Poland business

Poland Economy Between 1960 and 1975

The period 1960-75 is characterized by the effort to reach its own model of economic development. Once the crisis of the old Stalinist mechanism was officially admitted, the fundamental imbalance was attributed to the disproportion between the growth of the capital goods industry and the rest of the economy. In the 1950s, more than 30% of the national income had been sucked into sector A (means of production). Sector B (consumer goods and agriculture) had been sacrificed, as the Soviet tradition dictated. The result, especially for agriculture, was so negative that it compromised the supply of the cities and had repercussions on the entire industrial production. At the end of the decade, a “Polish” line of development was established with the new economic policy, first of all by putting an end to forced collectivization. Agricultural activity was entrusted to the peasant-small owner. Thus in 1970 the peasant participation in agricultural production was 84.8%, that of the state farm 13.78%, that of collective farms 1.3%. For the industry, the innovations initially centered on the diversification of product sectors. Metalworking, chemistry and electricity were developed primarily until reaching an incidence of 40.9% on global industrial production in 1970, compared to 24.6% in 1960. The declared objective was to start production of industrial products, so as to decrease Polish dependence on foreign countries.

Precisely the need to secure a modern industrial apparatus in the shortest possible time was to revitalize the Stalinist formula of economic management in the early 1960s. Despite official criticism and adverse economic theories, the primacy of sector A was restored as the cornerstone of the extensive industrialization pursued. The inequality of national income between consumption and accumulation became again the index of the too rapid pace of industrial growth. The same phenomena of the 1950s were reproduced: 1) 65% of investments directed to the construction of new factories and only 35% to the upgrading and modernization of existing ones; 2) insufficient return on fixed capital. The effort undertaken lacked economic objectives and aggravated social tensions. The inadequate development of the consumer goods sector and agriculture, in the presence of an increase in employment, made the discrepancy between the increase in the purchasing power of workers and the availability of the market increasingly dramatic. In the meantime, the loss of responsibility of the state towards the agricultural sector and the peasants had disastrous effects, in terms of productivity, the fall of mechanization, the use of chemical products and so on. After reprivatization, 63% of farms with less than 5 ha. they survived closed in family needs. Just as in the previous period, again after 1965, the agricultural sector was recognized as responsible for the general economic slowdown. The supply of raw materials for light industry was not ensured. The production of food for self-consumption had reduced the export possibilities of agricultural products, which forced to decrease the imports of machines and energy, necessary for the functioning of the industry. This resulted in a slowdown in global production. This time the critical analysis will no longer lead to the abandonment of sector B and the over-investment of sector A, but to a general renewal of the management system. As for the other socialist countries, also the Poland launched its economic reform in 1966. The new measures provided for: 1) a reduction of the indicators and control figures, imposed from above, with a consequent greater autonomy of the company; 2) profit as a criterion for assessing the company’s profitability; 3) interest on fixed assets; 4) an increase in the consumption fund. The pricing system was modified so as to allow a calculation of costs closer to reality. Finally, measures were launched to support private agricultural activity, and at the same time the usefulness of state intervention was proposed again. Despite all this, the results of the reform itself proved insufficient to resolve the economic crisis and social tensions.¬†For Poland business, please check cheeroutdoor.com.

Following the outbreak of popular anger in December 1970, the authorities decided to tackle the dysfunctions of the system with greater determination for the 1971-75 plan. The measures concerned: 1) a selective industrial development policy which provided for the concentration of resources in the leading sectors. Industrial consortia were created that united a complex of medium and small enterprises in a single body, capable of self-financing and managing the relationship between the ministry and the market; 2) a restructuring of foreign trade such as to expand the export of industrial products and agricultural products, but also to guarantee the imports necessary for industry and the food needs of the population. A few years after the last measurements, the data to be detected is the alternating ups and downs of the Polish economy as a whole. The leap in maturity of an intensive and homogeneous growth of groups A and B has certainly not yet been achieved. On the other hand, the authorities intend not to provoke the worsening of social tensions with inattentive consumer price policies. In this sense, the choice of borrowing abroad (especially with the USSR) must be made, enormously worsening the trade deficit (3 billion dollars in 1975 alone), in order to ensure what is needed by industries and the population. worsening of social tensions. In this sense, the choice of borrowing abroad (especially with the USSR) must be made, enormously worsening the trade deficit (3 billion dollars in 1975 alone), in order to ensure what is needed by industries and the population. worsening of social tensions. In this sense, the choice of borrowing abroad (especially with the USSR) must be made, enormously worsening the trade deficit (3 billion dollars in 1975 alone), in order to ensure what is needed by industries and the population.

Poland business

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