The Unexpected Consequences of Traditional Macro Stabilization Policy During Transition: The Case of Poland
The term "transition" in the context of post-communist societies has become ambiguous from journalistic use and abuse. It is therefore necessary to state that I understand "transition" as a process of significant transformations in the operating principles and structures of the centralized model of physical allocation of resources, eliminating obstacles to efficiency and growth. In this sense, several attempts at transforming the economic system in Poland since 1956 have, by the large, proved unsuccessful because they were limited to modifications within the old framework. 1 Dramatic but swift change of the power elite in 1989 has removed political and ideological obstacles to the introduction of radical reforms aimed at the transformation of the existing economic system into that directed by the market through monetary instruments.
The market economies, however, despite their similar general features, have many faces and are not exactly the same in various countries. They are not solely defined by the "iron rules" of supply and demand but are also supported by complex systems of institutions shaping them. In the industrialized societies these institutions, consisting of private ownership, highly developed markets for production factors, and the organizational framework of the market economy, were gradually formed through centuries. The problems and difficulties during the transition process in Poland and other East European countries arise from the fact that market institutions must be created practically from scratch. Moreover, there is no country or group of countries in the contemporary world that can serve as a positive example of such transition.