Morawiecki’s Plan as a Symbol of Polish State Interventionism

Mateusz Morawiecki, Polish Minister of Development || Creative Commons

Big interventionist programmes are very often seen as the only key to a better economic situation, instead of the idea of introducing free-market changes from which all companies and consumers would benefit. This approach is visible not only in the policies of individual governments, such as the anti-crisis packages launched during the economic crisis by e.g. the US, France or Spain. We can see this approach also within the European Union: the centrally-planned initiatives such as the Europe 2020 Strategy or Youth Guarantee are treated by Brussels as being more important than enlarging the common European market. Now, another drastic example of statist interventionism can be seen in Poland, in the so-called Action Plan for Responsible Development, commonly referred to as the “Plan of Minister Morawiecki” or simply the “Morawiecki’s Plan”.

During the 2004-2014 decade, the Polish VAT law has been changed 36 times, and there are still some absurdities – such as, for instance, a 23% tax imposed on a coffee drank while inside a coffee shop and a 5% tax when it is a takeaway drink. If you are single and you have a standard employment contract in Poland, the state brings 35% of your gross wage. However, neither limiting the entrepreneurial bureaucracy, nor reducing the individual workers’ tax wedge have been yet declared the economic decisions of the politically rightist (but economically socialist) new Polish government of the Law and Justice party, which took over in November 2015 with Prime Minister Beata Szydło on the front lines of the good good change. Instead, in February 2016, the government launched the abovementioned Morawiecki’s Plan.

Although Mateusz Morawiecki (Deputy Prime Minister and Minister of Development) often says that his plan would be based on the idea of both governmental and private saving and investing, the programme itself shows quite the opposite: the government just wants to spend money immediately on certain investments and branches which are not chosen by consumers and producers but by the state itself. By 2020, PLN 530 billion (EUR 122 billion) from the state budget is planned to be spent as an implementation of the Morawiecki’s Plan (apart from the EU funds and the funds of the state agencies such as the National Health Fund).

The objectives of the Morawiecki’s Plan are as follows: “an increase in investments to over 25% of the GDP”, “an increase in the share of R&D expenditure to 2% of the GDP” as well as “an increase in the number of medium-sized and large enterprises to over 22,000”. But how does the government intend to attain these goals? Despite emphasizing the need for “business-friendly regulatory environment”, the Morawiecki’s Plan primarily aims at giving money and allowances to big firms in order to make them “national champions”. The “national champion” itself is the catchphrase of the plan, with the fragment that will seem especially ugly to all opponents of state interventionism: “a next project [will be] a ‘national champion’ of business services, created with the participation of the enterprises of the State Treasury”.

Of course, the problem highlighted by the Ministry of Development – that “only 6 companies in Poland are champions in the world” – can be resolved by free market changes such as limiting tax bureaucracy and using innovation tax breaks. But the Ministry does not believe that. It is convinced that the state interventions addressed to particular companies and branches are needed.

According to the Plan, the money should go to branches and regions chosen by the government. In the Morawiecki Plan, it is for example building military drones and other air equipment in South-Eastern Poland (Podkarpackie and Lubelskie voivodeships) or constructing trams, buses and trains in North-Western Poland (Wielkopolskie and Kujawsko-Pomorskie voivodeships). As a part of the plan, the government has already created a special institution, called the Polish Fund for Development, that will (among other activities) “search for the market outlet for these enterprises which have the potential to gain the status of a ‘champion’” – as we can read in the full presentation of the Morawiecki’s Plan (not available in English). The goal of increasing research and development expenditure (which is possible to be attained by private enterprises under the condition of friendly regulatory environment) also turns out to be based on governmental spending: for example, The National Centre for Research and Development promised to cooperate in the implementation of the Morawiecki’s Plan by giving PLN 5 billion (EUR 1.15 billion) annually for the development of the potential “national champions”.

Obviously, the plan quite often highlights the need for the already mentioned business-friendly regulation, and calls for preparation of a “Business Constitution” which would gather all entrepreneurial regulations in one place. But the broad state intervention announced in the plan implies more free market distortions and unfair links between companies and the government. The enterprises representing branches other that enumerated in the Morawiecki’s Plan would have less possibilities of financing: they will have to consist of bank credits, while the other, governmentally privileged branches, would have government’s support, together with a facilitated access to the EU funds which surprisingly are a part of the Morawiecki’s Plan itself.

However, it is not the equality and friendliness of business rules which are the objectives of the Morawiecki’s Plan – especially in the light of the statement by Law and Justice’s leader, Jarosław Kaczyński, who in 2013 in the interview for Rzeczpospolita1 proved his big hostility towards entrepreneurs by saying that: “Entrepreneurs in Poland are completely uninnovative, they base their earnings on the exploitation of workers like villains. That is because in Poland after 1989 a fatal phenomenon occurred: the mechanism of negative selection, which was characteristic of communism, has been used in the business life. Not only a significant part of big and medium enterprises, but also small business is unfortunately, in many cases, continuously a safe haven for the people of the previous [communist] political system”.

Like the Central Industrial Region in the pre-war Poland in 1930s, now the Morawiecki’s Plan – with all the differences considered – has the task of enabling the narrative about the triumph of the Polish state, despite other economic problems and political controversies (such as limiting the power of the Constitutional Court). The empowering role of the Morawiecki’s Plan is visible in the way the European Union funds are presented: While in 2013 Prime Minister Donald Tusk quite naively presented the regular EU-financed investments as his own success by saying that the “European Funds are changing Poland”, in the Morawiecki’s Plan we can read: “The EU funds: we will invest them, not just ‘spend’ them. These investments would be subordinated to the goals of the Responsible Development Plan”. So, even the European Union is suggested to be somewhat superior to the powers of the plan of the Polish Ministry of Development – which is significant not only economically, but also politically.

1 A Polish newspaper.