What Wales can learn from Poland, the country that moves quickly

Stephen Morris

Our new party, Ein Gwlad, will launch on 28 August.

We are an outward-looking, internationalist party keen to see Wales take its place among the community of nations.

There’s a lot to do before we reach that goal: but there are plenty of examples we can follow.

As we’ve said before, Wales is unique and there is no off-the-peg solution to the country’s needs; ultimately, we’re going to need to find our own way forward, taking our history and all of our particular circumstances into account.

Nevertheless, that’s not to say that we can’t learn from the experiences of others: the world is full of countries that have achieved independence, whether from empires, from neighbouring countries or from oppressive systems of government, and they all have something to teach us.

I think that Poland can teach us a lot. Since the collapse of communism in 1989, Poland has powered ahead to become by far the fastest-growing and most successful of all the former communist countries in Europe.

There are plenty of similarities between Poland and Wales: a relatively small country (in Poland’s case, small relative to Russia!) sharing a long border with a much larger and more powerful neighbour (in fact two, in Poland’s case, if you count Germany as well), and spending long periods of history wiped off the official maps with no legal status of any sort.

Many of the lessons in this article were gained from my recent reading of Marcin Piatkowski’s newly-published book “Europe’s Growth Champion – Insights from the economic rise of Poland” (2018, Oxford University Press), which I warmly recommend to anyone with an interest in these matters.

To underscore his point, Piatkowski gives the following figures to show how the Polish economy has grown since 1989, compared to other countries in Europe. I’ve put the UK and Wales figures in myself, taken from other sources:

To be clear, these figures show how much each country has grown, relative to its 1989 level, over a 27-year period.

It’s not the same as a table of actual incomes, since of course the starting points in 1989 were very different.

What it shows is that the average Pole today is well over three times wealthier than the average Pole in 1989; the average Croat merely twice as wealthy.

There are a number of stories in these figures. Look at how far Wales has slipped back relative to the rest of the UK over this period.

And does anyone here think that Slovakia would have outperformed the Czech Republic by such a huge margin if it were still part of Czechoslovakia? No, me neither.

Yet Poland tops the table by a wide margin. What has been its secret? And what can we learn from it?

Extraction

Piatkowski’s key insight is that almost all societies can be classified into the categories of ‘Extractive’ or ‘Inclusive’.

‘Extractive’ societies are characterised by a small, stable elite having a monopoly on power, and by implication having control over the country’s wealth and natural resources.

By suppressing enterprise and keeping the bulk of the population economically inactive or in low-value employment, the elite’s position is safeguarded at the expense of much lower overall national wealth, making even the elite a great deal poorer than they might otherwise be.

In ‘Inclusive’ societies, on the other hand, power and wealth are more evenly spread throughout the population, encouraging everyone in society to contribute and raising the level of the whole of society.

There may still be an elite, but its membership is likely to be less entrenched and the gulf between it and the rest of the population will be less, even if its actual wealth is much greater.

It almost goes without saying that with the exception of the occasional small country with disproportionate natural resources (Brunei, for example), the richest countries in the world without exception follow the Inclusive model to a greater or lesser degree.

For most of its history, however, Poland was the extractive country par excellence. While in many ways late-mediaeval Poland was regarded as a beacon of participative democracy and equal rights for women, in practice this only applied to the szlachta, the gentry which formed ~6-10% of the total population.

Even among the gentry, many were landless and impoverished, while outside the gentry the vast bulk of the population lived as serfs, the property of their masters.

They were actively prevented from gaining education, moving to towns or becoming involved in trade or industry, lest they become too powerful.

When industrial or professional services were required by the szlachta, they were commissioned from German or Jewish settlers, brought in for the purpose and assumed to be loyal to those who brought them in.

This situation persisted in Poland, centuries after such patterns had been swept away further West, on account of its having been unaffected by the Black Death and the shortage of labour (and hence the increase in the value of labour) that the Black Death brought about.

The Second World War and the subsequent forty years of Communism effectively did for Poland what the Black Death had done further West.

Though it ruined the economy and catastrophically failed to improve living standards in absolute terms, it did at least sweep away the extractive institutions and culture, that had persisted into the mid-20^th Century despite the country’s previous partitioning between Germany, Austria and Russia.

From 1989 onwards, 17 different governments in a 30-year period have ensured that no new political elite has become entrenched.

The situation in Wales may be less extreme, but the parallels are surely obvious. Throughout its history to date it has been run on an Extractive basis.

Before universal suffrage, it was exploited by an elite of landowners and industrialists determined to extract the value of the country’s natural resources while seeing its population as nothing but a source of cheap labour.

More recently, it has been exploited by a one-party political elite content to see living standards and economic output fall steadily behind our neighbours while arguing that this decline makes them all the more indispensable. The szlachta would approve.

