Kolodko reviews Polish economic reform

Kolodko

As first deputy premier and finance minister in the Polish government from 1994 to 1997, how would you describe the move from communism to a market economy?
First of all, it was a great challenge. I accepted the invitation only when I was convinced that I knew what needed to be done toward sustainable development, and that my program would be supported. It's very difficult to be a professor and then go into the government. We intellectuals are devoted to fighting for the truth, for honesty. But politics is about changing the world or a piece of the world--in my case, it was the Polish economy and Polish society.

In the political arena, what is necessary is sometimes impossible to do--a nightmare. So there's a contradiction between these two, yet both activities must be based on thinking, and the more one knows, the more efficient one is. It is much easier to convince postgraduate students to do this or that, than to oppose public opinion or the Parliament or the most influential lobbyists.

During your time in government, Poland's economy was booming. What was going on?
Those were the best years in the second half of this century. Despite social, structural, and other problems, Poland was a star performer in this post-communist transformation. During the four-year period, our economy grew 28 percent. That was remarkable.

If compared with other countries, even today we are doing pretty well. That is due to my activity to implement an economic program based on deep, theoretical considerations and how they affect real life. The lesson from the Polish experience, especially from the period we call the Strategy for Poland 1994-97, is that our success is not due to so-called shock therapy--when one tries to introduce structural change in a radical manner without proper concern about the social implications--but rather a gradual process mainly focused on institution building. "Shock without therapy" was a very serious mistake. The Strategy for Poland has proved that.

In the 10 years since Poland has made the dramatic transition to democracy and a market economy, are people better off?
There has been clear improvement: businesspeople are more entrepreneurial, households have more products, and people are pleased with the elevated position of their country in the eyes of the world. There is optimism, but there will always be groups that complain. So much in Poland still depends on the government and so many people still blame the government for their dissatisfaction. Currently, the economic growth has slowed and therefore it's not surprising that social tensions are on the rise. Yet the situation in Poland is by far better than in other countries in transition, especially if compared to Russia, where transition has indeed been mismanaged.

As consumers and citizens of a democracy, where do Americans fit in?
Americans should remember that the U.S.A. is a unique country. What's happened here will not be followed by very many regions of the global village. It's important for them to understand other countries and respect them. In these emerging markets, millions of people are working hard to make ends meet. For the West, that shouldn't mean just another market with the potential for a higher rate of return on investment. I do understand the mentality of both the East and the West. I'm looking for a balance between the interests of investors and the economies that are thirsty for capital.

Tell us about your latest work.
I have worked for the international organizations--the United Nations, the World Bank, and the International Monetary Fund--sharing my experience and knowledge about managing the transition policy and development strategy. I want my forthcoming book on From Shock to Therapy: The Political Economy of Postsocialist Transformation to contribute to the worldwide debate on economic and political transformations.

Since I left government I've traveled to 35 countries, doing comparative research and lecturing in many of them. I also lectured last fall at Yale and now here at this great university. The issue of managing transitions to a market economy and civic society is one of the biggest challenges at the end of this century. And it is the biggest challenge of my life from an independent viewpoint. It's also a great chance. I'm taking advantage of this coincidence.

Maintained by University Public Relations
Please send your comments and suggestions to:
Public Relations.