The polish transition programme: Underpinnings, results, interpretations

AT THE TIME OF WRITING, the Polish transition programme has entered its third year of implementation. In the almost continuous debate about its merits and demerits that goes on in Poland and also, within a larger, comparative framework, abroad, one question has been conspicuous by its absence, namely: 'Why was Poland the first to start implementing the transition programme?'. After all, Hungary was well ahead of Poland in tinkering with the Soviet economic system and its communist rulers were more amenable to reforming than Poland's were (to say nothing about Czecho-Slovakia or East Germany!). The answer is very important for understanding the political economy of transition from the Soviet-type economy, centrally administered under the communist party monopoly, to the capitalist market-type economy. For it concerns the fundamental difference between reform, i.e. tinkering with the old system, and change, i.e. decisive break with the past. As this author insisted for years (see Winiecki, 1984, 1987(a), 1987(b), 1990(a), and 1991(a), one should begin by establishing who has the strongest incentive to maintain the Soviet economic system and why. The predatory theory of the prerepresentative state (North, 1979) posits that such a state specifies the fundamental rules of the game, inter alia, the property rights structure, so as to maximise the rent to the ruling stratum. Changes to a more efficient property rights structure are resisted by those segments of the ruling stratum that stand to lose from such changes. This applies very well to the stratum ruling Soviet-type economies (STEs). If reforms-let alone changes!-were to be implemented, two segments of that stratum, communist party apparatchiks and bureaucracies running the economy, would lose two vital system-specific modes of appropriating their rent from running the system. Firstly, efficient management by competent professionals would require abolishing the system of nomenklatura, that is, the right of the communist party apparatus to appoint themselves and their card-carrying cronies to all the best paid managerial jobs in the economy. Secondly, return to equilibrium would eliminate another crucial mode of rent appropriation, namely 'kickbacks' from the managers already appointed to their cronies elsewhere-mostly the communist party apparatchiks and bureaucrats who could help them in their career. For most of the kickbacks were attractive because beneficiaries paid list prices for