[The following article appeared in the February 16, 1981, issue of the Frenchlanguage fortnightly Inprecor, published in Paris. The translation is by Intercontinental Press.]
No one doubts that Poland is going through a very deep economic crisis. A few figures suffice to indicate its scope. Of course these figures are incomplete and must be handled with care, given the notorious problems of statistics in the Eastern European countries, and the unreliability of Polish statistics in particular.
• Per capita national income fell 2.6% in 1979 (the workers question the 1.8% improvement shown in the statistics for 1980).
• Net national production fell 2% in 1979 (the plan had projected an increase of 2.8% overall and a small rise in industrial production). Mining production in 1980 was 15% lower than in the preceding year.
• Agricultural production fell 1.4% in 1979 (and 3.8% for vegetables) while the plan had projected an increase of 4.8%, which was later lowered to 3.9%. The grain and sugarbeet harvests in 1980 were onethird lower than the 1979 levels. The drop in potatoes was even greater. It is expected that the number of livestock-which has been stationary since 1974—will decline in 1981.
• There has been a sharp rise in the debt owed to Western countries (the debt stood at $1 billion in 1971, $20.7 billion at the end of 1979, and $23.5 billion at the end of 1980). The interest on that debt nearly equals the income from all exports, and 92% of the export income in 1979 went to pay off interest and principal on the debt to the Western countries. In fact, Poland has accumulated more than onethird of the entire debt of all the Eastern European countries to Western governments.
• There has been a sudden halt in investments in heavy industry. Hundreds of projects under construction, especially in the steel industry and mining, had to be completely stopped due to the catastrophie economic results for 1980.
It is useful to compare these statistics with the perspectives laid out in the strategy put forward in the early 1970s. That new strategy aimed to correct the situation inherited from the Gomulka period (1956- 1970). Such a comparison makes it easier to see the objective basis for the tremendous workers mobilization that has been taking place these many months in Poland. And it shows the full scope of the bankruptcy of the Edvard Gierek regime (1970-1980).
The Gierek regime projected rapid economic growth, primarily based on continuous growth in productive capacity, modernization of existing productive capacity, and growth in the standard of living through increases in wages, improvement in supplies of consumer goods, and growth of foreign trade.
The Polish economy did in fact experience rapid growth during the first half of the decade, and there was a jump in wages between 1971 and 1975. But the consequences of the unrealistic and overambitious policies of the ruling group were quickly seen. An enormous gap developed between the growth of investments and imports, and the much slower growth in productive capacity and exports. This is the root cause of the present level of foreign indebtedness.
Distortions in Industrial Sector
The investment policy virtually took on the character of a forced industrialization. Between 1971 and 1975 investments grew at an average annual rate of 18.4%, while investments in the capital goods sector rose more than 24.8% per year. The steel and electrical equipment industries were the most highly favored sectors of the economy.
There was some truth to Gierek's assertion that completion of these projects would create "a second Polish industry" alongside and equal in size to the existing industrial base.
But at the same time, the energy sector was totally neglected. Production of coal, the main source of electricity in Poland, rose by only 4.5% from 1971 to 1975, while the annual growth rate in the metallurgical industry (including steel) was 9.9% and 14.4% for the electrical equipment industry.
Even though the 1976-1980 economie plan was scaled down regarding investments in new productive capacity, the annual growth rate for the electrical equipment sector remained twice as high as the growth in electrical energy generation for the years 1976-1978.
The uneven distribution of investments and the absence of measures to rapidly increase energy production have resulted in the present situation where most factories suffer power cuts 300 days out of the year. This is one of the basic causes of the disorganization of production and places big limits on industrial productivity.
Furthermore, the technological obsolescence of a large number of factories causes added wastage of electrical power. According to Polish specialists, the energy usage coefficient in Polish industry is twentyfour times higher than in the industrialized Western countries.
Besides the problems related to energy consumption, Polish industry is also characterized by excessive consumption of raw materials. The value of the metal used to obtain $1,000 of national income is nearly twice as high in Poland ($56) as in Italy ($31), and three times higher than in France ($19). Of course this is partially due to the industrial structure and the technological backwardness of a number of economic sectors and factories. But it is also due to waste stemming from the malfunctioning of the planning system and the lack of motivation for workers, who resort to "off the books" work to compensate for their low wages.
