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Poland

Political and Economic Lessons From Democratic Transitions

Authors: Grzegorz Ekiert, Professor of Government, Harvard University, and George Soroka, Ph.D. candidate, Harvard University
June 18, 2013

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This preview highlights the main points of the Poland chapter from Pathways to Freedom: Political and Economic Lessons From Democratic Transitions, a publication of the Civil Society, Markets, and Democracy Initiative. For previews of other chapters, please see the Table of Contents.

Overview

Poland has achieved a sweeping and successful transformation since 1989. By carefully sequencing its economic and political reforms, installing welfare policies designed to protect the most vulnerable, and maintaining a consensus around the transition's ultimate goals, the country has managed to build a robust democracy and thriving free-market economy.

This result was not preordained; Poland endured years of crisis before Communist leaders finally sought accommodation with their opponents. Starting in the mid-1970s, the economy faced sizable imbalances, no real growth, and mounting foreign debt. The situation deteriorated further in the 1980s, with skyrocketing inflation, massive consumer shortages, and, after the imposition of martial law in 1981, onerous international sanctions.

Poland's transition officially began with the Round Table talks, which commenced in early 1989 between Communist Party officials and representatives of the Solidarity movement. Solidarity, founded as a trade union in 1980 and soon thereafter forced underground for its protest activity, was still an outlawed organization at the time. Compromise became a guiding principle of the regime change; sustained bargaining and the promise of institutional and legal continuity made democratization less threatening to Communist officials and helped secure support for reform. Grassroots agitation for change from Solidarity's membership, which at its peak numbered nearly ten million, was also an indispensable component of the transition.

The Round Table talks led to semi-free parliamentary elections in June 1989. Electoral rules were designed to guarantee the Communists and their allies a majority, but unexpectedly high opposition support allowed Solidarity to form the region's first noncommunist government since the 1940s. The new legislature began the work of overhauling Poland's political system, quickly guaranteeing basic rights and laying the groundwork for systemic reforms.

Instability defined the initial post-transition stage. More than one hundred parties and electoral alliances competed in the first fully free parliamentary election in 1991, with twenty-nine winning seats. By the end of 1993, Poland had held five post-transition elections, rotated through six prime ministers, and witnessed the ex-Communists' return to political prominence. Meanwhile, the radical economic overhaul that began in this period brought with it a sharp contraction in gross domestic product (GDP) and industrial output, along with surging unemployment.

Between 1993 and 2004, however, economic recovery and political stabilization took hold. During this time, the European Union (EU) accession process dominated Poland's attention. Power oscillated between post-Solidarity and postcommunist forces, fostering a middle-of-the-road approach to reforms. Civil society remained a vital component of the transformation, using protests to shape policy and encourage transparency.

Since Poland joined the EU in 2004, its democracy has consolidated further, as evinced by the maintenance of constitutional order after the 2010 plane crash that killed President Lech Kaczynski and dozens of other dignitaries. The country has also prospered during the last decade. Not only has Poland managed to achieve the strongest real growth of any country in the Organization for Economic Cooperation and Development (OECD) since 2007, but it is also the only European state that did not fall into recession during the latest global financial crisis.

However, this success was far from certain at the outset. Four decades of communist rule resulted in the country's lack of many attributes—such as a middle class, secure property rights, and a culture of electoral competition—typically deemed necessary for capitalism and democracy to flourish. But communism also left several positive legacies, including an egalitarian social order, a well-educated labor force, and a diversified industrial base.

In sequencing its reforms, Poland preferentially reinforced the rule of law and established institutional safeguards to guarantee free speech, private property rights, and welfare benefits before proceeding with steps such as privatization. After the fast-paced initial phase was completed, leaders prioritized debate and consensus-building over specific objectives, helping citizens feel invested in the process.

Finally, historical and external influences shaped Poland's success. Poland had a cultural and political affinity for the West, as well as memories of previous attempts at democracy and state-building. Western states, international financial institutions, and—most important of all—the EU offered massive support, often tied to conditions that helped cement democratic gains and encouraged difficult economic reforms.

Pathways to Freedom: Political and Economic Lessons From Democratic Transitions, a new book from the Council on Foreign Relations, explores Poland's progress and challenges in six areas of economic, political, and social development.

Socioeconomic Exclusion and Inclusion

Transitional leaders paid significant attention to inequality. Drawing on central Europe's welfare tradition, they advanced democratization and market reforms by favoring programs that cushioned shocks for vulnerable groups. Establishing an antipoverty program, indexing wages to inflation, providing unemployment benefits, and paying out pensions were all instrumental in overcoming opposition and blunting populism's appeal. Postcommunist Poland has consistently devoted more than 20 percent of GDP to social expenditures, exceeding the OECD average.

