THE FIRST FIVE-YEAR PLAN
IN POLAND (1956-1960).


by Marianna Khmelnitskaia
 

 

The First Five-Year Plan was in the nature of a transitional plan between the first and the second waves of Polish postwar industrialization. The main aim of economic policy during the First Five-Year Plan (FYP) was to continue the process of industrialization in a lower gear and to mitigate the dislocations that arose during the Six-Year Plan (1950-1955) between the growth of output and the increase of consumption, between industry and agriculture, and between individual branches of industry. A reform of the system of functioning of the economy was supposed to become an integral part of these undertakings.

The period 1956-1957 featured an accelerated rate of increase of personal incomes in excess of the rate of growth of output and in excess of the level established for the entire plan. It was also a period of rapid growth of agricultural production and important changes in foreign trade. It was a period of consolidation when attempts were made to repair the most damages caused by the excessive strains of the Six-Year Plan (1950-1955). The period 1959-1960 featured a relatively slower pace of increase of consumption compared to that of production. It was marked by an increase of investments in industry, whose level had remained almost stagnant for a few years.

 

The first FYP had not only a relatively large growth of real income but also rather small deviations from planned targets. The overall relaxation of growth pressures was complicated by the upward revision of wages and prices. It was few source of the reasons for price increases . First of all, prices of nonconsumer goods purchased by the population were raised following the elimination of rationing. This pertained primarily to such goods as synthetic fertilizer, agricultural implements, and building materials, which were purchased mainly by the farmers. These price increases were largely compensated by raising the prices of deliveries over and above the obligatory quotas and by lowering the obligatory quotas and raising their purchase prices. Second, prices of some consumer goods were increased for specific reasons. For example, prices of furniture, paper products, and books were increased in order to promote savings of timber. Railway fares were increased by about 55 percent with the aim of discouraging burdensome and excessive overcrowding on trains. And third, prices were increased in an attempt to maintain marker equilibrium. This pertained mainly to such necessities as meat and fats and such luxuries as crystal, photography equipment, and automobiles. As a result of price increases, the cost of living of both the urban and agricultural populations increased, but the latter to a smaller degree.

 

The 1956-57, real wages rose faster than national income. This policy shift was supported by a reduced rate of investment and credit purchases of consumer goods abroad. Inflation was avoided only by cutting the investment rate and by taking advantage of foreign loans. The wage fund was overfulfilled. The farmers succeeded en enlarging their incomes by failing to meet compulsory quotas and by tax evasionl the situation apparently benefited small-scale private industry, intermediaries, black-marketers, and speculators.

 

Real income of the population was not entirely earmarked for consumption. The fastest rate of growth was in financial assets, followed by nonmaterial services. Total savings in 1956-59 exceeded 10,000 million zl.. Only about 80 percent of real income was spent of good and material services; the rest went to nonmaterial services and savings. Only thus was it possible to achieve planned increase of real incomes while the supply of goods and material services was underfulfilled. Whereas there was general market disequilibrium , between the size of the population's purchasing power and the volume of goods available for sale, in 1956-57, equilibrium was restored by 1959, but the structure of goods on the market dei not correspond to the structure of demand. In particular, the supply of meat and animal fats did not satisfy demand.

During 1956-1960, essential changes in the dynamics and structure of foreign trade took place. By 1960, the foreign trade turnover increased by 52.3 percent in comparison to 1955. The targets of the FYP for foreign trade were fulfilled by 105.4 percent, for export by 98.7 percent, and for import by 112.1 percent. Difficulties in producing export goods often were solved by cutting down on imports. Imports increasingly concentrated on agricultural products(mainly grain), fuels (oil and its by-products), and raw material and semifabrcates for heavy industry.

 

Some of the reasons for the greater role of foreign trade were: The increase of consumption in the first years of the plan was only possible due to an accelerated increase of import of foodstuffs and a decrease of exports. This often was accomplished with the aid of short-term credits at high interest rates. The change of policy in the second half of the FYP involved an increased rate of investments, intensifying import of raw materials for production of producer goods and of capital goods. At the time, it was necessary to increase exports to repay the credits received in the first years of the plan. Essential changes in the structure of exports took place. The share of machinery in exports increased from 13.1 percent in 1955 to 28 percent in 1960. The share of industrial consumer goods increased from 7.2 percent to 10.1 percent. And the share of raw materials and fuels decreased from 64.4 percent to 43.8 percent of total exports. During the entire plan period, the balance of foreign trade was negative. 1957 was an exceptional year insofar as imports were concerned, where as exports remained at a more or less stable level. The rise in imports was facilitated by a substantial credit from the United States.

The interbranch structure of investment outlays was altered. In industry, investment resources were directed mainly where bottlenecks occurred. Outlays were relatively redused for metallurgy, machine-building, and chemical industries. Outlays for building materials, light, food, electric power, and fuel industries grew at a higher rate than those for total industry. A more considerable increase of outlays for light and food industries took place only in 1959-1960, indicating that the main factor in the growth of consumer goods production in 1956-1958 was a better utilization of existing potential through better supply of materials. The increased supply of consumer good was less influenced by shifts in the structure of investments in industry than by reduction in the rate of investment and the shift of a part of working capital toward current consumption needs.

 

In conclusion, as I said before, the period 1956-1957 was mainly devoted to tying up the loose ends remaining after the SYP, such as completion of investments started during the SYP. However by 1958 a wave of new investments stronger than originally envisaged was started in anticipation of economic policy for the second FYP. For this reason, 1958-1959 "has often been described as the beginning of a second stage of Polish postwar industrialization." An entire decade (1959-1968) was devoted to overcoming the barriers that had become apparent during the SYP and thereafter. In addition to "feeding itself", industry was set the task of promoting exports, consumption, agricultural production, and technical progress. The primacy of development of heavy industry as a general rule for the growth strategy of a centrally planned socialist economy was officially reiterated at the threshold of the second phase of the first FYP. "The statement was blunted by admitting that the gap between consumer and producer goods branches should be narrowed, mainly by accelerating development of agriculture."

 

 

 

 

 

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