On the whole, Polish industry consumes two to three times more raw materials and energy per unit produced than France, Britain, or Italy.
These are some of the factors that explain why the rate of industrial productivity has not fulfilled the hopes of the authors of the 1971-1975 five-year plan, which has to be revised downward on nearly all points in late 1975.
This also partly explains why Polish foreign trade has stagnated. The country has difficulty winning new markets because of the mediocre quality of the goods aimed at export markets and their unsuitability in terms of the needs of the Western countries. That is why Poland's share of world trade in 1978 remained around 1% of total world exports, although its total industrial production had risen to 2.5% of world production.
Agricultural Swamp
Despite agricultural subsidies of about 180 billion zlotys* in 1978 and 250 billion in 1979 (about one-quarter of the state budget) agricultural production declined that year. The production of grains for the 1974-1979 period averaged less than 1974 production. While climatic conditions were partly to blame, it primarily reflected a very low yield per hectare.
The stagnation of Polish agriculture is the result of both the structure of agricul. ture and the policies of the bureaucracy. Several factors come into play in the present crisis. First there is the ridiculously low yields on the state enterprises. The state farms, with an average size of over 4,000 hectares, and the cooperatives, with an average size of 330 hectares, together cover a little more than 20% of the cultivated lands. Their share of the total agricultural production is about the same. But they receive the lion's share of agricul tural investments—66% of the amount budgeted.
*100 zlotys equals U.S. $3.30.
Despite this, their yields are hardly better than those on the private farms. True, the official statistics showed that in 1978 the rate of cattle production and grain production per hectare was about 25% higher on the state farms and that about one-half as much full-time labor was employed as on the same size individual farm. That should be no surprise given both the investments made in the state farms and the kind of production they specialize in. Large-scale grain production involves much more mechanization.
But a comparison of recent figures shows that the cost to produce a kilogram of meat on a state farm is twice as high as on a private farm, and the cost to produce a liter of milk is four times as high.
Part of the explanation lies in the amount of recent investments to build model farms of advanced technology. But the difference in cost of production also stems from the tremendous wastage in the state sector. For example, there are industrial facilities for raising pigs and cattle built without regard to common sense (there was a recent report on television about a "model" pig farm with 8,000 pigs, in which the workers who fed the pigs were unable to use a vehicle designed for that because it would not fit through the door and therefore they had to carry the food for 8,000 pigs into the building by hand).
The cost of feeding livestock on the state farms is also much higher because of the lack of attention paid to the cost of the grain or forage used (the salaried agricultural workers employed on the state farms say they often "salvage" from the troughs potatoes and other vegetables that they cannot find in the stores and eat them themselves).
This difference in the cost of producing foods such as meat or milk products makes it all the more absurd to practice a policy of discrimination against private farmers. It also shows the absurdity of not establishing a clearly defined division of labor between the thousand state farms, each with several thousand hectares, and the three million odd private plots, 85% of which were smaller than ten hectares in 1978.
Strangulation of Private Plots
Whatever one's opinion on the merits of maintaining a private sector of such size (nearly 80% of the land) in a workers state, the situation of the independent producers is intolerable. Although both Gomulka and Gierek called themselves supporters of an agrarian reform based on the maintenance and growth of small agricultural plots, neither was able to provide even the glimmer of a solution to the crisis that has wracked private farming for three decades.
Extreme parcelization of the land has taken place during this period, to the point where one-third of the individual plots total less than two hectares each. Most of these are subsistance farms producing almost nothing for the market.
Another one-third is made up of farms of two to five hectares. One-quarter of the private farms are five to ten hectares in size, and less than 15% are ten hectares or larger.
This degree of parcelization makes it totally impossible to apply modern technology to agriculture, which was a clear priority in the last five-year plan. Nothing was projected to increase production in the private sector. On the contrary, for years the entire policy of the bureaucrats in power has simply been to increase the nonviability and atomization of private holdings. In effect, the discriminatory measures against private farmers and the small subsidies they get lie behind the increasing difficulties they encounter in exploiting their land.
