[The Restoration of Capitalism in Poland]
By Tadeusz Kowalik.
I had always wanted to read a detailed account of what happened in Poland circa 1989 and this book certainly does that – right down to specific meetings and conversations had by participants. This was enlightening – and what transpires is that things were and are complex – there is no one party to blame wholly for the economic disaster that occurred in Poland after the fall of communism. Some individuals – such as the idealogogue Balcerowicz can take a large share of the blame as can the right wing hawks in the IMF, and perhaps also the naivety of the Solidarity leadership with governorship suddenly thrust upon them. In Kowalik’s opinion the following happened:
“Prime Minister Tadeusz Mazowiecki made a “Columbus mistake” when he wanted to go to Bonn for a model (looking for his Ludwig Erhard), but his confidants bought him a ticket to Washington (the Washington Consensus) and Chicago (headquarters of Milton Friedman’s school) instead.”
The quotes I highlighted in this book are numerous. But, here are a few which seem to sum things up – if they can be consolidated in such a way.
“The Polish middle class emerging from the first version of post-communist capitalism did not gain its positions through the market. For a great portion—or at any rate for those who acquired great fortunes—it was not the free market that turned out to be the most important, but pocket diaries. And so if this group is in fact defending anything, it is these pocket diaries—the connections, arrangements, quotas, government orders, limits, customs barriers, monopolies, thanks to which it gained its current position. This is the Polish drama.”
“It is remarkable that all indicators, without exception, both economic and social ones, have turned out to be more favorable for countries with a social market economy (cooperative) than for countries based more on a free market and open class conflict. Japan, for example, started an accelerated modernization march by radically reducing income (wages) and property disparities (zaibatsu expropriation, agricultural reform). Sweden by no means paid for its egalitarianism with lower efficiency, as it moved to the lead (next to two countries with a similar system—Denmark and Finland) among the knowledge-based economies in the world. “
“To recapitulate, Polish capitalism is characterized on the one side by massive unemployment, a large portion of people living in poverty, and high and constantly rising wage and income disparities. On the other side there is a diverse group of those who hold wealth and power, with strong clientelist or corruption links among its members. Both sides are the result of not so much uncontrolled market processes as deliberate activity (or inactivity, depending on the circumstances) of the state. All this convinces me even more that Poland has created one of the most unjust social and economic systems of the second half of the twentieth century, and with this system, it has entered the European Union.”
“Advantage was simply taken of the immense trust that the people had in the first non-communist government.”
By Ha-Joon Chang.
This book had its moments and there were a few points that started me thinking; one being that the the unqualified good of low inflation at any cost isn’t necessary for economic growth. This is the dominant view which is espoused everywhere and maybe it isn’t so. The book could be thought of as a primmer for further reading. Some parts are detailed – but mostly it is a summary of dominant free market views with rebuttals. Not all the rebuttals are watertight and more detail could be given, but then the book would be something more than what it is; a work canvassing and changing conceptions that the free market mechanisms are somehow moral and self-regulating.
Here are some good quotes:
So, when free-market economists say that a certain regulation should not be introduced because it would restrict the ‘freedom’ of a certain market, they are merely expressing a political opinion that they reject the rights that are to be defended by the proposed law. Their ideological cloak is to pretend that their politics is not really political, but rather is an objective economic truth, while other people’s politics is political.
It helps us break away from the myth that our economy is exclusively populated by rational self-seekers interacting through the market mechanism. When we understand that the modern economy is populated by people with limited rationality and complex motives, who are organized in a complex way, combining markets, (public and private) bureaucracies and networks, we begin to understand that our economy cannot be run according to free-market economics.
By Naomi Klein.
This a very detailed alternative history of the last 50 years. It is well referenced and written. Reading this was actually quite a depressing experience – at various times it seemed that there was no hope and those with money and resources seem to keep themselves on top and also win the propaganda war. The way the book ends with some analysis of South America gives some grounds for optimism. I think I want to read about the history of Bolivar, he seems to be behind the desire for self-determination of many South American countries.
[Why Everyone Owes Everyone and No One Can Pay]
By John Lanchester.
A very interesting book that sheds light on our current economic woes. I had no idea that the investment banks worked the way they do, and that they are basically casinos creating a plethora of risk products to sell on to investors. Some of the products and risks associated are absolutely ridiculous – there is so much abstraction involved.
The book does what it sets out to do in an intelligent, understandable and entertaining way. I had no problem with the content and it was easy to read. So, what were the underpinning causes of the 2008 (and continuing) recession? There were a few – lack of regulation, irresponsible attitudes to and understanding of risk, problematic mathematical formulas, Alan Greenspan and his cult of personality, the culture of owning your own home and its promotion by governments, and the culture of To Big To Fail in the financial sector where there was no cost to failure. I may have missed something out… Of course, the free-marketeers will say consumers taking on untenable levels of debt is a major cause. True, but it was more a symptom of some of the above primary causes. If people are encouraged by professionals and governments to get into debt then they will. Not every consumer has the benefit of a good education and can critically appraise their financial risk objectively. If the banks couldn’t assess their risk properly – how could consumers?
So, much food for thought in this book. Part of the reason for the crisis was lack of understanding of what banks and their mathematicians were doing. This analysis demystifies their obscurantism, rituals and acronyms.
Soundtrack: Bailterspace – Robot World.