Saturday, May 11, 2013

Really Primitive Accumulation

“From Solidarity to Sellout – the Transition to Capitalism in Poland,” by Tadeusz Kowalik, 2013.

This book is an in-depth account of the counter-revolution in Poland, especially the period 1988-1991, and should stand as a classic in its genre.  Kowalik covers in detail the theoretical and programmatic disagreements among the various thinkers and formations over that period, including Solidarnosc, the ostensibly Communist Polish United Workers Party (‘PZPR’), the IMF, various foreign ‘advisors’ and the multiple shades in between.  Kowalik himself is not a communist in the PZPR anymore, having been expelled in 1968.  Instead he is a social-democrat and a fan of Keynes and Stiglitz.  He was and still is interested in turning Poland into something like Sweden, Austria or even Germany – a ‘social’ market economy.  As part of this view, Kowalik praises China and Vietnam for their slow approach to privatization and a market economy.  As he puts it, "What kind of capitalism is viable from a social point of view?"  The value of this book is that it calmly depicts how a proletarian state can be overturned, and describes the players that did it.

It is certainly significant that the Polish worker’s state could ultimately be overthrown without violence, which only goes to show that the state was based on the working-class – and when that class withdrew its allegiance, the state collapsed.  Similar things happened in the USSR and across central Europe.   It is similar to a decertification vote in a union.

Instead, the astounding thing in Poland is that, like Russia under Yeltsin, what won out was capitalist ‘shock treatment,’ otherwise known as the Balcerowicz Plan.  Balcerowicz was the prime minister in the new non-communist reform government dominated by Solidarnosc.  Ideologically, this meant adhering to the most extreme form of Friedmanite, Hayek-leaning, Reagan/Thatcher IMF capitalism.  This came about after somewhat murky, contradictory and extensive discussions in the early 1989 “Round Table” between nearly all parties, including the labor leaders around Solidarnosc like Michnik and Kuron and the PZPR.  Later, following the June 1989 election of the first non-Communist-led government since socialization in 1945, ‘shock treatment’ was officially endorsed, with participation of the PZPR.

Kowalik does not discuss entities like the nationalists or the Catholic Church, which had never been in favor of any kind of socialism or class struggle anyway.  In an interesting aside, he points out this Catholic Church is still trying to regain Polish properties it lost more than 200 years ago!

This account does not describe anyone who was for preserving the bureaucratic system in place prior to the Solidarnosc-led Gdansk strikes in 1980-81.  Even Wojciech Jaruzelski eventually resigned.  Nor does it describe anyone from a Marxist perspective who wanted the working-class to take more direct control of the economy and state, and create a truly cooperative commonwealth.  Here is the only reference I found, as Kowalik describes Gomulka’s youthful ideas: “In the early 1960s he (Gomulka) criticized really existing socialism from the position of orthodox Marxism, with a pro-worker and anti-bureaucratic orientation.  In the West such views were often classified as Trotskyite. In Poland, however, this term has negative connotations.” We might ask, ‘which’ Poland?  (By the way, “Trotskyite” is an insulting turn of phrase, used by both Stalinists and the bourgeois press. It is 'Trotskyist.')

Instead, after Jaruzelski’s martial law in 1981, all enthusiasm for versions of military socialism evaporated among the opposition, and eventually among the bureaucracy.  This is the same role the 1968 invasion of Czechoslovakia had in that country.  Prior to the invasion of Czechoslovakia by the Soviet Army, the overwhelming majority of the Czecho-Slovak population wanted ‘socialism with a human face.’  Instead they got tanks.  As Kowalik explains it, in Poland martial law cut off Solidarnosc’s leaders from the ranks, creating an isolated and rightward-moving group of intellectuals, heading quickly towards extreme counter-revolution.

Kowalik spends a lot of time on various theories of ownership – as they are basic to the nature of an economy.  While the promoters of shock capitalism in Poland believed that state ownership was inherently inefficient – Kowalik praises various forms of cooperatives, ESOPs, kibbutz, Yugoslavian forms, employee councils, worker self-management and joint worker/owner management, as well as the sometimes beneficial advantages of state ownership.  As he points out, 85 of the top 500 corporations in the world identified by Fortune magazine (no friend of social control) were state-owned.  Capitalist fundamentalism’s hostility to state ownership certainly has played a role in the destruction of Iraq, the current civil war in Syria and the invasion of Libya by NATO.  It is also a basis for the continuing hostility to China. And so too in Poland, this ‘harmless’ theoretical point formed the basis for a huge decimation of working class wages, jobs, conditions, as well as bankruptcy and poverty for many farmers and some small businessman.

