Economic_History_anim.gif (3797 bytes)   POLAND  

 


The Soviet-type Economy in Poland


by Richard Perlicz
 

 

Like much of Eastern Europe, Poland became a Soviet satellite after WWII with a friendly communist government and a command economy. Although the country remained communist throughout the cold war, its economy was closest to the soviet type from the years 1950-1956, when faith in Bolshevism was at its peak.

 The socialist forces in Poland were strong in Poland after WWII. In spite of this, Poland did not adopt a fully soviet-type economy for over five years. In 1946, the state of the countryís economy, ravaged by the Second World War, was far too delicate to ponder major restructuring. Instead, Socialists decided that the most prudent thing to do in the short term would be to work within the existing system until the economy was suitably reconstructed (Montias, 53). For a brief period, many private establishments and farms were not interfered with.

 

 A year later, when the most fundamental areas of Polandís economy had recovered, socialists finally began to mold their vision of Socialist Poland with the initiation of the three year reconstruction plan. Interestingly, the three-year plan did not seek to emulate the Soviet Union. There existed a belief that Poland would take its very own unique road to socialism and communism, sparing polish citizens the hardships that the Russian people suffered when the Bolsheviks initially took power (Griffith 97). The three-year plan divided the economy into three sectors of large-scale state industry, producerís cooperatives, and small-scale private enterprise. The thinking was that the private sector would naturally shrink at a gradual rate as citizens realized the value of working in the socialized sector. Policy became to guide the economy ď through general recommendations rather than by concrete ordersĒ. While the gradualist three-year plan was in effect, Polandís economy developed at a natural, even pace. All areas of the plan were fulfilled and some were even succeeded.

 

When Polandís economy was turned into a Soviet-type in 1950, it represented a radical shift from the policies of the three-year plan that had been fulfilled. The choice to make the shift came after a heated debate between two of Polandís top economic officials. The first of these two was Czeslaw Bobrowski, a moderate socialist, head of the Central Planning Office, and the driving force of the gradualist three-year plan. His nemesis was Hilary Minc, a hard line communist, and head of the Ministry of Industry and Trade. Minc believed that a rapid drive towards industrialization was the best way to increase consumption in the long run and he despised private enterprise for its Bourgeois nature. Due to Soviet pressure on Polandís government, forcing the resignation of Polandís leader, Gomulka, for a more Stalinist Bierut, Mincís policies won the ultimately won the day. He would be the architect of the upcoming six-year plan and was the reason that, during that time, Polandís economy most resembled that of the Soviet Union.

The years of the six-year plan (1950-1956) saw the soviet-type economy in Poland at one of its highest degrees of centralization (Montias 79). With very few exceptions, decisions came from the top down along an extremely complex chain of command. The commander in chief of the economy was the first secretary of the United Workers party. As the leader of the totalitarian state, he theoretically held ultimate control over every aspect of the Polish economy. Directly under him was the politburo, a group of roughly 12-14 top party members who coordinated political and economic policy. This group also held great decision-making power over Polandís economic engines. Under the politburo lay the central committee, whose members numbered over one hundred and whoís job was to make sure that the Politburoís economic policy was implemented in the practices of production. These three organs: the first secretary, the Politburo, and the Central Committee, were the heart of the soviet system in Poland. They made Polish Communism what it was and gave it its personality. The rest of the vast bureaucracy was almost entirely mechanical.

 

The central committee enacted economic policy by giving orders to a council of economic ministers. In theory, the council was intended to be subordinate to the sejm (Polandís parliament). But since the communist party held a monopoly on power within the parliament, it was just as well for the council of ministers to deal with the central committee directly (Montias 77). Each minister in the council was responsible for the direction of a certain field in Polandís economy, whether it be agriculture, light industry, chemical production, etc. Together, the ministers held all of the data related to Polandís economy and the council had attached to it organizational bodies that helped to consult and direct the economy, the most prominent of which was the planning commission.

