Tuesday, 9 February 2016

National Capitalism and the Dilemmas of the Polish Left

The Following article was originally published on the Transform! Website. 

Over the past few months Europe’s eyes have been on Poland. Most of the attention has been on the political changes introduced by PiS, but less concern has been paid to the economic programme of the new government.
Most of the attention has been on the political changes introduced by the conservative right-wing party, Law and Justice (PiS), since it formed a majority government in October. The introduction of reforms to such things as the Constitutional Tribunal and Media has seen the country move in a more authoritarian direction. However, less concern has been paid to the economic programme of the current government, outside of some general criticisms that it is planning a series of irresponsible social reforms that threaten the country’s fiscal stability. Yet, the PiS government has a distinct economic policy that could potentially result in a significant change in the country’s economic course. This conflicts with some entrenched vested interests, both international and domestic, and raises new dilemmas for the Polish left.
From Neoliberalism to National Capitalism        
Over the past couple of decades, Poland has been integrated into the international division of labour as a country with low wages, taxes and labour standards. The country attracted large inflows of foreign capital, often through the sale of its state industrial and financial assets. This has left the country with an underdeveloped national capital base, with around 70% of Polish banks owned by foreign banks. The country underwent a huge period of deindustrialisation during the transition. At least two-thirds of the country’s medium and large industrial enterprises collapsed, leading to around 2 million people losing their jobs (http://tinyurl.com/j6q45eb). Since this time, at least 45% of the Polish workforce has remained inactive (i.e. they neither work nor study), with large areas of the country suffering high unemployment and poverty. Average salaries continue to be more than 4 times lower than that in countries like Britain or Germany; and more than a quarter of those in work are employed on temporary insecure contracts. It is little wonder that around 2 million people have emigrated since Poland joined the EU in 2004, nor that a large percentage of them are settling abroad long-term.
The standard economic recipe to this situation has been for more liberalism. Poland may have amongst the lowest and most regressive personal and business income tax rates in Europe; just 12% of the workforce may belong to a trade union; wages may remain low and labour standards lax. But this is never enough. Polish workers must be expected to work harder, under increasing precarious conditions where the dictates of agencies and contractors rule. It is little wonder that a company like Amazon opened up new logistical centres in Poland, where it could employ staff on less than 3 Euros an hour, working 10 hour shifts, with just one half hour and two 15 minute breaks (http://tinyurl.com/jxkg26m). This level of exploitation has left a section of society angry and frustrated, especially in a period of economic growth when the fruits of this development have been unfairly distributed. And with the left in Poland weak and divided, it has been the conservative right that has capitalised on this social dissatisfaction.
The PiS government’s stated aim is to create a new national form of capitalism in Poland. This was laid out in an interview with the Minister of Economy, Mariusz Morawiecki, who described the change in emphasis thus:
‘We did not promote Polish ownership or our own national companies, but we de facto gave a privileged position to foreign capital. We did not try hard enough to develop the Polish economy and businesses, based upon Polish talent or assets. In reality we needed money and we had to open up to it, but we should have been more selective about which Polish firms we sold and only open up where it was absolutely needed (...). We are now in a situation where a large part of the national property, worked on every year through the hard labour of Poles, flows abroad – and we will not be in a state to retrieve it quickly.’
The present government now claims that it wants to support Polish businesses and innovation, in order to make Poland a major competitive economy. The PiS government therefore represents a section of the (aspiring) bourgeoisie in Poland as well as many small and medium business owners who are struggling to compete in the conditions of monopoly capitalism. And in order to become the first party in modern Poland to gain an overall majority in parliament, PiS also reached out to low earners and the socially excluded. This social alliance is presently being kept together through a promise of taxing international capital in order to gain the resources to support national businesses and fund social spending.
Taxation and Social Spending
The government’s first revenue raising proposal is a law, already passed in parliament, introducing a tax of 0.44% on bank assets. As noted above, the banking sector is concentrated heavily in foreign hands and it has enjoyed a period of continuous high profits, along with some of the highest fees and commissions in Europe. The second proposal is to implement a new tax on supermarkets. It is envisioned that this will be a progressive tax, with the larger (mainly foreign) supermarkets carrying the major burden of this tax. The Prime Minister, Beata Szydło, has argued that this tax ‘will give small commercial enterprises in Poland a fighting chance to compete on the market’. The government is therefore attempting to tax large mainly foreign financial and commercial enterprises, whilst claiming that it wishes to help local businesses. Before considering the problems connected with these measures, let us look at the social programmes that they are designed to fund.
Throughout the past quarter of a century there has been an almost one way redistribution of wealth to the richest sections of society. PiS claims that it wishes to reverse this trend and its flagship reform is to provide families with 500 Złoty a month (around 113 Euro) for every second and additional child. This will provide a significant increase in income for millions of families, particularly in those areas where incomes are low and poverty high.  This will be provided for all families irrespective of income, for the second and additional children. However, for the first child this will be means tested at a level below the social minimum (800 Złoty – around 181 Euro), meaning very few families will be able to receive it. This social policy is not only supposed to alleviate poverty but also to encourage families to have more children and thus raise the country’s low birth rate. It also fits the conservative ideology of PiS, based upon promoting the ideal of the traditional family. This is not a social policy based upon a left-wing premise of universalism, with many of those most at need (such as single mothers with one child) excluded from this benefit.  Also, it does not encourage women to work and tackle the low activity rate of women on the labour market, nor provide general help to parents through investing in things such as preschools (where there is a serious lack of available places).
Despite these shortcomings, this proposal offers the first significant downward redistribution of wealth over the past couple of decades and it is therefore supported by large sections of society.  With the government also proposing to more than double the tax-exempt share of household income, raise the minimum wage and reduce the retirement age, so millions of people believe that their living standards will improve under the present government.
Another potential break with neo-liberalism is found in the government’s health care proposals. The Polish Health minister has revealed plans to reform the health care system, that if carried out could be the most important and progressive changes to have occurred in the Polish health care system over the past two decades. Firstly, the government says that it will significantly increase the level of public health care spending, aiming to raise it to 6% of GDP. Secondly, it plans to move from an insurance based system to one where the health care system is funded directly from the central government budget. This would be a move away from a Bismarkian style health insurance system to a Beveridge universal health care system. Around 2.5 million Poles currently find themselves without health insurance and this reform would therefore help to fulfil the clause in the country’s constitution, which states that health care should be provided free of charge by the state to all citizens irrespective of their income.
Support, Criticism and Left Alternatives
The Polish left faces a serious dilemma as to how it should respond to the economic programme of the PiS government. For whilst it must oppose many of the political reforms of the government, it is not so clear what its response should be to the new administration’s economic strategy. The left needs to distance itself from the liberal opposition to the government, by pinpointing those parts of the government’s economic programme that it supports, whilst developing coherent alternatives to those it does not.
Below I outline some of these quandaries:

