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6 Program on Central and Eastern Europe

Stabilization & State Enterprise Adjustment: The Political Economy of State Firms After Five Months of Fiscal Discipline, Poland 1990

1990 – Janusz M Dabrowski, Michael Federowicz and Anthony Levitas


This report describes the behavior of Polish state firms after six months of fiscal stabilization. On the one hand, it is shown that state firms are attempting to adapt to fiscal constraints and the fall in domestic demand caused by the Mazowiecki government's stabilization plan. On the other hand, it tries to demonstrate that the continued confusion of both property rights and managerial authority impede the formulation and implementation of strategic adjustment plans at the firm level. The report also challenges a number of the governing stereotypes concerning managerial, union, and Employee Council behavior during the process of firm adjustment. In the final section, a proposal for the partial, indirect give-away of state assets is sketched. It is argued that the commercialization of state enterprises, and their partial assignment to publicly held investment associations presents the possibility of both clarifying managerial authority and more clearly introducing external market pressures into the strategic calculation of firms.