Book review: “The road to socialism and back. An economic history of Poland, 1939-2019” by Peter J. Boettke, Konstantin Zhukov and Matthew Mitchel (Part 1)
17 July 2023
SUGGESTED
Markets and Morality
Monetary Policy
19 July 2023
Tax and Fiscal Policy
19 November 2024
Two months ago, it was widely reported that Poland could economically overtake the UK by 2030. This was not the result of any complex modelling. It was merely an extrapolation of current growth rates into the medium-term future. But it nonetheless became a “story” that was featured in almost every major British newspaper, often with a sense of genuine shock and surprise.
Perceptions of other countries often lag about a generation behind the actual country. We still seem to think of Poland as an impoverished post-Soviet economy, even though it stopped being that quite a while ago. When Poland joined the EU, their income levels were less than half of the British level. When Britain voted to leave the EU, they had risen to about two thirds of that. They now stand at four fifths.
The Road to Socialism and Back: An Economic History of Poland, 1939–2019, published as part of the Canadian Fraser Institute’s “Realities of Socialism” series, tells the story of how Poland fell so far behind Western Europe in the 20th century, and how they managed to turn themselves around after 1989.
In postwar Poland, like everywhere else in Red Army-occupied Europe, the Soviets made sure that a Moscow-aligned Marxist party came to power. The Polish United Workers’ Party (PZPR) quickly set out to collectivise the economy, nationalising most industries, and organising economic activity on the basis of comprehensive central plans. Poland escaped some of the worst excesses of a Soviet-type economy. In particular, agricultural collectivisation never went very far, which is probably the reason why there was no Polish equivalent of the Soviet famine of the early 1930s.
But while the Polish economic model was not simply a copy of the Soviet one, it was nonetheless one where legal markets, and private sector activity, were pushed to the fringes.
Economic outcomes
The results were grim. GDP figures do not tell us much for a planned economy without market prices, but the authors show us how many hours an average Polish worker had to put in in order to be able to afford a selection of everyday consumer goods, e.g. a pair of shoes, a winter suit, a kilo of washing powder, a TV set, or a litre of beer or wine. The result is almost always a multiple of the West German figure, meaning that a Polish worker had to work three times, five times or ten times as long as their West German counterpart for a comparable product. (If it is indeed “comparable”: this does not yet account for differences in quality and availability!) Where there are exceptions to this, there is usually a non-economic reason for that. For example, cigarettes were relatively more affordable in Poland than in West Germany, but this is simply because the West German state was a nanny state, which deliberately taxed tobacco in order to discourage consumption.
These results are stark, but unsurprising. We know that the Polish People’s Republic was an economic failure. Even most socialists would admit that.
What is probably less well-known is how much of a failure it was in other respects too, including in terms of outcomes that the Left professes to care about, such as environmental pollution, workers’ rights, inequality, materialism, security, and the treatment of minorities.
Environmental outcomes
Air pollution, as measured by the emission of sulphur oxides, was many times greater in the Eastern Bloc (including Poland) than in the West. This is remarkable insofar as car ownership was so much lower under socialism. In the late 1980s, even East Germany, which had the highest car ownership rate of the Eastern Bloc, still had fewer cars per 1,000 people than (at the time) relatively poorer Western Bloc economies such as Spain (and less than half the rate of Switzerland and West Germany). While there is a trade-off between environmental protection and material living standards, socialism brought us the worst of both worlds: lower living standards and a more polluted environment.
Workers’ rights
A “workers’ state” is never a good place for actual workers. Under socialism, Poles had to work long hours, and at least in the early days, work absenteeism was a criminal offence. This would be unthinkable in a capitalist economy (other than maybe in times of war), where, whether you turn up for work or not is purely a matter between you and your employer. But it makes some sense in a collectivised economy, where there is no such thing as “my business” and “your business”: everything is everyone’s business. A shirker in a socialist economy is not simply a bad worker, who will harm their own career prospects, but an “enemy of the people”.
Materialism
A fashionable criticism of capitalism is that it makes people acquisitive and materialistic, obsessed with owning more and more “stuff”. The implication is that in a more collaborative type of economy, communal values would prevail.
These things are not really measurable, so there can be no hard evidence either way, but the authors show, quite convincingly, that Polish society was, in some ways, more materialistic than Western counterparts. One reason for that is that, in an economy characterised by constant shortages, it is impossible to keep economic considerations out of our personal relations. In such an economy, people need favours from each other. You cannot just go to the shops, and buy what you need. You need informal networks of support. “Don’t mix business with pleasure” is a typical Western attitude. It does not work in such an economy.
Inequality
In eastern Bloc economies, inequality of nominal incomes was low. But living standards were not simply determined by how much money you had in your wallet. Rather, many important goods and services were allocated via administrative-political processes. If that type of inequality could be measured, it is not even clear whether Poland was really more egalitarian under socialism than it is today.
