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Poland Table of Contents


Retrenchment and Adjustment in the 1960s

By the early 1960s, economic directives again came only from the center, and heavy industry once more received disproportionate investment. At that point, the government began a new industrialization drive, which was again far too ambitious. Rates of investment were excessive, the number of unfinished industrial projects increased, and the time required for project completion was considerably extended. Structural distortions increased, and the rates of growth in high-priority sectors were adversely affected by the slower than expected growth in lowpriority sectors. Bottlenecks and shortages increased inefficiency. By the late 1960s, the economy was clearly stagnant, consumer goods were extremely scarce, and planners sought new approaches to avoid repetition of the social upheavals of 1956. At this point, suppression of consumption to its previous levels had become politically dangerous, making a high rate of accumulation problematic at a time when demand for investment funds was growing rapidly. Because of these factors, additional investment funds were allocated to the neglected infrastructure and to the production of consumer goods.

Modernization efforts stressed technological restructuring rather than fundamental systemic reforms. However, a policy of "selective development," introduced in 1968, required another acceleration of investments at the expense of consumption. Selective development and a new system of selectively applied financial incentives ended in the worker riots of December 1970 and a second forced change in the communist leadership in Poland. Meanwhile, no funds were invested in remedying the environmental crisis already being caused by excessive reliance on "dirty" lignite in the drive for heavy industrialization.

These conditions necessitated a switch from an "extensive" growth pattern (unlimited inputs) to an "intensive" pattern of growth that would ensure high rates of growth through improvements in productivity rather than in the amount of inputs. The new emphasis helped drive another reorganization of industry in the early 1970s. State enterprises were combined into a number of huge conglomerates called Big Economic Organizations. They were expected to increase efficiency by economies of scale. Wage increases were tied to net increases in the value of outputs as an incentive to labor productivity. In practice, however, central planners could now control a smaller number of industrial units and regulate their activities more intensely. The system was never implemented fully, and no improvement in efficiency resulted. The failure of the 1973 reform demonstrated that the technological level of industrial products was still too low to permit significant increases in efficiency.

Data as of October 1992