Poland’s Quest for Economic Stabilisation, 1988-91: Interaction of Political Economy and Economics

Authors: Branko Milanovic

Publication: Soviet Studies. vol. 44, no. 3. pp. 511-532

Date: 1992

Abstract:

Poland’s January 1990 Stabilisation Programme has attracted widespread attention. It is so far the boldest attempt to transform a socialist economy suffering from a high degree of instability (inflation and shortages) into a stable capitalist economy. It thus involves two separate components-macroeconomic stabilisation and systemic reform. In this paper we are concerned with the first component.

The 1990 Stabilisation Programme, however impressive, cannot be consi- dered in isolation. Prior to January 1990 there were at least two years of intensive attempts at reform. Reforms failed, either because no minimal social consensus could be achieved or because they were badly designed. However, they hold lessons for other countries that may follow the same road as Poland. Their failure also paved the way for the much more ambitious project in January 1990.

This paper is organised in four sections. In the first two we examine respectively the Price and Income Operation of February 1988 (the so-called ‘second stage of reform’), and the change in policy that ensued under the Rakowski government, including the removal of food subsidies, in August 1989. The third section discusses the January 1990 Stabilisation programme and the fourth presents conclusions.

Link: Poland’s Quest for Economic Stabilisation, 1988-91: Interaction of Political Economy and Economics (PDF)