Shortages of fertilizer, agricultural equipment, and construction materials are a permanent feature of Polish agriculture as a whole. But because the state enterprises are given priority access to whatever is available, the independent producers find it impossible to carry out measures needed to rationalize their labor.
In theory the farmers are free to sell their produce to the bodies or individuals of their choice. But if they want to have access to low-interest bank loans or receive coupons enabling them to get fertilizer, they have to deliver specific quantities of their produce-which can be as high as 70%—at very low prices. The prices are so low that it is sometimes advantageous to buy back the products in question at the official sales price—often below the cost of production-and then resell them at a higher price on the free market.
Under cover of a law passed in 1978 on buying out the land of farmers upon their retirement, the administration can at any time intervene to decree the "collectivization" of a farm. Under these conditions it is hardly surprising that many peasants decide not to invest in their farms, preferring instead to build a house, the ownership of which is guaranteed them.
Among the youngest layers, there is constant growth in the number of "farmerworkers," who have a factory job while continuing to work the farm, using the labor of the wife and the rest of the family. Their labor output—in the factory as well as on the farm-is of course affected, but this is often the only way to keep the family farm going.
All these inconsistencies and difficulties have simply led to an exodus of youth toward the cities. It has reached the point that the mean age of independent farmers is somewhere between fifty-five and sixty years.
All this gives us a better understanding of the low yields of independent farms. When we add the muddle in the state sector, we can see why the present crisis in agriculture is so deep.
According to official sources, in 1979 "the percentage of new projects that did not begin functioning in the time period projected rose to 58%, while it had never surpassed 35% in preceeding years." It is likely that this percentage will be even higher for 1980. This shows that the Central Plan has been a work of fiction in the last period.
Even though they have big differences over what political objectives to aim for, in the present debate on reforming the economy we see that the majority of expertsfrom Solidarity as well as from the government-seem to agree on the need to decentralize the management system and replace most of the present performance indicators with others that provide a better gauge of reality.
The figure of net total production must replace the present use of gross production, which allows the factory managers to juggle their results to "prove" that they "fulfilled the plan." In line with that, the bonus for fulfilling the production figure of the plan-without worrying about the quality or the cost of production involvedmust be replaced by a bonus for overall economic results.
The discussion on this is only beginning. To get a view of the muddle that now reigns in planning, we can take the example of how investments are portioned out.
Despite successive corrections to the 1971-1975 and 1976-1980 five-year plans to pay more attention to consumption, investments in the capital goods sector have continued to grow more rapidly than those in the consumer goods sector.
There has, however, been major progress in the fields of textiles and food, with the construction of plants to process meat, milk, vegetables, and so on. When added to the rise in consumer goods and imports and the growth of production in the household appliances sector, this led to a significant rise in living standards in the early 1970s. But the lack of a coherent plan for developing different industrial sectorsespecially the energy sector-means that the level of return has significantly declined in recent years.
And, of course, this state of affairs was felt most immediately in the area of consumer goods since even at the height of the economic boom supply remained far below demand.
The bureaucrats' unrealistic policy of systematically giving priority to investments in new productive capacity was never dropped, even after the 1976 decision to abandon the "largest projects" in light of the growing economic stagnation.
For example, they continued to build the Huta Katowice steel complex, with a capacity of 9 million tons. The first part of the project, with a capacity of 4.5 million tons, came into service in 1979.
It took the outrage of the workers last year to stop this sullied, gigantic project. Lack of funds means the second stage will undoubtedly never be completed (1.2 trillion zlotys would be needed to finish the project). The billions of zlotys already invested in the now terminated construction reflect the carelessness of the bureaucrats, who gave themselves the right—in the name of the collective whole-to undertake a project that has proved so catastrophie for the country's economy.
The consequences of this policy of excess are seen not only in the technological backwardness of economic sectors that were considered secondary, but also in the lamentable working conditions that exist in some of the most "up-to-date" enterprises like the Huta Warszawa foundry in Warsaw, where people around the blast furnaces work without any protection in the midst of unbelievable noise and atmospheric pollution.