  • The proposal of the government to tax banks and large supermarkets is a long overdue reform that partly addresses the privileged position of multinational capital. However, this tax will be difficult to implement as finance capital in particular is able to move relatively easily to avoid taxes. Banks and supermarkets may also choose to pass the cost of these taxes onto customers, with some banks already raising charges. Furthermore, international capital possesses huge political and financial clout to fight back against the government’s proposals. In a period of global uncertainty, the Polish stock-market has fallen by around 16% since October; the yield on 10-year government Eurobonds has risen by 80 basis points, and the Złoty has reached a 4 year low in relation to the Euro (http://tinyurl.com/gwg5s8c). These troubles have partly been caused by the decision of the international rating agency, Standard and Poor’s, to cut its rating for Poland from A minus to triple BB plus. This was a direct interference in the internal affairs of Poland, with the rating agency mainly citing political reasons for its downgrade (http://tinyurl.com/hpfjmmt). The left should be unswerving in its support for the government against these institutions of finance capital, which will place increasing pressure on the government to reverse its economic policy. If capital continues to flow out of the country and the currency continues to devalue, so dissatisfaction amongst the country’s urban middle class will intensify, whilst it could actually benefit Polish businesses and exporters. It is certainly not in the interests of the left to ally with international capital and sections of the most privileged sections of society in this socio-economic divide. However, much of the government’s opposition to international capital is simply rhetoric, with the Foreign Minister recently stating the government’s support for the Transatlantic Trade and Investment Partnership (TTIP), creating space for an alternative left voice on this issue (http://tinyurl.com/zfrnn56).