Even so, much of the above could have been written about any one of the former communist countries. Why has Poland, in particular, done so well?

Wealth

Interestingly, Piatkowski cites Poland’s lack of natural resources as a key reason. You often hear people say “how can Wales become independent when it has no oil and the coal’s gone?”

But in fact a glance down the list of the world’s most successful small countries (Finland, Israel, Singapore, Switzerland and so on) reveals that very many of them have even fewer natural resources than Wales.

The point is that having abundant natural resources pushes countries towards being extractive – whoever controls the resources controls the wealth, and all that is needed to extract it is cheap labour – while a country without resources has no choice but to invest in its people, naturally encouraging more inclusive politics[1].

Another reason is the country’s political balance. With a rambunctious multi-party system with frequent changes of government, politicians who are in power are careful not to monopolise too much wealth and influence.

This is because they know that they are likely to lose it at the next election – better, therefore, to ensure that power and opportunity are as widely distributed as possible. How different from Wales!

Yet despite the frequent changes of government there has been remarkable continuity of policy.

When communism fell, no-one – certainly not the Communists themselves – were under any illusions about the ability of communism, or any other form of socialism, to improve their lot.

Rather, there was a remarkable unity of purpose on the part of all the parties to reform the country along Western, market-driven lines.

Very often it was the former communists who were the keenest to drive this forward, being ahead even of the Solidarity party in seeking to flatten tax rates, for example.

Here in Wales, I worry that our national movement is subject to an ingrained groupthink, believing that somehow Wales can build a prosperous and fair economy on a socialist foundation.

No other country has ever done that, certainly not Poland, and Wales is unlikely to be the first.

Short-circuit

What of the role of the EU? Piatkowski praises the EU to the skies to an extent that would make the most enthusiastic Welsh Remainer blush, partly reflecting his unashamed political alignment with Donald Tusk’s pro-EU Civic Platform party.

Fair enough – there’s no doubt that Poland really has benefitted hugely from EU membership, but what’s more interesting is how the EU has benefitted Poland.

There has certainly been a phenomenal amount of EU cash invested as structural funds – some €107 billion between 2002 and 2020 – but for comparison this works out on average at about €140 per person per year.

Over the same period, West Wales and the Valleys has received around €120 per person per year, with little to show for it, so it’s clearly not just the volume of cash that has made the difference. Open trade borders have no doubt helped, though Piatkowski barely mentions this.

No, according to Piatkowski, the overwhelmingly positive impact of the EU on Poland was as a source of ready-made laws and institutional norms, and as a guarantor of a peaceful transition.

By ‘downloading’ the whole corpus of EU law to replace its communist-era legislation, Poland was able to short-circuit a process that might otherwise have taken decades.

The former communist leaders could relinquish power peacefully, knowing that under EU supervision they were unlikely to find themselves immediately imprisoned or killed as might have happened in the former era.

Those of us in Wales who are sceptical of the benefits of EU membership to Wales would hardly go so far as to say that the EU has never done anyone any good – of course it has – but these factors are hardly relevant to Wales.

We don’t have a tradition of throwing our fallen leaders into jail (Carwyn Jones can sleep soundly in his bed tonight), and we already have a legal system based on a heritage of common law going back well beyond the advent of the EU.

While Poland has flourished under EU membership, Wales simply hasn’t – and that has far more to do with the way that we’ve been governed than whether we’re in the EU or not.

Finally, speed of transition was a key factor; whereas countries like Romania, Bulgaria and Ukraine went for a slow transition, dismantling their Soviet-era institutions and introducing new ones as gradually as possible, Poland moved quickly.

This obviously caused a disruption to the economy and a spike in unemployment lasting about two years, but has resulted in solid and consistent growth ever since, Poland having been the only country in Europe to avoid a recession during the great crash of 2008.

Too much of our political life in Wales is based on fear; our economy may be falling steadily behind the rest of the UK and Europe, with no prospect of that ever changing under our current leadership, but at least we’re only falling behind slowly and we daren’t do anything to rock the boat.

Poland teaches us that who dares, wins.

[1] Although Piatkowski doesn’t go on to make this next point, I think it is likely that Poland’s lack of natural resources combined with the retention of its own currency (it has never joined the Euro area) also helped stimulate its ability to export goods and services by having a relatively ‘cheap’ currency.

It is well-known that oil-rich countries, in particular, suffer from inflated currency values that damage the rest of the economy by making its exports uncompetitive. Economists call this “Dutch Disease” after it having first been noticed in the damage done to the Dutch economy in the 1960s following the discovery of the Groningen gas field.

It also accounts for some of the damage done to British manufacturing in the 1980s when North Sea oil production was at its height, and Sterling joined the Exchange Rate Mechanism while being heavily overvalued.