It is also seen in the wage differences between sectors of production or sectors of the economy, and between different categories of workers. In a single factory the wages of manual workers can vary by a ratio of one to ten. The spread is as much as one to twenty between office workers and some highly skilled technicians. Of course women are at the bottom of the scale, with wages that are often around 2,000 to 3,000 zlotys per month (the average salary being around 5,000 zlotys after the first wage hikes in late 1980).
Decline in Social Services
The course adopted by the Gierek team in recent years has had especially significant repercussions in the social sphere. The government has always neglected "nonproductive" investments (housing, hospitals, child-care, etc.). This is seen not only in the terrible situation of most families regarding housing, the ridiculously low number of places available in the child-care centers, and the shortage of hospital beds, but also by a tendency away from free medical care toward private medical care.
The insufficient educational budgets have led to closing schools in small towns and a decline in instructional conditions for the poorest layers of the population. To overcome the shortages of teachers and facilities, many schools operate on double shifts-the morning shift and afternoon shift. Sometimes there is even an evening shift. Children on the "evening shift" begin their school day at 4:00 p.m. or 5:00 p.m. Until then they are "parked" wher ever possible in the school, and watched by a supervisor.
The anger of the workers can be better understood when one knows that in 1979, in line with a Warsaw Pact resolution, it was decided from above to increase expenditures for "the country's security and defense capability," further reducing the budget available for improving the population's standard of living.
Because the big decisions by the bureaucrats in power were made in secret, they could be made with total impunity, even when they contradicted the decisions and intentions embodied in the plan.
During the past decade the authorities never carried out a real reorientation of the plan, despite the growing evidence that errors were being made. Instead, they were content to adopt pragmatic measures and lower targets when the gap between projections and reality became too apparent and threatened to cause social tensions dangerous to the regime.
In late 1975 it became clear that the growth in debts to the Western countries was reaching alarming proportions. But the corrections applied to turn the situation around-cuts in imports and a partial investment freeze-primarily resulted in a decline in the supply of goods on the market. When the government decided to increase consumer prices in June 1976, the workers anger stemmed especially from the fact that, after a period of growth, the attempt to impose these increases was being made at a time when food supplies were becoming increasingly scarce.
Pricing Policy
A central focus of the present discussion on economic reform is the inconsistency of the pricing system. But no technical decision can resolve the situation unless accompanied by a rapid improvement in productive capacity, especially in the area of food supplies. To understand the breadth of the economic wastage, it might be useful to examine more closely the mechanisms of the pricing policy, using the example of meat, which is one of the most striking cases.
As is the case for other basic products, the retail price of meat is lower than the cost of production (including transportation, administrative middlemen, and processing). It is quite correct for a workers state to decide to subsidize certain products sold below their cost. But, again, in making that decision one also has to know its repercussions on the economy in general, and on the mass of consumers in particular.
It is said that state subsidies on meat for 1979 totalled 91.4 billion zlotys, which is a subsidy of 34 zlotys per kilogram. The consumer pays between 100 and 150 zlotys per kilo, depending on the category of the meat, while the producer receives only 40 zlotys per kilo. The biggest portion of the difference between the two prices—to which we must add the 34 zlotys subsidyis therefore absorbed by expenses for middlemen, transportation, and the meat processing industry.
Nothing was done to try to reduce the middlemen's costs or to challenge the prices charged by the processing companies. But the measures the government took to increase livestock production on the state farms increased the price of a kilo of meat and caused an uncontrolled increase in the importation of feeds and grain to feed the animals.
This is one of the main causes of the rise in the foreign debt, and it required an increase in annual subsidies for food production, which now total 170 billion zlotys per year. In 1979 that represented slightly over 11% of total wages.
Meat is in a different category than other basic necessities such as bread, milk, and sugar. The statistics show, in fact, that in Poland those in the highest wage categories consume considerably more meat than lower paid workers.
To the extent that the meat subsidy comes out of the social surplus product, it means that the poorest are subsidizing those who are richer.
