Poland is one of the most economically successful countries in Europe and has been achieving high growth for decades. However, in socialist times, Poland was one of the poorest countries on the continent.
As late as 1910, the income of a Pole was 56% of a Western European’s income. But by the end of the socialist era, which lasted from 1945 to 1990, this figure had fallen dramatically: In 1990, the average Pole earned only 31% of a Western European salary.
Through consistent capitalist reforms, the standard of living in Poland has continued to rise significantly. In 2016, it reached 57% of the level of Western Europeans, whose standard of living had risen considerably since the war. Across all income groups, Poles have benefited from capitalism.
In his 2018 book Europe’s Growth Champion, Marcin Piatkowski stated that “it is Poland that has become the [unrivaled] leader of transition and Europe’s and the world’s growth champion. Since the beginning of post-communist transition in 1989, Poland’s economy has grown more than in any other country in Europe. Poland’s GDP per capita increased almost two-and-a-half times, beating all other post-communist states as well as the euro-zone.”
And not only has the living standard of Poles improved dramatically but so has the environment. Contrary to the claims of anti-capitalists that capitalism is to blame for environmental degradation and climate change, the example of Poland shows that the opposite is true. Energy intensity, i.e., the ratio of energy consumption to gross domestic product, halved in the years from 1990 to 2011. And the increase in carbon dioxide emissions in Poland has now decoupled from the increase in gross domestic product. Capitalism is not the problem, but the solution — and this applies not only to improving living standards but also to the environment and climate change.
How did Poland manage this, and why has Poland been more successful in the transition to capitalism than other former socialist countries? One major reason is that capitalist reforms were implemented more radically and quickly but also because it was not only the economy and institutions that changed — so did people’s thinking and behavior.
And, as is so often the case throughout history, the work and significance of individual political leaders should not be underestimated. First and foremost, there is Leszek Balcerowicz. Elected in 1989, the liberal economist was finance minister in Poland’s first democratic government. He was also chairman of the National Bank of Poland (2001–2007) and twice deputy prime minister of Poland (1989–1991 and 1997–2001).
Balcerowicz developed a program of capitalist reforms that was later called “shock therapy.” Piatkowski observes, “The reform program was among the most radical economic reform programs ever implemented in peacetime in global history.”
It is in the nature of such reform programs that they initially lead to a temporary deterioration of the situation for perhaps the first year or two, but the Poles were more than rewarded for their perseverance, as Balcerowicz’s program was also the reason why Poland was the first former socialist country to return to economic growth (in 1992) and later became so successful.
Like former United Kingdom Prime Minister Margaret Thatcher, Balcerowicz was a follower of consistently free-market thinkers such as Friedrich Hayek and Ludwig von Mises. Poland is an outstanding example of how successful their ideas, frequently criticized as “neoliberal,” can be. One can only hope that Poles today do not forget the reasons for their economic success.
Rainer Zitelmann is a historian, sociologist, and author of the book The Power of Capitalism.
