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The wages of Marxism

It is hard to see how the government of Edward Gierek can resolve its latest confrontation with Poland's spirited workers without in effect giving them a "new deal." Poland finds itself in a fix partly because it has been unwilling to undertake any serious economic reform which would give the Polish people a vested stake in a more efficient economy.

The paradox of the situation is that the Polish government was trying to put its economic house in order. Raising meat prices -- the issue which sparked the labor strikes -- was a reasonable thing to do. Poland has been heavily subsidizing food prices, and it was not illogical to try to bring prices in line with production cost. East-bloc socialism subsidizes a great many things, including housing and transportation. But even Polish Marxists recognize a limit if there is to be economic growth and a bigger pie for everyone.

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At the root of Mr. Gierek's problems has been Poland's rush to rapid industrialization. The course Poland chose in the early 1970s was to let economic growth be financed by the West. It began borrowing capital to modernize industry, with the hope that exports of ships, coal, and other products would enable it to pay off the loans. But it did not foresee recession in the West or the rising energy prices since 1973, both of which have affected Polish plans. The Soviets supply Poland with oil at a favorable rate, but Poland must also import higher-priced oil from outside the Eastern bloc and such imports are expected to grow. Today its foreign debt approaches $20 billion and it needs over $7 billion in hard currency a year just to service that debt.

Inefficient farming, meanwhile, adds to the strains. This seems incongruous because Poland is the only Communist country in which agriculture is not collectivized. Yet the myriad privately owned farms are too small for efficient operation. Six years of poor weather have compounded the difficulties. A large part of this year's harvest, severely battered by rains and flooding, may be lost. As a result, Polish imports of grain from the West have been steadily rising.

In an effort to invigorate the Economy -- and Western lenders are anxious this be done -- the regime has been cutting back imports, increasing exports at the expense of domestic consumption, and slicing away at the food subsidies. It has also tried to get Polish workers to work harder and accept some belttightening. But persuading Poles to consume less in anticipation of future rewards no longer seems a saleable policy. The communists have lost credibility. For 30 years they have promised citizens a better life and, while standards have improved and a degree of modernity has been introduced in Polish life, these fall far short of people's expectations.

The question is whether the Polish authori ties will shortsightedly insist on the usual way out of the current dilemma -- giving workers more pay and putting more consumer goods in the shops. The Soviet union, anxious to see an end to the unrest, would probably provide aid for this purpose (although it bristles at helping maintain a better living standards in Eastern Europe than in the USSR). Most Polish workers would in fact probably settle for economic benefits even though strike leaders are pressing for political reforms.

But, if Poland is to move forward economically, a fundamental dialogue is needed between state and people. The Gierek government must give a hearing to those liberal members of the Polish communist party who urge a new flexibility in planning and management and a more open society. Like other Marxist societies, Poland suffers from over- centralization, stultifying bureaucracy and lack of incentives. The workers, on the other hand, need to appreciate the need for labor discipline and higher productivity. Some observers even question they want real economic reform for it would mean they would have to work harder.

Admittedly it is risky for Mr. Gierek to loosen the reins. Yet experience elsewhere in Eastern Europe shows innovation is possible even within the communist system. Yugoslavia has gone so far as a virtual market economy yet retains one-party political control. Hungary, too, has moved away from economic orthodoxy, even while prudently keeping in mind Soviet interests. Its economic reforms have included more flexible planning and investment, cost and export effectiveness and higher pay for better work.

That Poland confronts such severe economic difficulties, given the nation's natural resources and the talent of its people, points to structural deficiencies in the state-controlled system. Importing technology from the West is not enough. Because of stifling controls and mismanagement, the technology does not fulfill its potential. Exports targets are not being met, many products are of inferior quality and not competitive with Western goods, and there is massive waste.

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In sum, the only long-term solution to Poland's discontent is a more credible government and economic mechanism. Back in 1956, after riots in western Poland, the workers won wide reforms, including a "workers' charter" that envisioned genuine unions and workers' councils that would be involved in industrial co-management. But within two years these reforms were emasculated. In 1970 the workers again revolted and the government again made promises of reform. Now the workers are at it again, with praiseworthy patience and forbearance. They are not trying to overthrow the Soviet-backed Marxist system, but merely to bring rationality and honesty to it. The risk of bowing to their demands may be high for the Gierek government -- but the risk of not meeting them halfway could be even greater.

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