Therefore, the pricing policy, as it was applied until now for meat, seems to be a flagrant case of social injustice. The projected meat rationing must, therefore, correct this situation in the future. For the immediate present the rationing is largely a case of sharing the scarcity.
But there should be no illusions. Unless the insitution of rationing is accompanied by information about existing reserves and by the ability of the workers to control the distribution of meat supplies, things will not change very much.
For the immediate period the basic priority is to improve supplies. However, there must obviously be a much more general review of the planning and pricing system in order to put an end to both the policy of privileges and the inconsistencies and waste resulting from superbureaucratic management.
A Simple Inquiry
A very instructive article in this regard appeared in the bulletin of the Solidarity union group at the Katowice steel mill (No.
26, 1980).
24, November
Solidarity members organized an inspection tour of the food stores in Dabrowa Gornicza, the city where the Huta Katowice steel complex is located. The members of Solidarity learned that a number of stores had back rooms containing varying amounts of merchandise that was not placed on sale.
"It was impossible for us to know how long these goods were in the store. In this case [a grocery store], the amounts were not enormous, but we wonder who they were meant for, acquaintances, the shop employees (two people in this case)?"
In other stores the amounts were larger: *280 kilograms of margarine, 19 kilos of slab butter, 115 kilos of block butter, 72 kilos of vegetable butter, 80 kilos of flour, 10 kilos of spaghetti, 300 kilos of rice." The Solidarity newsletter noted: "This merchandise was not for sale."
In addition, their small inquiry led them to question the absurd way work was organized in a butcher shop: "4:50 p.m. The shop is open until 7 p.m. No customers. The windows are empty. We go to look in the back and ... we find 280 kilos of meat waiting to be carved. The manager explains that there is no one to do it (two bored clerks were sitting around while we carried out our inspection)."
The inspections made by other Solidarity committees, at the time when meat rationing cards were introduced for the holiday period, showed that merchandise was not divided equally among all categories of stores. In Radom, the amounts in the stores catering to the militia and police were systematically higher than what was found in ordinary stores.
On another level, workers at the Ursus tractor factory held direct meetings with representatives of Rural Solidarity to discuss the production of tractors, because they are familiar with the bureaucratic character of the commission in charge of recording orders and distributing the machines produced by the factory. The commission cannot take stock of the real needs of the farmers and is an obstacle to improving the situation.
These are some examples of the scope of the tasks that await the Polish workers.
Improving the economic situation requires more than just eliminating the waste and the useless middlemen who increase production costs. It also requires transforming the entire management and planning system so that the producers and consumers can exercise direct and continuous control over all the decisions relating to the plan and the distribution of social wealth.
The establishment of a society set up on an egalitarian basis, a society capable of satisfying the needs and aspirations of the mass of workers, would mean the death of the bureaucracy. In that sense it involves not economic reform, but political revolution.
Deutschland [the central organ of the East German Communist Party] or on [East German] television unfortunately limit themselves exclusively to warnings against counterrevolutionary forces in Poland, which undoubtedly also exist, but which, as we see it, do not, even in the remotest sense, dominate the situation in Poland.
The information from West Germany is also greatly filtered, because no one in the news-editing departments of West German television is interested in reporting on the fundamental aspects of this process. To report on that would be to admit that the workers can be radical and even revolutionary.
It seems that both "East" and "West," together with the Catholic Church in your country, are interested in playing down the revolutionary experiences in your country, to blunt them and thus to deform them.
We hereby urge you to continue unremittingly in the struggle for the democratic organization of Polish society. The socalled "actually existing socialism" must be replaced in an evolutionary way by socialist democracy. To achieve this it is necessary that independent trade union organization be extended to every area; organization be extended to every area, above all self-management of the factories must be undertaken. Only a strong movement can block intervention by the armies of the Warsaw Pact.
Even in the event of such intervention your struggle will serve us as a model. The old bureaucratic party regimes in our countries run themselves into the ground economically, politically, ideologically, and morally. Intervention would shorten their life-span rather than prolong it.
Nervousness is a symptom of the party apparatus. What characterizes us is the determination to realize, step by step, our dreams of freedom.