Polands Transformation from Socialism to Capitalism
Poland’s Transformation from Socialism to Capitalism In 1990 Poland became the first pioneer of a reform that gave way to a wave of socio-economic reforms amongst former Soviet-style states. From a deteriorating socialist state she became the ‘tiger economy’ of Easter Europe overnight. ... After the breakup of the Soviet Union, the empire’s former satellites, such as the Czech Republic and Hungary, were left with devastated economic situations that socialism had bestowed. There were many discrepancies that evolved from socialism’s main apparatus; the central allocation mechanism. ... Promises of new economic life were to be found in capitalism. ... Although Poland’s reform from socialism to capitalism was generally successful it failed to bring promised prosperity. Discrepancies of Socialism The aim of Poland’s transformation was to make a transition from a socialist to a capitalist economy. ... In this economic system income derived from private sources or the private ownership of the means of production was regarded as the reason for an inefficient means of distribution within an economy. ... Other discrepancies resulted from the lack of an innovative workforce (Balcerowicz 40). ... Many other factors resulted from these core discrepancies. ... The introduction of an authoritarian party-state system, centered on the Polish United Workers Party (PUWP) and the transformation of the market and ownership structure, were two major changes to Poland’s institutional system (Balcerowicz 290). ... During the Stalinist Era, from 1948 to 1956, Poland was ruled by the communist party, with the help of “Soviet advisors” (“Poland in Brief”). ... One of these problems resulted from Poland’s failure to produce consumer goods. At this point in time Poland was closed off from the rest of the world. ... The Polish zloty was not convertible into any currency in the world and thus the only way to import consumer goods from other countries was by selling resources such as coal or food products. This way Poland would obtain “legitimate “ money with which it could purchase goods from other states. ... According to Leszek Balcerowicz in Socialism Capitalism Transformation, “ The new leadership under Edward Gierek promised an improvement in the standard of living. ... Maria Dolata described some of the discrepancies that emerged in the company she worked for as a result of Gierek’s move: “ During the 1970’s the enterprise that I had worked for decided to purchase a license from an English company called Massy, Ferguson & Perkins. ... However, there was no demand for these machines from other countries because they were technologically primitive. ... The solutions to these problems were to be found by remodeling Polands ownership structure, domestic private sector, state sector, pricing system, budgetary instruments, and structures of state businesses. The transformation aimed at eliminating the directive role of central planning by substituting it with the market mechanism (Balcerowicz 278). ... The structure of the state sector further prevented the enterprises from becoming autonomous. ... During the reform employment in the sector escalated from 4. ... The inefficient firms of the socialized sector continued to operate as a result of state subsides and aid from the government and those enterprises that were unsuccessful were dissolved by consolidation with more successful organizations (Balcerowicz 283). ... The installment of Balecerowicz’s reform led to a transition from a socialist economy to a capitalist economy in Poland. ... Poland was suffering from hyperinflation and massive shortages as a result of illegitimate prices, inflated worker wages, and negative interest rates (Kozminski 2). ... The total workforce in the increasing private economy rose from 13. ... Output in private manufacturing increased dramatically from 7. ... In a free market system an exit barrier is often referred to as an obstacle that prevents a firm from exiting an industry. ... In 1989 Polish bank structures began to aberrate from the socialist “monobank” model. ... During the transition the number of commercial banks soared from seven to eighty (Balcerowicz 330). ... In 1991 a modern stock exchange was built from scratch (Balcerowicz 330), which further contributed to increased competition for banks by providing an alternative source from which enterprises could acquire capital. ... The strength of the zloty has increased throughout the years from 21 zloty per dollar in 1995 to around 4 per dollar in 2002 (CIA world fact book). The GDP, for instance, decreased from $172. ... The percentage of the GDP coming from the private sector had risen from around 50 percent in 1995 to 70 percent in 2001(CIA world fact book). The unemployment rate soared from 0. ... In fact, the high unemployment rate is one of the many problems that resulted during the transition from a socialist to a capitalist economy. ... In the process of transition from socialism to capitalism the assets of the socialized sector, which were transferred to the private sector, were mostly bought out by foreign competitors. ... The agricultural sector was subject to discrimination under socialism because it was the only private sector. ... Farmers struggle to sell their output because agricultural products from foreign competitors come at substantially lower prices. ... The definition of a good quality of life may vary from person to person and amongst societies. ... For instance Maria Dolata explained that during Communism society’s expectations were different from those in a capitalist system. ... These five criteria will be examined to value the quality of life before and after the fall of socialism. ... During socialism housing in the urban areas was provided in the form of apartments. ... Total robberies, however, have increased from 69 percent of 100,000 in 1995 to 79 percent in 1998 (Law and Order Referendum). ... The statistics are from every January of each year. The information for the chart was taken from htttp://www. ... The information for this graph was taken from http://www. ... edu/ETC/ReadingRoom/Historical/USCI/ * The GDP growth rate is expressed as a percentage increase in real gross domestic product from year to year. ... The statistics for this graph were obtained from the CIA World Fact Books of 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, and 2002. ... Balcerowicz, Leszek, Socialism Capitalism Transformation, Budapest: Central EuropeanUniversity Press, 1995 2. ... , “When Socialism Meets Capitalism: Corrupt Practices and Post- Communist Transition. ... Kozminski, Jerzy Ambassador, “Nine Years of Transformation In Poland”, Presented in a Forum at the Miller Center of Public Affairs, October 1998.