Poland is trying a new approach with capitalism. Will it work?

After communism collapsed in 1989, Poland wiped its hands of socialism. Capitalism swept in, bringing fast-food chains and shopping malls. Today, the country is the EU’s sixth-biggest economy. GDP per capita has overtaken Greece’s and is catching up with Portugal’s. Yet despite this outward success, many Poles feel left behind. In response, the Polish government proposes “solidarism” – capitalism with a social face, involving more social support, especially for families – as a sort of third way. This doesn’t mean that the Polish cabinet is made up of a bunch of Corbynistas. Far from it. Though typically described as “right-wing”, the Law and Justice (PiS in Polish) party, which has been in power since 2015, combines social conservatism, supported by the Catholic church, with high welfare spending. Broadly Eurosceptic by Polish standards, the PiS government remains locked in a conflict with Brussels over its overhaul of the judiciary, which EU officials say undermines the rule of law. The architect of this shift in thinking about the economy is Mateusz Morawiecki, the prime minister, a former bank CEO (the irony has not gone unnoticed). “It turns out that the rules of capitalism are not sacred, inviolable and uniform. Capitalism is different in different countries,” he said in November. “Capitalism must be a social capitalism, pro-social but also creating good living conditions for entrepreneurs and companies. Solidarism should be that economic system,” he added. The impact of this approach is examined in “Capitalism – the Polish way”, a report by the government-linked Polish Economics Institute. While Poland’s socio-economic model has been relatively liberal until now, it has begun shifting towards solidarism, it argues. This “capitalism à la polonaise” involves emphasis on social policy and a more inclusive vision of economic growth, not limited to the urban elite. For the report’s authors, this move is a response to the type of capitalism in Poland that has emerged following the collapse of communism. “Poland and other CEE countries did not have the possibility to pursue a different model than the one imposed externally in order to join the Western structures, because their bargaining power was very weak in the 1990s,” according to the report. (Though technically about economics, the reference to “externally imposed” models echoes PiS’s political rhetoric, which includes greater defiance towards Brussels and Berlin.) Using an index of capitalism based on eight factors – from social policy to economic competitiveness – the report compares Poland to other developed countries. Between 2015 and 2017, the country advanced from 20^th to 16^th place among the 32 developed countries surveyed in terms of overall solidarity, meaning that its economy has become less liberal. Belgium, Finland, France and Austria topped the list, followed by Denmark, Sweden and Norway. Britain ranked 21^st. Family policy is the flagship example of Poland’s move towards greater solidarism. As Poland struggles with a low birth rate, PiS has been encouraging Poles to have kids. In 2016, it launched its flagship 500Plus policy, which gives families 500 złoty (£100) per month per child under 18, from the second onwards (and from the first in low-income households). In the two years since it launched, 3.7 million children from 2.4 million families received a total of 42.6 billion złoty (£8.8bn). In 2016, Poland spent 2.5 per cent of GDP on family policy, up from 1.4 per cent in 2015, putting it in sixth place in the EU, between Estonia and France (Britain came in 16^th). Since being introduced, 500Plus has reduced child poverty. A record 1.25 million children went off on summer camp this year. Its longer-term consequences are less clear. Slightly more children are being born, but this coincides with a period of low unemployment and rising wages. Meanwhile, early research suggests that women are quitting their jobs. The Institute for Structural Research in Warsaw estimates that some 100,000 women left the labour market in the first half of 2017 due to 500Plus. Women with low levels of education and in small towns were most affected. Looking ahead, the report’s authors suggest that Poland could help Europe rethink capitalism. “The task of the region, but first of all of Poland, is to try to find new solutions for the EU, so that various development models have the chance to coexist and create conditions for sustainable development,” the report concludes. Whether “capitalism à la polonaise” catches on beyond the country’s borders remains to be seen. Back home, it will be a vote-winner for PiS as Poland enters election season, starting with local elections in October.