Leszek Balcerowicz, Polish economist: biography, career

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:44

Almost thirty years ago, Poland managed to radically change its economy. Without them, the country would never have managed to become on a par with European states. And these reforms have two fathers. The first of them is Leszek Balcerowicz. This brilliant economist just developed a plan for the transformation of the economy. The second is Lech Walesa. He brought transformation to life during his presidency. Without these two prominent figures, Poland, which we now know, simply could not exist. They succeeded in what all the politicians of the post-Soviet space, who were so striving for market transformations and European values, did not succeed. Now the field of activity of Balcerowicz is Ukraine. Poland became a member of the EU, but will “shock therapy” help this time?

Biography

The future Polish economist was born in the small town of Lipno, which is located betweenWroclaw and Poznan, in 1947. From childhood, he showed good learning abilities. In 1970, Leszek Balcerowicz graduated with honors from the Department of Foreign Trade at the Warsaw Main School of Planning and Statistics. Later he continued his education abroad. In 1974, Balcerowicz received his master's degree from St. John's University, which is located in New York. After that, he returned to Warsaw. There already in 1975 he defended his doctoral dissertation. In the early 1980s, Balcerowicz joined Solidarity. This opposition communist party included many of the pro-Western technocratic intellectuals of his generation. Balcerowicz did not play a prominent role in Solidarity, but he liked to cooperate with the Network. The latter was an alliance of enterprises that united under the auspices of the party. This is how the idea of "shock therapy" for Poland was born. It was needed in order to transform the planned economy to a market one.

Career start

As one of the leaders of Solidarity wrote in his memoirs, only Balcerowicz could come up with the idea of his own program of economic transformation at a time when meat was given out on ration cards in the country. In 1989, the ruling Communist Party and the opposition sat down at the negotiating table. In this discussion, the future reformer was only one of the participants. However, after a few months, Rakovsky and the Communists resign. Solidarity comes to power. And at the age of 42, Leszek Balcerowicz became Deputy Prime Minister for Economics.

Woauthorities

The economist received his first important position in the first non-communist cabinet, headed by Tadeusz Mazowiecki. The leader of "Solidarity" Lech Walesa went over a dozen candidates for the post of economic vice-premier. Many prominent economists have turned down the position. But Balcerowicz agreed and made the right decision.

Poland in the 1980s-1990s

This is an extremely difficult period in the life of the country. The financial system was completely destroyed, there was a general deficit in the economy, prices were constantly rising, and the supply of even key products was disrupted. It was impossible to do without the formation of market mechanisms. This was the only way to ensure financial and monetary stabilization. Balcerowicz got hard times. There was no mechanism for the transition from industrial socialism to a market economy. Everything had to start from scratch. After Balcerowicz left the government, he returned to science. He taught in Warsaw, lectured at European and American universities, and wrote several books about the Polish reform experience. However, the theory was never enough for him, he had to test all the hypotheses in practice.

Back in government

In 1994, the economist joined forces with former Solidarity activists and created the Freedom Union, which he headed. Over time, the new party became the most numerous in Poland. In the parliamentary elections in 1997, she took third place. So Leszek Balcerowicz returned to power. He again tookposition of economic vice-premier and minister of finance. In 2000, B altserovich, anticipating the imminent collapse of the coalition, left the government, managed to be an adviser to Shevardnadze, and in 2001 became president of the National Bank of the country. He left this post in 2007. In the same year, he was awarded the title of "the biggest reformer in the European Union" by the Brussels Think Tank. In 2008, the economist became one of eight members of an expert group that was developing a remedy for the consequences of the global financial crisis. In 2016, Balcerowych was appointed representative of the President of Ukraine in the Cabinet of Ministers of the country.

The essence of the reforms

In the early 1990s, Poland was in a state of deep systemic crisis. The country experienced such phenomena as a decrease in the general standard of living, hyperinflation and a general decline in production. The exit strategy from the crisis assumed a transition to market mechanisms, a change in the ownership structure, the demonopolization of the economy, and reforms in all areas. Balcerowicz's plan included:

• Carrying out a tough restrictive monetary policy. She assumed a reduction in the issue of money and an increase in interest rates.
• Liquidation of the budget deficit. Most tax breaks have been eliminated, as have subsidies for food, energy, raw materials, etc.
• Price liberalization. Only energy resources, medicines, rent and transport tariffs remained under state control.
• Establishment of partial zloty convertibility.
• Toughrestrictive income policy. It included the abolition of full wage indexation and the establishment of high progressive tax rates.

Results

In 1990, the government began to implement "shock therapy". Subsidies for agriculture were abolished. The government succeeded in strengthening the złoty. However, there was a shortage of cash at enterprises, and bank loans became unavailable. Therefore, the production decline began. The population quickly became poorer. And unemployment has risen significantly. Thus, although “shock therapy” balanced the budget and helped overcome hyperinflation, it became a factor in deepening the crisis. Therefore, it was decided to soften it. In the first place was put the structural restructuring of the economy, in the center of which was privatization. Already in 1992, it brought the first fruits.

Balcerowicz and Ukraine

Poland was able to overcome the legacy of a planned administrative economy and even join the European Union. However, will this experience help Ukraine? Economic reforms in Poland were successful, now they are trying to adapt them to new realities. “Shock therapy” in Ukraine was started by Yatsenyuk's government. According to Balcerowicz, this helped to avoid even more difficult times. He believes that first of all it is necessary to pay attention to the development of the private sector. And this means the need for large-scale deregulation. The fight against corruption is also important. Relevant bodies should work in full force. At the next stage, Balcerowicz proposes to carry outstabilization of the hryvnia and reduction of the budget deficit. Ukraine is hindered by the close connection between the authorities and the oligarchs. And this requires political will. Another aspect of the reforms is privatization. Reforms are needed to attract foreign investment, not their appearance. This is how Poland managed to attract money. Therefore, Ukraine can only work on its national economy and demonstrate real results. You cannot justify your failures with military actions and difficult times. Investors want results, not reassurance that they will come in the future. As soon as they are, Ukraine will receive such an influx of foreign investment that it needs.