Speaking of the future, we have to do so increasingly often in terms of alternative forecasts rather than strict scenarios arranged or enforced by a single decision making institution. There are three factors that need to be taken account of in doing so. One is the democratic system that naturally inspires changes of governments resulting frequently in subsequent revision of economic strategies pursued so far. Globalisation is another factor as it strips national institutions of their power to decide and do things their own way. The third factor is European integration, which denies EU member countries much sovereignty of decisions in favour of European Community’s policies.
To illustrate this last point, former German President Roman Herzog observed at a time that more than 80% of the country’s budget related acts of legislation adopted by the Bundestag were in fact based strictly on EU community law. Admittedly, the European Union has now developed into a regulatory giant, and all countries connected with the European community in terms of capital, trade and otherwise are bound to reckon with the increasingly more rigorous standards imposed by the EU. Yet being a regulatory giant, the European Union is a dwarf in terms of its budget. Its budget stands at 2.5% of public expenditures, or at about 1% of the GDP sum of all its member countries. In contrast, the US federal budget amounts to about 20% of the total GDP of its states.
I would like to draw particular attention to the importance of the European-integration-factor for the future shape of the Polish economy. The EU model – with all its varieties in the particular countries – is basically built on two foundations. One is the German-rooted EU macro-foundation consisting of the European Central Bank and the Pact of Stability and Growth. This pact has developed through trial and error of European economies rather than from any dogmas and in the case of the new economies from behind the former Iron Curtain countries it serves as a straitjacket of a sort constraining populist temptations of some governments there. The second foundation is that of the Anglo-Saxon-rooted liberalization enforced on continental Europe by directives from Brussels. The liberalization process has met resistance from staunch advocates of economic patriotism but it does enforce changes in countries where natural monopolies still reign supreme. That applies also to Poland. The national PZU life insurance company has already been losing about 1% of the market share each year and once other capital giants enter this liberalized market with greater resolve that process will accelerate. PKP Cargo, Poland’s giant in railway cargo transportation, has been losing about 4% of the market share each year but the real and fierce competition that PKO Cargo will now face with the imminent entry of the Polish market by Deutsche Bahn, Russian and British railways will in no time speed up the downturn of its monopoly position as well.
I believe that the two sound and solid EU foundations serve Poland’s interests well. For reasons I have mentioned that applies to the monetary and fiscal discipline imposed by the EU on its member states as well as the liberalization process because – at least in the case of agricultural goods and services – it allows Poland to challenge competitors with its prime asset of low prices. Perceiving the European model in such a way I cannot describe the Polish economy as liberal. It cannot be referred to as such because it is one that provides more privileges to labour, spends more public money on social security services, medical benefits, disability and old age pensions than most other countries I know of. It will take long before liberal economy becomes a fact in Poland.