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?”

Commitee members with Professor and Mrs. Balcerowicz
at the reception hosted by Shoshanna and Roman Budzianowski.
First row from left to right: K. Untersteiner, M. Grabowska, E. Poraj-Kuczewska,
J. Budzianowski, E. Balcerowicz, K. Dziwirek and A. Burdzy
Second row from left to right: Z. Konofalski, B. McNair,
M. Golubiec, W.Cieslar-Pawluskiewicz, L. Balcerowicz,
R. Budzianowski and K. Burdzy

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.