  • The PiS government’s strategy of national capitalism means that it will most likely support Polish businesses and wealthy Poles against the interests of the rest of society. For example, despite its attempts to tax banks and supermarkets it has made no proposals to reform the country’s income tax laws. Poland has an extremely low and regressive taxation system, which benefits the wealthy and high income earners. It is estimated that the government’s social reforms will cost around $11bln annually. A reform of the income tax system to increase and redistribute revenue is needed to fund such social spending and help reduce social inequalities. Also, whilst the government is focussing on international capital, it may turn a blind eye to the malpractices and exploitation of workers by domestic companies.

  • The social policies being introduced by the government signal some form of redistribution, for the first time in Poland’s ‘post-Communist’ history. It is not clear how far these policies will go and the left should be placing pressure on the government not to renegade on its promises on such things as health care and the minimum wage. Whilst the left must give critical support to the government’s policy of providing new child benefits, it is also important to point out the deficiencies in this policy. This benefit will leave many of society’s most vulnerable unprotected and without a combined policy of investing in such things as jobs, housing and public services, particularly aimed at increasing the activity rate of women on the labour market, it will almost certainly not increase the birth rate in the country. The left therefore has to support the introduction of a universal child benefit, which is part of a wider programme of social investment which offers an alternative vision of social and family life to the conservative one offered by PiS.

  • The economic programme of PiS is full of promises of new social spending but has no coherent vision of how the wealth will be created to fund it. An economic programme of the left should not just focus on consumption but also include a supply policy of growth through investment. The Polish economy continued to grow through the crisis, mainly through raising public investment, which as a share of GDP rose to the highest level in the EU (http://tinyurl.com/zvlvywf). This was made possible through the inflow of large EU funds, which were used to partly fund a series of infrastructural developments. The uncertainties in the international economy and the national capitalist programme of PiS, mean that private investment through an inflow of international capital is likely to decline. The left should lay out a new programme of public investment that goes beyond simply utilising EU funds, which themselves will begin to wane in a few years. This should be based primarily upon job creation, investment in green technologies and social investment in such things as housing and the health service that would both raise the rate of economic growth and improve the living conditions and standards of the population. 

Tuesday, 2 February 2016

Leszek Miller's Degeneration to the Far-Right

Leszek Miller's primary concern has always been Leszek Miller. 

Whilst Minister of Labour and Social Policy in the early 1990s his image was of the principled left-wing member of the government, opposing such things as the privatisation of pensions. Yet, by the time he had become Prime Minister in 2001, he was competing with President Kwaśniewski to be Poland's answer to Tony Blair. He espoused the benefits of a flat-income tax, obediently sent Polish troops to Iraq and (allegedly) allowed the CIA to carry out torture in secret prisons in Poland. At the next elections the Democratic Left Alliance (SLD) lost 3/4 of its vote and has remained on the political margins ever since. After a period in the political wilderness he returned to lead the party and then led it through a series of disastrous election campaigns, with the party failing to enter parliament and dwindling into a political irrelevance. 

After resigning as leader of the party after the recent elections, Leszek Miller has begun adjusting himself to the new right wing conditions in the country. He has spent the past few weeks touring various right-wing media outlets convincing all who will listen that he is the most radically anti-refugee politician in Poland (a title for which he faces stiff opposition). So for example speaking about the events in Cologne on New Year's Eve, Miller managed to combine hostility to refugees with patriarchy and xenophobia by stating: 
I am surprised by the reaction of German men. After all the women were not alone, where were their partners, why did they allow this. I cannot imagine that Poles would look on at this without wishing to intervene.  
However, his latest comments on refugees have perhaps gone even further than his right-wing colleagues, after claiming:

Refugees who do not want to integrate are flooding Europe. They want Europe to adapt to them and not the other way round (...) There may come a time when we will have to fight with weapons on the streets of Europe to defend our identity. We are seeing the building of a Trojan horse, to the surprise of the Trojans and with their own money. 
One wonders whether Miller's political degeneration has reached its lowest point, or whether there are even deeper levels of reaction he can reach.  