According to Kowalik, surveys from 2000 indicated that most people thought they lived better under the worker's state.  The majority of people now oppose the the policies of the Polish elite, according to him.  Part of the reason may be how capitalism was reintroduced.  "Shock therapy’ provided by the IMF and its Polish allies aimed at immediate privatization.  The shock and subsequent full capitalist rule increased unemployment to 19% from almost zero, eliminating 5 million workplaces. It stayed formally at 16% until entry into the EU, and is still among the highest in the EU, much of it falling on youth and college graduates.  Industrial output dropped by 30% in the first months.  Farm income fell by half.  State farms were sold off and the farm workers consigned to destitution even today, while large estates came into private hands. Wages fell from 46.2% of income to 29.9% of the population's compensation.  Inflation was 5 times that predicted after prices were 'freed.'  Imports and the penetration of foreign capital is higher in Poland than anywhere else in the EU.  Womens' wage inequality is the highest among the new members of the EU.  The 'gini' coefficient measuring general social inequality is also highest in the EU. The changes resulted in lowered life spans, increased class stratification, larger foreign debt and engendered massive emigration into the rest of the EU, flooding Germany and England with young Polish speakers.  Just as imperial penetration of the Mexican economy and economic oppression in Mexico send Mexicans north across the U.S. border.  The 'reform' slighted labor laws, increasing accidents, and fatally weakened the union movement.  The same union movement that started and legitimized this process in the first place.

None of the rosy public predictions of the ‘reformers’ came true.  This crude destruction of the economy provided the necessary ‘capital accumulation’ for a new ownership class and middle class in Poland – about 1 million people, according to Kowalik.  (The population of Poland is a bit over 38 million today.)  Theft of social property was the source of their riches, money and assets now flowing upward.  Truly primitive accumulation. 

That the IMF basically had its way with Polish sovereignty is most stunning.  The fact that foreign advisers like Jeffrey Sachs, George Soros, Edward Lippman and Stanislaw Gomulka became the gurus for budding Polish capitalists, and that foreign advisers were allowed to even directly control economic events in Poland is somewhat amazing.  The gigantic worker-led strikes of 1980-1981, instead of producing a “Self-Governing Republic” as Solidarnosc and KOR wanted at the time, ended up in another regime of the rich and the powerful.   Worker self-management had become ‘too socialist’ for Solidarnosc by 1988.

The role of the former bureaucracy played true to form.  As already described in the book, “Contradictions of Real Socialism” (reviewed below), Kowalik also gives evidence that the bureaucracy felt it could take over individual ownership and control of various enterprises, thus making the transition to capitalism quite handsomely.  This also played out in the USSR during their period of shock therapy.  It is happening in China and Vietnam right now, but at a slower pace.  In Vietnam, it started with the 1986 ‘Doi Moi’ program for a ‘socialist-oriented market economy’ and in China, the 1978 de-collectivization and opening to foreign capital organized by Deng Xiaoping, later followed by the privatizations of the 1980s.  In Poland, the Polish party nomenklatura had an interest in capitalist restoration because it saw it could be one of the most immediate beneficiaries, both in property and in corruption and bribes. For instance, PZPR minister and privatization head Krzystof Lis supported privatization as the only alternative to state ownership - not even supporting workers' self-management as a slogan.  The PZPR government had already laid a legal basis for transferring state enterprises to private ownership in 1987.  They, like the leaders of Solidarnosc, chose ‘fast’ over slow, and the consequences to the population were far more extreme.  Perhaps “get rich quick’ was their real, hidden slogan.

As you can see, this was not limited to former PZPR. The 'managerial elite' grew not just from the former nomenklatura, but the bourgeois technocratic and managerial class, who have vastly enlarged the government even over the Communist one, packing it with relatives, friends and allies.  Kowalik calls this 'clientelism,' and it still goes on today.

Kowalik has a long detailed section on the failure of the NIF certificate/share program, which gave ‘ownership’ of certain public companies to the Polish population as a whole.  There was much excitement at the time about this 'democratic' experiment in sharing capitalism.  Eventually most shares ended up controlled by foreign hedge funds, which extracted massive management fees and sold-off companies for profit, without regard to anything else.

Foreign firms picked up modern factories for a song.  Kowalik cites the Kwidzyn paper plant, which the International Paper Group called 'fully modern,' and purchased for far below what was put into the plant by prior governments.  The excuse of the Walesa government?  It was 'outmoded' and 'near bankruptcy.'  Other factories were bought and closed, so that foreign firms could compete in Poland without local competition.  A 2000 study by K Posnanski indicate firms were sold for 10% of their real value. The Polish banking sector, by 2003, was 75% controlled by foreign banks.  Some have labeled the Polish economy as a victim of 'neo-colonialism.'  Kowalik points out it is really a sub-contractor economy - sub-contracted to firms from the EU and the US.  However, some Polish experts want to export their model to the rest of the EU, in order to 'de-statize' it!  Their sad example, of course, will only be attractive to the most predatory capitalists.

Kowalik is fond of the phrase ‘really existing socialism’ (as Brezhnev also called it) to describe the deformed Polish workers state.  Kowalik says on page 24 of this book that the revolution in the USSR ‘degenerated.’ Then on page 25 he condemns ‘many socialists, Trotskyites and social-democrats’ for saying that Poland was a form of ‘degenerated socialism.’  Confusing?  Well, we are not here for a contradictory lecture on the definition and degradation of socialism, but to understand the facts.  Many supporters of Solidarnosc who initially supported ultra-capitalist methods later changed their minds, but unfortunately after the historical moment was over.  To his credit, Kowalik seems to be one of the few who knew this would end badly, even then.   As the present copper and coal miners in Poland who are resisting further privatization know, this story is not over.

And I bought it at May Day Books!
May 11, 2013
Red Frog

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