Leszek Balcerowicz  in Seattle

By Dr. Arista Cirtautas, Visiting Lecturer at the UW Jackson School of International Studies

 That Professor Leszek Balcerowicz is still very much a man with a mission was clearly in evidence during his lecture on “Post-Communist Transformation in Central Europe,” and his meeting with students at the University of Washington, Nov. 1-2, 2007.  While his mission was once to transform the “destructive system of communism” into a well-functioning “Western system of capitalism,” a revolutionary transformation that he carried out most ably as Finance Minister, Deputy Prime Minister and as President of the Polish National Bank, his current goal is to ensure the continuity and sustainability of sound market-building economic policies against the vagaries of intemperate and short-sighted political decision-making.  As he noted in the question and answer session following his lecture, the most difficult challenge now and in the future is to navigate the “period of normal politics” when economic policies are all too easily politicized and distorted by non-market-building objectives.  Difficult as the initial reform period might have been, the stabilization, liberalization and privatization policies introduced then under his leadership took place under a “period of extraordinary politics,” an admittedly short but vital grace period when a permissive consensus on the part of both elites and publics enabled radical reform.  After political life routinizes and returns to ‘normal,’ the biggest question is, as Professor Balcerowicz elaborated at the student meeting,  “how can good policies be maintained through regime change and beyond as in the case of Chile?”
 

In addressing this new challenge or mission, two key strategies can be delineated following Professor Balcerowicz’s remarks, one more defensive in character, the other more offensive or proactive.   On the defensive side, it is important to promote, protect and preserve an appraisal of the recent past that does justice to what was overcome and what has been achieved since 1989 in order to offset the negative, politically mobilizing effects of unnecessarily critical or uninformed assessments of his reforms.  Accordingly, Professor Balcerowicz reminded his lecture audience of the destructive nature of the communist system, how it might have provided some sort of security but at a very low level of economic development with no rule of law and an unprecedented “scope of control over individual freedom.”  Both “Western illusions” regarding welfare under socialist regimes and east European “myths” regarding the responsibility of the state to provide for “free lunches” need to be dispelled by a return to the objective facts of communist development, specifically that, during the communist era, the developmental gap between eastern and southern Europe grew enormously leaving post-communist countries with that much more “backwardness” to overcome.  Consequently, an “extremely broad transformation” was needed to move from communism to capitalism; a transformation that “did not neglect institutional change as some observers claim” (especially since “privatization is institutional change) and that did have to take a “radical approach on a broad front with maximum possible speed but at different rates depending on issue areas, e.g. stabilization or liberalization.”   This, and not “shock therapy”, a term Professor Balcerowicz dislikes due to its association with electrical shocks, is a more realistic portrayal  of his reform package.  Furthermore, due consideration has to be given to the positive outcomes produced by these reforms such as increased life expectancy, declining infant mortality rates, a marked reduction in industrial waste and, correspondingly, a reduction in the negative environmental impact associated with communist economic development, and, most importantly perhaps, the enhanced scope of individual freedom as in both “market and non-market transactions, people establish their own relationships.”  Inevitably, more needs to be done  to ensure continuing rates of economic growth, government spending needs to be controlled, privatization needs to be completed, unnecessary bureaucratic regulations need to be removed and the judiciary, especially the prosecutors, need to be more efficient and impartial.  Most importantly, overcoming the continuing effects of economic backwardness such as high levels of emigration (producing a potential “brain drain”) and the disparity between high west European price levels and much lower east European wage levels, are completely dependent on a sustained rate of growth which, in turn, is dependent on the continuity of good economic policies.  

But how can such policies be preserved in the face of growing political populism and the general unpopularity of the market economy?  As Professor Balcerowicz himself noted in answer to a question after his lecture, this lack of popularity can be ascribed to a potent combination of socioeconomic interests (as those with a privileged status under communism like miners exchange places with those who held a much lower status under the previous regime like educated people), myths (such as the myth of the “free lunch” and “brotherhood”) and morality (as in the assumption that the “profit motive is bad”).  Here, a more offensive, proactive strategy is needed to promote good communication (e.g., “good slogans” to undermine populist appeals) between market oriented elites and the general public.  In his meeting with students, Professor Balcerowicz informed us that, precisely in order to foster good political communication in Poland, he has founded a new NGO, (with the acronym “FOR” – “we are for and not against,” he emphasized), which has the following goals: identify the most popular populist beliefs, use psychology and marketing to challenge and overcome these beliefs (for example, through the use of satire and sharp, pointed humor).  Most recently, FOR initiated a “get out the vote” campaign, primarily addressed at the younger generation using text-messaging and the internet, which doubtlessly contributed to the 15% increase in electoral turnout in the parliamentary elections and the electoral victory of the Civic Platform, a party much more favorable toward sound economic policies than their opponents. 
 

 Basically, it appears as if this new Balcerowicz mission is designed to foster, by conscious design, the very factors that initially combined spontaneously to support market reforms in Central Europe and the Baltics.  Since these factors, reform linkages, quality of leadership and the politicization of social dissatisfaction (as Professor Balcerowicz pointed out in his lecture, it is “bad reasoning” to conclude that because there is social dissatisfaction, the reforms –his reforms—must be wrong),  played such an important role, according to Professor Balcerowicz, in “determining the difference in the rate and success of reforms in the former Soviet bloc,”  they might well be of equal importance in determining when and where good economic policies persist beyond regime transition.  Hence, the new mission is to promote “positive reform linkages” whereby market reform or continued good economic policies are linked to positive, highly desirable non-economic objectives, to promote, via the electoral process,  a qualified, pro-market leadership and to undermine the populist effort to connect social dissatisfaction to pro-market policies.  Given the drive, determination and focus Professor Balcerowicz brings to his work, he is likely to be as successful in these endeavors as in his past undertakings.  
 
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