Consumer and Social Welfare  

updownA DISCUSSION REGARDING THE CORRELATION BETWEEN SOCIAL STRUCTURE, INCENTIVES AND WAGES

by Krystyna Kostka

Perhaps one of the most important aspects of economic, political and societal life in a country is the social structure, due to its underlying and permeating nature. It is fascinating to observe the correlation among wages, the social structure implied by them and the incentives or lack thereof that the former create. The following paper is a short discussion which will address first, the type of society that Marxist ideology attempted to create, second, why this ideology radically tampered with traditional social structure and finally, how this manipulation led to a type of stagnation among workers.

According to Adam Sarapata and Jerzy Wiatr, the ideal society would be one in which the differences between workers and intellectuals would be minimized to such an extent that ideally the seemingly different classes would be cooperating for the mutual good.1 Although this seems to be an interesting and egalitarian idea at first glance, the way in which communism attempted to implement such changes is flawed. First of all, Mr. Sarapata discusses frequently the necessity of educating workers and maximizing their access to the class of intellectuals. This in itself was a just concept considering the elitist structure of pre-world war Polish society, however, educating these workers through various seminars is a preposterous notion.2 Under communism in Poland, one saw the proliferation of various seminars which were held under the auspices of so-called Marxist-Leninist Universities which awarded diplomas to unqualified or at best underqualified individuals.3 In an attempt to equalize the classes, they divided them further. After all, how can a university educated intellectual respect an individual who earned his engineering degree from such a ludicrous university sometimes in the course of one year and received a higher position due to his standing in the communist party. (I apologize for the use of only the pronoun his, however it is accurate since very few women were highly ranking members of the communist party.) One hears a plethora of stories regarding individuals with no education who rose to incredible positions of power due to their political affiliations. There are the intellectuals who were praised in Poland, the "newly-created" ones who were chosen by the party due to their humble roots (which curiously enough after all of this rearranging the majority of intellectuals from worker or peasant families still choose to hide their background), but instead of allowing them equal access to education(also it is important to note that children from worker or peasant families were given special "points" when applying to university thus actually giving them privileged access to education)4, they were created into something they were not. This false creation of intellectuals only exacerbated contempt from true professors, historians and others who subsisted on meager salaries while their "false" counterparts earned enormous salaries with all types of amenities due only to their political affiliation, not brilliance.

In such a scenario, it is unsurprising that innovation was virtually nonexistent. Furthermore, how could innovation occur where not only were the wrong people sent to relevant events to gather information for further research and development, "ministerial bureaucrats visit conferences and fairs much more frequently that enterprise engineers"5 but also competition practically did not exist. An interesting point is made by Jan Winiecki in the following example, "Underpaid and underappreciated engineers in Soviet-type economy enterprises have not only very limited access to professional literature, conferences, fairs, etc., but very little incentive to follow technical developments abroad."6 Worse yet, a survey of managers in Czechoslovak enterprises (comparable to the Polish) in the mid-70's showed that the average manager "knew little about productivity levels in his industry abroad and at least 20 percent of managers knew nothing on the subject."7 Furthermore, enterprising individuals were not only discouraged but often terminated due to breaking the routine. A telling example described by Winiecki concerns, "an eager young man who was accidentally sent to India to continue negotiations on a deal. The young man went there, cleared minor ambiguities and concluded the deal. Having returned to Warsaw, very proud of himself, he was met with a frosty reception by his superiors. Later, his colleagues explained that he killed a goose laying golden eggs (meaning trips abroad with per diems in convertible currencies). His position became so unbearable that he decided to quit the job."8 Obviously, this type of corruption was promoted on all levels as any deviating behavior was unacceptable as illustrated by the unfortunate young man in the above example. Frequently, rather enterprising individuals would attempt innovation nevertherless, but for a multitude of reasons not least of which was lack of funding, eventually resigned. Finally, how can one expect an underpaid researcher to dedicate his life to his work when he is more concerned with feeding his family as he makes less than some workers in a coal mine, approximately 6 million zloty(about 300 dollars) as opposed to 11 million zloty(about 550 dollars).9 Further, this immense difference in salary can only crush the innovative spirit of an active mind.

In conclusion, it is evident that the communist promotion of lower classes into the intellectual ones, was although a relatively just idea, implemented in a horrid way. A way which instead of equalizing the classes through equal opportunity progressively lowered intellectuals salaries to meet the level of the workers. In effect, this simply lowered the standard of living for the thinkers in society, precisely those that are responsible for propelling a society forward. To conclude, I would venture to suggest that this policy was responsible in part for the technological stagnation in Poland and further exacerbated already existing class tensions.

Sources:

  • 1. Adam Sarapata, Jerzy Wiatr. "Przemiany Struktury Klasowej", XX LAT POLSKI LUDOWEJ,Warszawa:Panstwowe Wydawnictwo Ekonomiczne, 1964, p.231-248.

  • 2. Information about pre-world war Polish Class Structure taken from: Polska Mysl Polityczna by Michal Sliwa.

  • 3. Information taken from a Lecture by Prof. Kozub-Ciembroniewicz given at the Jagiellonian University in Krakow.

  • 4. Information taken from a Lecture by Prof. Kozub-Ciembroniewicz given at the Jagiellonian University in Krakow.

  • 5. Jan Winiecki, THE DISTORTED WORLD OF SOVIET-TYPE ECONOMIES. Pittsburgh:The University of Pittsburgh Press, 1988, p.179.

  • 6. Winiecki, p.178.

  • 7. Winiecki, p.178.

  • 8. Winiecki, p.202.

  • 9. Offhand knowledge about various salary levels based upon conversations with workers in various sectors.

 

 

 

 

 

OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:

http://econc10.bu.edu/GENEC/Default.htm

Economic Systems:  

http://econc10.bu.edu/economic_systems/economics_system_frame.htm

Money and Banking:

http://econc10.bu.edu/Ec341_money/ec341_frame.htm

Past students:

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

Czech Republic

http://econc10.bu.edu/Czech_rep/czech_rep.htm

Kyn’s Publications

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

 American education

http://econc10.bu.edu/DECAMEDU/Decline/decline.htm

free hit counters
Nutrisystem Diet Coupons