Transition triumphs and traps - Assessing Poland's recent economic journey, and where it goes next

This article was published in Issue 59 of our quarterly Bankwatch Mail.

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Some interesting cross-cultural and ideologically various perspectives were due to bounce around during the discussion, and we kicked off with a look at the so-called 'Polish economic miracle' that has seen the country enjoy the fastest rates of growth in Europe over the last two decades (over four percent a year), become the sixth largest economy in the EU, and resulted in living standards more than doubling between 1989 and 2012.

Just how miraculous has this economic miracle been?

Aleksander Nowacki: I hesitate to bring up personal anecdotes, but I remember being sent as a child to buy bread. My mother said to me that in the morning it cost 2,000, so she was giving me 4,000 at 3pm to be on the safe side. I ended up coming home without bread, as the price had more than doubled since the morning. When we talk about living standards, it's not good just to talk about income per head. We also need to look at the fact that while the Polish economy in 1989 was maybe not as bad as Germany in the early 1920s, it was in terrible shape: there was hyper-inflation and the economy was collapsing.

And the fact that Poland is now one of the most developed countries in the world is, in some ways, miraculous, though there was nothing really miraculous about it – just hard work, and some luck, such as joining the EU.

Gavin Rae: I've lived in Warsaw pretty much permanently since 1996, and I've seen considerable changes in that time. I think the term 'miracle' involves an element of hyperbole, but it can be looked at as a positive example only really within the context of the post-socialist transition. In general, I would say that the post-socialist transition in eastern Europe has been a complete disaster. That isn't supposed to be a justification of what existed before, but when you look at many of the ex-Soviet states, the declining GDP and living standards have been of an unprecedented scale in peacetime history.

When you look at Poland within this, of course, there has obviously been a much better experience, where GDP has risen significantly, living standards have risen, and so on. However, even within this, when you look at the very large deactivation of labour, the decline in many public services, particularly in health and pensions, and rising inequality, then I think that the Polish transition has not been the unprecedented success that the present government would like to portray it as.

AN: I would disagree quite strongly with some of these points. Regarding what Gavin describes as declining standards in public services such as health, between 1989 and 2010, average life expectancy grew in Poland by seven years – that's much higher than the global average. The number of infections in hospitals was cut, I think, to 20 percent of what it had been in the eighties. The quality of health care is a lot higher than it was in the eighties: you don't now get patients lying in beds in corridors, as was very common in the 1980s. We've also seen very significant advances in, for example, the treatment of and facilities for disabled people.

As for inequality, while economic inequality has indeed increased, in the eighties what we had in Poland and elsewhere in the region was 'hidden' inequality. In a socialist economy, how much money you had didn't influence your position in society, or even your economic position. It was all about your contacts. So people who had contacts in the party, contacts in certain companies, could access goods that money couldn't really purchase. So actually we had incredible inequality not in terms of income disparity but in availability of goods, and that was hidden. The inequality we have now is more transparent.

GR: To come back on health, I can agree that the system in Poland in the 1980s was particularly bad. But look at some of the figures: there are fewer doctors now in Poland than there were 20 years ago, there are fewer dentists, fewer nurses, fewer public hospitals. And we can see the health system now increasingly failing. That is of course not to say that things were great 25 years ago, and now they're bad.

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