean democratic reform. Under the government in which Wladys- law Gomulka (1905–82), was First Secretary, Poland reversed the agri- cultural collectivism that existed, allowed greater freedom for the Roman Catholic Church, increased cultural freedoms to a certain degree and permitted workers’ councils in factories and mines (Gerner, 1985:
48). These small freedoms were soon whittled down as the government feared loss of control. However, Polish communism ceased to be as authoritarian as other varieties, resulting in a Polish civil society that survived in a fairly robust form, particularly in the workers councils.
Inevitably, increased freedom lead to increased expectation and desire.
During the 1960s and 1970s a variety of political demonstrations took place. In 1968, students took to the streets to protest the censoring of a nineteenth-century classic Polish play whose topic was on the Russian oppression of Poland in the early nineteenth century (Gerner, 1985:
48). Workers in the Baltic ports demonstrated in December 1970 over the issue of large government food price rises. The political situation was very tense and the government ordered troops to shoot a number of the workers to put down the movement (see The Kubiak Report, 1982: 3). In many ways the riots of 1970 were the beginning of the end for Polish communism even if it would take another 19 years for a full collapse. The riots had seriously damaged the legitimacy of the Gomulka government and as a result he resigned as leader. He was replaced by Edward Gierek, whose first task was to regain some of the political legit- imacy lost during the Gomulka years. The healing process was initiated by increasing state payments to farmers who produced meat and grains;
quotas were removed and many farmers were given formal property rights to their farms. This went a long way to solving the common problem of food crises through the 20 per cent increase of the production of both grain and meat during the 1970–73 period (Gerner, 1985: 49).
The Gierek regime endeavoured to usher in a new era for Poland by creating a new economic development strategy. The strategy rested on the need to increase Polish exports, and to import Western technology to retool/modernize Polish industry. This marked departure from former policy was to be financed by borrowing from the West and repaying with hard currency accrued through increased exports to the West.
Although theoretically plausible, Gierek’s plan did not, in practice, give the results expected.
Gierek’s strategy – which primarily consisted of borrowing from the West in the hopes of boosting international exports – is striking in its dependancy on Western approaches to capitalist development. It was a curious mix of trying to acquire western standards of living while main- taining state control of the economy. Democratization was not consid- ered an option. This strategy was bold, as the investment was all front loaded with moneys initially going into modernization of factories.
Importing Western technology and retooling factories was not itself a guarantee of Western export markets.
Gierek’s economic strategy marked the re-entry of the Polish eco- nomy into the international capitalist system. The year 1989 despite Fukuyama’s ‘end of history’ argument, was not as solid a break as many portrayed. What 1989 did mark was renewed interest by the West of the CEECs after the dissolution of the USSR. Despite Western political attitudes during the Cold War, many of these countries, Poland in par- ticular, had been integrating into the world economy from the 1970s onwards. Western popular perception saw countries behind the iron curtain as being completely cut off from the West. However, it seems reasonable to assume that if Poland were borrowing Western capital, it was exposing itself to Western capitalism. Import/export regulations, Western loan conditionality and business/government contacts with the West would all have had an impact on the Polish economy.
In the early 1970s Gierek’s economic reforms seemed to be working.
Between 1971 and 1975 total investments in Polish economy increased 18.4 per cent annually and industrial investments grew by 21.9 per cent. With increases in investment and production came the rise of living standards. In 1974 alone, personal income grew by 17 per cent (Gerner, 1985: 49). The growth of the Polish economy far outstripped expectations. Estimates for its growth between 1971 and 1975 were approximately 42 per cent but in reality the figure was closer to 90 per cent. The same holds true for the expected increases in real wages. The assumption was that they would grow by 39 per cent but in 1975 the growth was closer to 70 per cent (Fallenbuchl, 1982; Gerner, 1985: 49).
Indeed, in the early 1970s Poland seemed to offer the possibility of enjoying the best of both worlds, namely eastern bloc security with Western growth. By 1975, however, cracks in the system were starting to appear. Many of the problems which confronted Poland at this time were not of its own making. Crop failures, due to precarious climatic conditions caused a renewed domestic food shortage. Internationally,
Nixon had taken the US off the Gold Standard in August 1971 (see Section 1.3 of this books), which effectively ended the Bretton Woods system of fixed exchange rates. The Arab–Israeli war of October 1973 sparked off the first round of Organization of Petroleum Exporting Countries (OPEC) oil shocks (December 1973). These two major inter- national economic development brought about economic recession in the developed world. Poland, following its recent entry into the world of export-led trade growth, found itself hit quite hard.