More recently, Poland has overhauled its pension and health-care systems. Pensions now marry state-run coverage with a defined contribution plan and voluntary individual retirement accounts. Meanwhile, decentralizing responsibility for funding and delivering services in the health-care sector has served to promote competition, allowing for more effective expenditure controls. The country's sustained economic growth facilitated such reforms. Poland was already a middle-income country by 1989, and extensive foreign aid and investment allowed it to recover quickly from the recession that engulfed the region after communism's fall.

Economic Structure and Policies

Needing to tame hyperinflation and replace an inefficient, state-dominated economy with a market-based one, Poland's transition leaders chose a "shock therapy" approach. Their aim was to promote development while undermining old power networks capable of sabotaging reforms. The instrument employed was the Balcerowicz Plan, a radical macroeconomic program backed by international financial institutions and Western governments.

Since 1990, Poland has quadrupled its per capita income and become a leading foreign investment destination. The country has benefited from large-scale EU aid, as well as the remittances of Poles working abroad. Early on, however, the postcommunist transformation produced severe pain. GDP fell by 11.6 percent in 1990 and unemployment grew from 6.1 percent that year to 16.4 percent in 1993, provoking protests and strikes. But successive governments maintained the momentum of reforms, the overall objectives of which remained consistent. With no viable "third way" articulated between communism and capitalism, societal consensus favored liberal democracy and a market economy.

Privatization posed another challenge. While the process was contentious and slow, it had the benefit of being orderly and transparent. By 2010, Poland had privatized or liquidated nearly 6,000 state-owned firms.

Civil Society and Media

Mass protests against Poland's Communist regime date to the 1950s. But the struggle in the 1980s between the government and Solidarity proved formative, bequeathing Poland a well-organized labor movement, a powerful Catholic Church, and experienced opposition leaders, many of whom remain in politics today. As a result, communism's collapse unleashed massive organizational mobilization. Since 1989, five thousand new nongovernment organizations (NGOs) and five hundred new foundations, on average, have been launched in Poland each year.

Alongside civil society's role in representing diverse interests and providing services, Poland's media contributed to the transition by catalyzing debate over social problems. Print, radio, television, and digital outlets all expanded dramatically after single-party rule was abolished.

Legal System and Rule of Law

Poland's communist legal system, though ideological, was comprehensive. Transitional leaders decided to affirm the validity of inherited legal arrangements while removing the most repressive regulations. This emphasis on predictability, stability, and the rule of law proved an effective tactic during the transition.

The first phase of legal reform centered on abolishing preferences for the Communist Party, establishing fundamental rights and liberties, protecting private property, and restoring judicial independence. The second phase aimed to meet EU accession criteria. This process was not particularly democratic, as it placed certain policy domains outside the realm of political contestation, but it was efficient and ultimately produced an outcome favorable to liberal norms.

One of Poland's post-transition challenges is corruption, which has been successfully combated in recent years through anti-bribery campaigns, EU oversight, and media exposure. Another longstanding debate involves accountability for Communist-era collaboration and political crimes, a topic that remain a source of societal disquietude.

Government Structure and Division of Power

The Round Table negotiations created a directly elected presidency and restored an upper chamber to the legislature. Poland thereby became a semi-presidential regime, avoiding an excessive concentration of power in the executive. Likewise, proportional representation in the lower house ensured a range of voices would be represented in parliament. This system fostered electoral competition, but it also initially produced severe political fragmentation.

Effective local governance was another early priority. Two rounds of reforms gave municipalities considerable power and resources, including an independent revenue base and responsibility for infrastructure, health care, and education. Only after this devolution of power did Warsaw boost its own revenue stream by adding personal income and value-added taxes. In 1997, the authority and autonomy of the central bank were also bolstered. The bank's resulting clout, coupled with a conservative fiscal policy, has contributed significantly to Poland's economic stability.

Education and Demography

Poland's post-1989 educational landscape has been marked by the proliferation of private institutions of higher education. More than three hundred were created between 1991 and 2011, compared to approximately forty state institutions. A 1999 reform added a year to comprehensive-education requirements for students pursuing vocational training. Educational responsibility was also significantly decentralized. Coupled with EU support, these changes have fueled a surge in scores on international assessment tests.

The Communist period left Poland a universally literate and predominately urban society. Moreover, the transition benefited from population bulges representing baby boomers and their children, which guaranteed that a high proportion of adults over the next two decades would be of working age. In coming decades, however, Poland's population is projected to rapidly age and shrink, which will place a strain on the health-care and pension systems.

Conclusion

Poland's successful transition offers several lessons. First, an efficient and accountable state is essential to democratic consolidation and the rule of law. Second, leaders should capitalize on a post-transition honeymoon to enact difficult reforms quickly, though not before installing societal safety nets. Third, though external influence is limited, long-term foreign assistance can be vital. Finally, previous democratic experience helps. In the struggle for democracy, there are no lost causes, only frustrated short-term expectations.

Additional Material

Poland: Full Chapter Preview
Poland Timeline
Further Reading


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