Democratic Preconditions

Poland’s parliamentary elections last Sunday have led to a likely victory for Donald Tusk and his party, Koalicja Obywatelska (Civic Coalition). Although the ruling Prawo i Sprawiedliwość (Right and Justice, or PiS) Party received the largest share of the vote, 35.4 percent, granting them the first opportunity to try to form a government, they are likely unable to do so. An alliance with the far-right Confederation party, which won eighteen seats, would not be enough for a majority. Partnering with the centrist Trzecia Droga (Third Way), and the Nowa Lewica (New Left) alliance, Civic Coalition will be able to lay claim to 248 of the 460 seats in parliament, returning Tusk to the office of prime minister, a position he last held between 2007 and 2014. 

Tusk’s victory isn’t the result of a decline in the Law and Justice vote; PiS supporters by and large remained loyal to Jarosław Kaczyński and his agenda. Rather, the decisive element was a surge in voter participation, which shot up to over 74 percent—an increase of more than 11 percent on Poland’s first free elections in 1989. The rise was especially marked among women and young people, many of whom voted for the Tusk’s Coalition. Despite having dominated the Polish government since 2015 and winning the largest share of the vote, PiS is, by many accounts, now expected to break into warring factions around potential heirs and claimants to Kaczyński’s legacy. Like its counterpart in Hungary, Viktor Orbán’s Fidesz party, it  has challenged the democratic norms that were accepted when Poland joined the European Union in 2003, suborning Polish media outlets and subjecting the judiciary to political pressure and appointment. 

For the majority in Poland’s cities, the continued oppression of women, the seemingly endless reinforcing of legal restrictions on abortion, the picking of spurious arguments with partners in the European Union, and the incontinent clericalism that combine to remind Poland of social backwardness kept afloat by remittances from migrant workers, PiS has little to offer. “In a normal country,” as Poles like to say, such wells of youthful outrage would find natural expression in a party of the left. Not so in Poland, where Tusk’s Koalicja Obywatelska absorbed much of the vote under 35. While Nowa Lewica—a new alliance formed out of the old Left Democratic Alliance, or SLD)—dominated Polish governments in the 1990s, and then from 2001 to 2005, its fortunes quickly fell. In the 2011 election, it barely scraped in sufficient votes to get into parliament, and in 2017, it even lost its remaining members of the Lower House, the Sejm. Last week it received just 8.6 percent of the vote, 4 percent less than it scored in 2019.

What accounts for this stunning decline of the Polish left, which has extended not only to the fortunes of party politics, but to the strength of its labor movement and its civil society institutions? The country’s experience under Communism is part of the story. After post-war reconstruction, Stalinist paranoia gripped the one-party state in the 1950s. A subsequent failure to raise living standards was followed by a foreign debt crisis, a brief period of military rule, food rationing, and austerity.

The coming of free elections in 1989 was supposed to be a harbinger of change, but with the dissolution of the Polish United Workers’ Party (PZPR), its leaders coalesced into social- democratic parties. Fatally, those parties and later the SLD, embraced more than just democracy. In their desire to place themselves at the center of Poland’s new political consensus, the post-Communist left adopted the “shock therapy” that transformed Poland into a market economy.

Shock therapy

Poland’s transition to a market economy was master-minded by the minister of finance in the first post-Communist government, Leszek Balcerowicz. He was advised by the American economist Jeffrey Sachs who had been promoting abrupt market liberalization in Latin America on behalf of the International Monetary Fund, in programs known as the Washington Consensus. In Poland, Balcerowicz was persuaded that a shock of this kind would convince Poland’s foreign creditors that the government was serious about abandoning state control over the economy.¹ But radical institutional change was not just a negotiating gambit over Poland’s foreign debt. Balcerowicz shared the conviction of most of the economic reformers of the time that markets and free enterprise are preconditions for democracy to function, preventing the emergence of a state with excessive power.

Almost overnight he pushed through legislation to liberalize the economy, remove price controls, make the Polish currency convertible, and eliminate the fiscal deficit by substantially reducing government subsidies to state enterprises. To deal with inflation, the government introduced partial indexation of wages and incomes. Faced with the reduction in subsidies, state enterprises reduced production and raised their prices. Hyperinflation took hold and, along with it, mass unemployment. In the government, economists advised that even these high levels of inflation were necessary to bring down real wages, but also to eliminate the money balances built up during the last decade of Communist rule, as shortages of consumer goods left households with incomes but little on which to spend.

The sharp fall in economic activity was more sustained than Balcerowicz and his advisers had planned. For the next two decades unemployment did not fall below 13 percent. The situation was especially bad during the 1990s, when public infrastructure rotted. The worst effects were felt in smaller towns and rural areas most dependent on state subsidies and state industrial policy. In the north and west of the country where state farms were concentrated, two generations of workers in rural isolation were socialized into idleness, with its symptoms of violence and alcoholism.