Poland cannot be held accountable for the nature of the international economic system during the mid-1970s nor was it responsible for the poor weather conditions during the early-1970s. However, it can be taken to task for a number of policy decisions which exacerbated a diffi- cult situation. The major weakness in the Polish economic strategy was that it did not have sufficient mechanisms to ensure that incoming investment was funnelled to companies or sectors which exhibited the greatest potential for export growth. The bureaucratic structure in Poland was heavy and cumbersome. Investment and high-priced imports were often spread out across-the-board, instead of concentrating resources in growth areas. Even worse, some costly imports were procured for projects not originally in the strategic plan. Too often, once imports had been acquired, the government did not have financial or other resources needed to complete the project. Some of the imports were, therefore, wasted. Moreover, much of the economic growth in Poland was domestic not export driven. Internal wealth based upon the zloty did not result in the acquistion of hard currency necessary for foreign loan repay- ment. In the mid to late 1970s the Polish economy started to flounder.
Unlike the early 1970s when reality outperformed expectations, actual export figures were well below estimated targets (Fallenbuchl, 1980).
By 1976, the food crisis had become serious and the Polish trade bal- ance revealed increased imports and decreased exports. The government tried to stop the flow of imports, but this only halted the modern- ization of many sectors and ceased projects to which millions of zloty had already been allocated. Food price rises of basic commodities only produced wildcat strikes and street demonstrations. Gierek’s hope that a modernised Poland would see its exports outstrip its imports would remain unfulfilled. Moreover, Poland’s economic failure spawned unrest which engendered new political restrictions on pre-1970 free- doms (Gerner, 1985: 51). Poland’s poor economic condition only worsened during the late 1970s, and by 1980 Poland’s debt was a stag- gering US$24 billion (Prust, 1988: 3–12). This figure looks even worse when one realizes that as much as 96 per cent of Poland’s total export
earnings would have been allocated to servicing its debt (WB, 1987: 17).
The failure of Poland’s economic strategy left the country in a vulner- able position.
Between 1980 and 1982 Polish society was involved in a series of confrontations with the communist regime (Sanford, 95: 106). This marked the beginning of societal movements which would ultimately bring down Poland’s single party government. Two important players were the Workers’ Defence Committee (KOR) and the Foundation Com- mittee for Free Trade Unions (WZ-WZZ). These organizations provided the initial intellectual and worker opposition to the communist state (ibid.: 107). KOR was a crucial precursor to free trade unions. WZ-WZZ performed a largely educational function, but did train individuals such as Lech Walsea who would later help in the creation of the political movement Solidarity.
The catalyst for the emergence of Solidarity occurred in 1980. The government was in crisis over continued foreign borrowing to subsidize the Polish economy. The subsidization of food prices was a major cost to the government and in 1980 it decided to raise food prices. The soci- etal reaction was similar to that of the 1970 Christmas-time food price hike. Strikes broke out throughout the country, but the greatest concen- tration was in the Lenin Shipyards in Gdansk. Lech Walesa, then a shipyard electrician, became the leader of the Strike Committee. The unrest moved to include over two hundred enterprises organized under the name of the Interfactory Strike Committee (MKS), of which Walesa also became leader.
The most significant outcome of these strikes was a compromise by the Soviet and Polish government to allow free trade unions not attached to the Communist Party or its government ministries (Mason, 1993: 37). This compromise saw the creation of the ‘Solidarity’ trade union. Within sixteen months of the union’s creation it had twelve million members or over two-thirds of Poland’s total workforce (of 16 million) (Mason, 1993: 39). Solidarity was more than a trade union, it also functioned as a social–political organization which went some way to meeting the Polish peoples’ need to articulate their dissatisfaction with the political system.