Continue to Part 2
____
Recommendations for further reading/watching/listening:
Perceptions of other countries often lag about a generation behind the actual country. We still seem to think of Poland as an impoverished post-Soviet economy, even though it stopped being that quite a while ago. When Poland joined the EU, their income levels were less than half of the British level. When Britain voted to leave the EU, they had risen to about two thirds of that. They now stand at four fifths.
The Road to Socialism and Back: An Economic History of Poland, 1939–2019, published as part of the Canadian Fraser Institute’s “Realities of Socialism” series, tells the story of how Poland fell so far behind Western Europe in the 20th century, and how they managed to turn themselves around after 1989.
In postwar Poland, like everywhere else in Red Army-occupied Europe, the Soviets made sure that a Moscow-aligned Marxist party came to power. The Polish United Workers’ Party (PZPR) quickly set out to collectivise the economy, nationalising most industries, and organising economic activity on the basis of comprehensive central plans. Poland escaped some of the worst excesses of a Soviet-type economy. In particular, agricultural collectivisation never went very far, which is probably the reason why there was no Polish equivalent of the Soviet famine of the early 1930s.
But while the Polish economic model was not simply a copy of the Soviet one, it was nonetheless one where legal markets, and private sector activity, were pushed to the fringes.
Economic outcomes
The results were grim. GDP figures do not tell us much for a planned economy without market prices, but the authors show us how many hours an average Polish worker had to put in in order to be able to afford a selection of everyday consumer goods, e.g. a pair of shoes, a winter suit, a kilo of washing powder, a TV set, or a litre of beer or wine. The result is almost always a multiple of the West German figure, meaning that a Polish worker had to work three times, five times or ten times as long as their West German counterpart for a comparable product. (If it is indeed “comparable”: this does not yet account for differences in quality and availability!) Where there are exceptions to this, there is usually a non-economic reason for that. For example, cigarettes were relatively more affordable in Poland than in West Germany, but this is simply because the West German state was a nanny state, which deliberately taxed tobacco in order to discourage consumption.
These results are stark, but unsurprising. We know that the Polish People’s Republic was an economic failure. Even most socialists would admit that.
What is probably less well-known is how much of a failure it was in other respects too, including in terms of outcomes that the Left professes to care about, such as environmental pollution, workers’ rights, inequality, materialism, security, and the treatment of minorities.
Environmental outcomes
Air pollution, as measured by the emission of sulphur oxides, was many times greater in the Eastern Bloc (including Poland) than in the West. This is remarkable insofar as car ownership was so much lower under socialism. In the late 1980s, even East Germany, which had the highest car ownership rate of the Eastern Bloc, still had fewer cars per 1,000 people than (at the time) relatively poorer Western Bloc economies such as Spain (and less than half the rate of Switzerland and West Germany). While there is a trade-off between environmental protection and material living standards, socialism brought us the worst of both worlds: lower living standards and a more polluted environment.
Workers’ rights
A “workers’ state” is never a good place for actual workers. Under socialism, Poles had to work long hours, and at least in the early days, work absenteeism was a criminal offence. This would be unthinkable in a capitalist economy (other than maybe in times of war), where, whether you turn up for work or not is purely a matter between you and your employer. But it makes some sense in a collectivised economy, where there is no such thing as “my business” and “your business”: everything is everyone’s business. A shirker in a socialist economy is not simply a bad worker, who will harm their own career prospects, but an “enemy of the people”.
Materialism
A fashionable criticism of capitalism is that it makes people acquisitive and materialistic, obsessed with owning more and more “stuff”. The implication is that in a more collaborative type of economy, communal values would prevail.
These things are not really measurable, so there can be no hard evidence either way, but the authors show, quite convincingly, that Polish society was, in some ways, more materialistic than Western counterparts. One reason for that is that, in an economy characterised by constant shortages, it is impossible to keep economic considerations out of our personal relations. In such an economy, people need favours from each other. You cannot just go to the shops, and buy what you need. You need informal networks of support. “Don’t mix business with pleasure” is a typical Western attitude. It does not work in such an economy.
Inequality
In eastern Bloc economies, inequality of nominal incomes was low. But living standards were not simply determined by how much money you had in your wallet. Rather, many important goods and services were allocated via administrative-political processes. If that type of inequality could be measured, it is not even clear whether Poland was really more egalitarian under socialism than it is today.
Continue to Part 2
____
Recommendations for further reading/watching/listening:
- The Road to Socialism and Back: An Economic History of Poland, 1939–2019, by Peter J. Boettke, Konstantin Zhukov and Matthew Mitchel
- Poland: Socialism in Reality? with Harrison Griffiths and Kristian Niemietz
- How Can We Stop Young People Flocking to Socialism? with Harrison Griffiths and Kristian Niemietz
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