In Gdynia, Szczecin and Gdańsk, home of the Solidarity trade union that had brought down Communist rule, the shipbuilding industry had been the pride of the Communist regime and the cornerstone of its industrial strategy. In the post-Communist era, the industry was so run down that it employed only a fraction of the mass labor force it once had. The automotive industries also fell into depression as consumers switched to buying foreign cars and trucks. The coal-mines of Silesia, heavily subsidized because they were the backbone of Poland’s export business, were gradually taken out of production. 

Young people who left school during the transition were especially affected, as industrial enterprises stopped taking on new workers. For most of the decade after Balcerowicz’s reform, youth unemployment did not fall below 25 percent and in some smaller industrial towns and industrial centers, youth unemployment among school-leavers was as much as 50 percent. There was only one thing for those young people to do: emigrate. Over the course of the two decades following the deflationary shock, over two million Poles (one in ten of the workforce) emigrated. The demographic impact is still felt in the aging population that is now the core of PiS’ support.

The economic depression was only effectively reversed with Poland’s entry into the European Union in 2004, at which point Poland became the largest recipient of EU assistance for economically depressed areas. Attracted by the subsidies, foreign companies started to take over Polish businesses to assemble products with cheap Polish labor. Cities were gussied up with EU regional aid, but the jobs in manufacturing never returned.

One case in point is Poland’s Fabryka Samochodów Osobowych, Passenger Car Factory, which had produced the Polski Fiat so dear to middle-class Polish hearts from the 1970s onwards. In 1989, the company was taken over by Daewoo. After Daewoo went into liquidation in 2000, ownership passed to General Motors, and then to a Ukrainian company. The slimming effect of each transfer of ownership has reduced the factory to producing components for foreign assembly, again using a fraction of workers compared to its former days.

During its years in government following the transition (1993–97, 2001–05), the SLD turned a blind eye to the depression of the Polish economy or, in its telling, took a long-term view of these economic difficulties. Fearful of scrutiny of its Communist origins, the party avoided any active government policy that might be seen to compromise adherence to the Stability and Growth Pact of the European Union. Even today the party considers its greatest achievements to be Poland’s membership of NATO and the EU. 

By contrast, PiS emerged in the early years of this century with a strong narrative about the betrayal of Polish aspirations after Communism. In their first free elections in 1989, Polish people had voted for full employment and fair wages—not to lose their jobs and become impoverished. PiS identified the neoliberalism at the core of Balcerowicz’s policies and criticized the give-away of Polish jobs and enterprises that had come with privatization. The PiS economic program was simple: child benefits, higher pensions, and keeping ownership of Polish enterprises in Polish hands. If that meant holding onto state enterprises and extending the party’s control over Polish media to the point of excluding critical voices, then so much the better for embedding control of the state and society in the hands of patriots.

The future of democracy

It was not thanks to PiS that the decline of the Polish economy was reversed. That has been done by EU subsidies and foreign direct investment. Poland has in any case been excluded from the EU’s post-Covid green recovery facility thanks to the government’s flagrant violation of democratic norms. Nevertheless, in its embrace of social welfare and Big Government, PiS has made life very difficult for its opponents in the Sejm. The Koalicja Obywatelska, under Donald Tusk, has had to shelve its early criticism that raising pensions and paying mothers złoty 500 (US$114) per month for each child is fiscally imprudent. Welfare spending has poured money into the Polish regions depressed by the Balcerowicz reforms. The uplift that it has given to many poor households in the country is undeniable.

The mainstream narrative that emerges about Poland is that democracy in that country has been subverted by PiS, a venal, authoritarian and intolerant conspiracy that is corrupting the institutions of the state, buying support from a docile electorate, and oppressing women, LGBTQ+ communities, and immigrants. This narrative, however, overlooks the consequences of Balcerowicz’s bungled dismantling of state controls over the economy, and the willingness of liberals and the left, when they held power, to satisfy their ambitions in Western capitals, rather than cleaning up the mess created in the transition from Communism. That created the social base from which nationalism grew into an oppressive celebration of social backwardness.

This was not something new. Poland had experienced much the same in the inter-war period. In the 1930s, an earlier generation of political economists, including Oskar Lange and Michał Kalecki, recognized that, far from strengthening people’s resolve to create a better, more democratic world, the immiseration of the working class directs that resolve to intolerance, violence, xenophobia, and fascism.² This view is not confined to left-wing socialists. The Financial Times’ chief economic commentator Martin Wolf recently observed that “it is impossible to sustain a universal suffrage democracy with a market economy if the former does not appear open to the influence—and the latter does not serve the interests—of the people at large.” The corollary of such a necessity, he added, is “welfare for all citizens—that is, a commitment to economic opportunity and basic security for all.”³

Thirty years ago, the commitment to full employment, which had been agreed on in talks between the Solidarity trades union and the country’s Communist rulers in Gdańsk, was the first of the promises abandoned by post-Communist governments. In accepting mass unemployment, those governments removed the economic foundation for Poland’s democracy, for the precondition for democracy is not free markets, but full employment.