Solidarity’s massive popular support revealed it as a real threat to the Polish Communist Party. Soviet pressure forced the Polish government to replace the Polish, Party leader, Stanislaw Kania with General Wojciech Jaruzelski, who was already Defence Minister and Prime Minister. In the autumn of 1981, the Soviet Army undertook threaten- ing military manoeuvres along the Polish border. Jaruzelski, a strong
supporter of Soviet communism, wrote in his memoirs that he feared a Soviet crackdown in Poland as had occurred in Hungary in 1956, Czechoslovakia in 1968 and Afghanistan in 1979 (Rosenberg, 1995:
128). Whether through fear of the Soviets or a bid to preserve his own government, Jaruzelski decided in December 1981 to declare martial law, arrest the leaders of Solidarity and forbid its existence (Mason, 1993: 40). The economy had stagnated and martial law remained in force until 1983. Momentum for change had been retarded. Even after 1983, it took until the late 1980s before dissension once again mani- fested as public demonstration.
Martial Law and the general political clampdown in Poland also effected its relationship with the broader world economy. The import–
export drive in Poland during the early to mid-1970s had brought it to the attention of West. This was reawakened in the early 1980s with Solidarity’s movements against Soviet-style communism. This coincided with the era of the Reagan Presidency (1981–89) in the US and That- cher’s premiership (1979–90) in Britain. The strong anti-communism of these two administrations meant that they were willing to encourage policies in the Eastern bloc that would embarrass the Soviets. As a result of this mildly sympathetic political climate, Poland during its 1980–81 economic crisis, looked to the West for assistance. One possibility was reapplication to the IMF, but conditionality was to prove a problem.
However, the Polish government throughout the time of martial law maintained full contact with the IMF. In 1982 a number of economic measures were introduced with regards to price deregulation, wage controls, decentralized control over enterprises and the devaluation of the zloty (Bjork, 1995: 92). These measures were unsuccessful, accord- ing to the IMF, as they did not aid the emergence of a market-driven economy.
Poland had difficulties in implementing economic reforms. However, the IMF felt that the Polish government needed encouragement in its exploration of pro-liberal ideas. The US and the IMF appeared more interested in introducing Poland to capitalism than to democracy.
Nevertheless, the Polish government was aware of Western expectations and in 1986 General Jaruzelski allowed an amnesty of political prisoners (most of whom were Solidarity members) in the hope of softening inter- national opinion. The US administration, although wary, did agree to drop its opposition to Poland’s reapplication to the IMF and the WB. It regained both its memberships in 1986, a full three years before the col- lapse of communism. Poland’s introduction to liberal democracy began with liberal capitalism, but its introduction to democracy had to wait.
Despite Polish government intentions at reform, and prodding by the IMF and WB, it found it difficult to sustain change. On the one hand, the price increases and wage constraints of liberal reforms were unpopular, on the other the Polish government needed to maintain good relations with the IMF from whom they would have to borrow to service their cumbersome debt. It was an all too familiar narrative in the international political economy of the late twentieth century.
In many ways, the talk of Poland’s transition to a market economy after 1989 is somewhat misleading. Their economy was certainly heav- ily state controlled before 1989. Nevertheless, despite the nature of its domestic economy, Poland’s international economic relations during the 1980s did not differ greatly different from many developing coun- tries whose economies were considered capitalist. With Poland’s rein- troduction to the IMF and WB in 1986 came renewed rounds of debt renegotiation. IFIs wanted to remain tough on Poland, but the IMF saw an opportunity to push Poland for a ‘second stage’ of reform (Bjork, 1995: 93). The pressure resulted in the Polish government’s attempt to implement a price and income operation. It was again an attempt to raise prices and cap wages and again it was met with unrest and demon- strations. Between 1986 and 1988 the government relented and even allowed large wage increases.
The Polish government’s position became increasingly difficult. It was pressurized by the IMF to do something about its policy short- comings, and pressurized by the public to leave things as they were. The continuing government compromises turned the Polish economy into a destabilized merry-go-round – although it kept going this was only because it was rolling down hill. In 1988, Polish debt had grown to US$40 billion, nearly double the 1980 figure of US$24 (Mason, 1993:
41; Bjork, 1995: 91). Workers continued demands for wage increases and price capping led to rampant inflation which reached 60 per cent in 1988. In response to these economic problems, General Jaruzelski’s government attempted a further price liberalization in 1988. It was met with stiff opposition. This time the political mood of the people had changed.