Friday, 29 January 2016

Polish Government and Opposition Back TTIP

An (un)likely new anti-democratic alliance has emerged in Polish politics, bringing together the ruling Law and Justice Party (PiS) and Nowoczesna (Modern). During a debate on foreign affairs in parliament, the Foreign Minister Witold Waszczykowski gave his support to the Transatlandtic Trade and Investment Partnership (TTIP), joining the leader of the liberal Modern Party Ryszard Petru. 

The TTIP is a bi-lateral trade agreement between the EU and USA, which is being negotiated behind the backs of citizens. The deal aims to reduce regulatory barriers to trade for big business, in areas such as food safety law, environmental legislation, banking and nations' sovereign powers. It potentially opens up public services to privatisation, drives down labour standards and eases data protection laws (ACTA through the back door). 

The pretensions of PiS to be a patriotic party upholding the sovereignty of Poland; and of Nowoczesna to be a liberal party defending democracy are both exposed by their support for TTIP. 

Thursday, 28 January 2016

Taxpayers Paying for Catholic Teachings

Two recent moves by the government have shown how the Polish state will increase its support for the Catholic Church in Poland, including its most radical elements, and that the Catholic religion will become an increasingly central part of the education system. 

Firstly, a citizens' project to present a bill to parliament, on ending the state funding of religious education in public schools, has been negatively assessed by the government even before its first reading in parliament. This means that around 1bln złoty of taxpayers money will continue to be used to fund religious education in schools. These lessons are generally just the teachings of the Catholic Church. Religious Education lessons are run in 92% of schools in Poland, with just a handful providing religious lessons covering the faith of other religions. 

Secondly, the Parliamentary Financial Commission has passed an ammendment which will grant the private Catholic higher education institution of the controversial Father Tadeusz Rydzyk (College of Social and Media Culture)  20 million złoty in subsidies. The influential radio station of Rydzyk (Radio Maryja) backed PiS in the recent elections, with this decision seemingly rewarding him and his institutions for their support. Written into the ammendment is that the money for these subsidies will be found through cutting funding in other areas, such as for theatres. 

Government Plans Important Health Care Reform

The Polish Health minister, Konstanty Radziwiłł, has revealled plans to reform the health care system, that if carried out could be the most important and progressive changes to have occured in Polish health care over the past two decades. The two proposed changes are: 
- To significantly increase the level of public health care spending; 
- To fund the health care system directly from the central government budget. 

Poland has one of the lowest levels of public health care spending in the EU, with little more than 4% of GDP spent on health. The Health Minister has said that next year he hopes to inject billions of złoty into the health care system. The long term aim of the government is then to increase public health care spending to 6% of GDP. 

Secondly, the government plans to move away from a Bismarkian style health insurance system to a Beveridge state funded one, similar to that which exists in Britain. The major damage to the health care system occured in 1999, when the then right-wing administration introduced a reform that both reduced public health care spending and created a number of local health care funds. This fragmented the system and opened it up to more market competition. It had an immediate negative effect on the health care system, with for example the number of public hospitals declining from 702 to 501 between 2000 and 2010. This reform was partly reversed by the Democratic Left Alliance (SLD) government in 2003, which introduced a new central health care fund (NFZ). However, not only has this not solved the issue of funding but around 2.5m citizens remain without health care insurance coverage. This includes both the most socially excluded (such as the homeless) and also many contractual workers or self-employed that miss health insurance payments. 

The Polish constitution states that: Equal access to health care services, financed from public funds, shall be ensured by public authorities to citizens, irrespective of their material situation. As with many of the other social clauses in the constitution this has been broken by successive governments. In this case the government's proposals would actually be a case of meeting the obligations of the constitution rather than breaking them. Therefore, those in Poland defending the constitution should actually be supporting this proposal by the government and pressuring it to introduce it as quickly as possible. 

