Dilemmas of Conservative Modernization Economic Policy in Interwar Poland

Dilemata konzervativní modernizace ekonomické politiky v meziválečném Polsku

Wojciech Morawski

Acta Oeconomica Pragensia, 2007, vol. 2007, issue 7, 288-303

Abstract: Irrespective of the changing economic climate, Polish economic policy in the interwar period had certain permanent features. Despite some real attempts to modernize it was in social sense conservative, the main aim being the ossification of status quo rather than stimulation. Deflation, apart from slowing down the dynamics of agricultural reforms, was the main instrument of that policy. Data in Table 1 reveals the clearly deflationary nature of Polish economy. Money supply in Poland was relatively limited, compared not only to richer countries, such as Czechoslovakia and Hungary, but also to poorer ones, such as Romania and Bulgaria.In 1924 minister Grabski's decision to set the mark to zloty exchange rate at 1.8mln:1 made deflation unavoidable. If the rate had been set at a slightly lower level, it would have been socially more favourable and would have alleviated the difficulties of the post-inflation crisis. However, the decision had to be taken "on the spot", and it was also determined by the fear of a new wave of inflation. The authors of the second stabilization in 1927 could choose between two ways: to enlarge the money supply considerably without changing its standard, or to strengthen the zloty without changing the supply. They chose the latter. The next time when Poland followed the way of deflation was during the Great Crisis when it joined the Gold Block. The last time deflation was taken up in 1936 during the Kwiatkowski vs. Koc conflict.It was not accidental that deflationary policy was so consistently carried out. The weak currency, despite all its disadvantages, increases social mobility and enables the process of emancipation of the plebeian classes. Strong currency makes social relationships ossified and maintains the supremacy of the already existing elites. The main reason for the conservative policy of Polish government the social and national relationships in Eastern Borderlands. In order to maintain the Polish character of the region status quo needed to be kept up. Rapid changes would have spurred the process of emancipation of Ukrainians and Belarussians, which, in turn, would have been conducive to political destabilization. Because of that it was decided that the process of modernization should not be faster than that of assimilation.Another feature of Polish economic policy was promoting the prestigious enterprises which would create the image of Poland as a vigorously developing country. Such motivation should not be totally discredited. The reconstruction of national dignity after time of defeat is an important task. In 1960s the France of de Gaulle was following a similar path.Therefore, the Second Republic created two seemingly contradictive stereotypes in social awareness of Polish people. On the one hand real severe poverty, on the other hand, also real symbols of economic success: a modern bomber "Łoś", a fast train called "Luxtorpeda", a fleet of transatlantic ships, or the strong zloty, remembered so nostalgically in times of Polish People's Republic (under the Communist rule).

Keywords: modernization; conservatism; deflation; Poland in 1918-1939 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.18267/j.aop.207

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