The Minister of each economic field had at his disposal several offices and boards that aided him in managing the production and distribution of his goods. For example, one office would control employment and wages among the various industries under the ministry. Another office called the Central Marketing Board was responsible for assigning the products from one factory to be used as inputs in another. The Board of transportation was responsible for the physical distribution. The Technical training board ran technical schools to train workers, and so on. With all of these tools at his disposal, the Minister of each economic area issued directives and gave support to the various industries he was responsible for. The specific industries themselves were represented by a central board that coordinated the production activity of one category of plants or enterprises throughout the country. Finally, at the bottom of the chain, were the enterprises themselves.

 

With this highly centralized and vertical chain of command in place, production was handled in a multi-step process. First, information had to be transferred from the bottom up. The enterprises, having completed their previous yearsí production, reported to the central boards information on worker productivity, inventories, use of materials, depreciation etc. The central boards then reported to the minister whose office compiled and coordinated the total production of all the industries in his field. The council of ministers then reported to the central committee.

After all of the information was gathered as to how well the previous yearsí plan was fulfilled, new production targets for the next year were devised and handed back down the chain of command. With the initial targets in hand, first the enterprises, then the central boards applied for materials, wage funds, subsidies and so forth. Every application had to contain a complete justification for all expenditures and uses of material. The applications went back up the chain of command and with a rough idea of what enterprises needed, the council of ministers drew up a production and distribution plan and then sent detailed directives and production quotas back down the chain to the factories. This process was sometimes repeated several times, as a plan occasionally needed many drafts.

 

In the distribution of the national income to citizens, certain features of the market were semi-adopted, although reluctantly. The best example is that while the soviet-type economy aimed to stray as far from the market as possible, many transactions were still handled with money. Loose accounts were kept, although the idea of cost never received as much attention as production itself. Money was also the chief way in which goods were distributed among producers and consumers. Enterprise managers received their salaries in money. Workers received wages in the form of money as well. For each industry, the central board would allot a wage fund that could not be exceeded. This could then be distributed as the enterprise saw fit.

As citizens were paid with money, a pricing system also had to be developed. Enterprises that fabricated producer goods computed prices on their own. These prices were roughly what the items cost to produce and distribute. If they charged anything higher, the Central Board would reprimand them. Consumer retail prices, on the other hand, were set directly by the state price commission. Consumer products, which were sold at state-owned stores, could be sold at a profit, but any of these profits would be realized solely by the state and would never be directly linked to the enterprises that actually produced the goods.

The Soviet-Type economy in Poland also searched for an alternative to market incentives in order to motivate workers and managers. In this area, the planners also turned to money. Managers, in addition to their salary, received a bonus for exceeding their production quotas. There were also bonuses for cutting costs, but these were much smaller. Finally, there was always the incentive to work well in order not to be dismissed. Incentives for workers were much less evident. It was more or less expected that they would perform enthusiastically based on the motivation given by managers and communist doctrine and propaganda.

 

Unfortunately for the people of Poland, the six-year plan did not perform as well as the three-year plan before it. It proved to be far too centralized. Planners could not possibly keep track of all the aspects of every market and there were several gluts and shortages as a result. Sometimes, the plans were so complicated and took so long to formulate that the final plan did make it into the hands of factory owners until well into the plan year. Also, the economy suffered from a lack of incentives to make production more efficient and costs soared. Finally, Weapons manufacturing for the Korean War was added to the plan without changing other targets and this further taxed the economy. In later years there was more pressure to stray from the soviet system economically. Sometimes Poland did stray. When they did not, great political tension was always the result. 

 

Bibliograph

Montias, Michael. Central Planning in Poland. New Haven and London: Yale University Press, 1962

Griffith, W.E. Communism in Europe. Caimbridge, Massachusetts: The M.I.T. Press, 1964

McCauley, Martin. Communist Power in Europe 1944-1949. London: The Macmillan Press LTD, 1977

 

 

 

 

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