The other major health care proposal by PiS made during the election campaign was to provide pensioners with medicines free of charge. The government has now announced that there will be a list of certain medicines that pensioners will be allowed to get for free. The health ministry has said that it is still compiling this list and that there is a chance this bill will be introduced in the next two or three months. 

The government has not provided detailed plans for its proposed reforms and it is unclear both how they will be paid for and exactly when they will be introduced. However, they potentially tackle some of the largest deficiencies in the country's most important public service. 

Monday, 25 January 2016

Britain To Station Troops in Poland. At What Price?

The Polish Minister of Defence, Antoni Macierewicz, has announced that Britain will station 1,000 troops permanently on Polish soil from 2017. On Thursday Macierewicz said

'One of the decisions, which resulted from yesterday's talks (is) a permanent presence of the British forces on Polish territory, that is 1,000 soldiers, who will permanently station on Polish territory from next year. They will switch around, it will be a rotational, but permanent presence of 1,000 soldiers.'

This goes against previous statements made by the Ministry of Defence in London, that the troops would be sent for temporary exercises only. If true it would mean that NATO troops would have a permanent base in Poland, thus potentially violating the 1997 agreement between NATO and Russia. 

As well as further adding to the volatility in the region, it raises the question at what price the British government has agreed to station troops in Poland. After all, earlier this month the Polish Foreign Minister said in an interview for Reuters that Warsaw might be prepared to soften its position on David Cameron's proposal to curb in-work benefits for EU migrants if ' Britain could support our expectations related to an allied military presence on Polish territory.'

The Deputy Foreign Ministers of Poland and Russia met in Moscow last week for talks. No breakthrough was reported on any of the issues dividing the countries, such as the possible return of the Smoleńsk plane wreckage from Russia. It has been common practice recently to speculate that the current right-wing administration in Warsaw would like to move Poland closer politically to Russia and Putin. However, at least in the arena of foreign policy, this seems extremely unlikely, with the stationing of permanent NATO troops in Poland certain to worsen relations between the two countries even further.  

Sunday, 24 January 2016

SLD Elect New Leader - New Beginning or The End?

After failing to enter parliament for the first time in its history the Democratic Left Alliance has chosen a new leader to replace Leszek Miller: Włodzimierz Czarzasty. Below I publish two contrasting opinions from inside the SLD (translated from the website Trybuna)
Grzegorz Pietruczuk, Councillor for the  Mazowiecki Regional Assembly and ex-leader of the Federation of Young Social Democrats):
As the SLD we have lost touch with reality. I heard the speach by Włoczimierz Czrzasy today and I did not find anything about the future in Poland, about social democracy, about the changes and what kind of Poland we would like to propose. I heard about the headquarters, premises and funds, which  are completely not of interest to me. 2% support in the opinion polls should make us think, but it does not seem to be happening. This is whyhwy I am not supprised about this election, because the party for years the party has become fosillised inside and does not take into account what is happening outside. The electorate are also aware of this, which accounts for the terrible results in recent years.  
Sebastian Wierzbicki, Deputy leader of the SLD in Warsaw and a member of the National Council of the SLD. 
Today ended the epoch of the SLD under the leadership of Leszek Miller. A new chapter has opened in the activity of hte party. Włodzimierz Czarzasty won with a large majority, gaining 130 more votes than Jerzy Wenderlich.  Moreover he offered his opponent the deputy leadership of the SLD, which he has accepted. vote
The new deputy leader has said that this is the end of the divisions in the SLD and that we must unite in order to resit the right-wing and its ideas. He gave a very good speech, and has ideas for the party and at how the SLD and the left should function and react to the ideas and activity of the SLD. We await the complete leadership team to be proposed by the leader. I hope that it will include many young people and therefore change and make younger the face of the party.
Włodzimierz Czarzasty is a person with a strong character and  without a doubt he is able to lead the SLD and open discussions with all the different parts of the left in order to build a strong alternative to Citizens' Platform and Modern and of course the Law and Justice Party.