Reflections on the financial crisis of the post-socialist state (original) (raw)
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The impact of the major economic and financial crises that have occurred over the past few decades of time on socio-economic life in Poland has been exceptionally large. On the other hand, in terms of source factors, some of these factors occurred repeatedly such as central banks raising interest rates after keeping them at low levels for a long time, and stock market crashes that occurred at the beginning of developing crises. On the other hand, some economic and/or financial crises were caused in part by new root factors referred to as “black swans.” This type of situation occurred at the beginning of the developing pandemic economic crisis from March 2020 and the deep recession that occurred during the first wave of the Covid-19 pandemic. The research conducted shows that the impact of recent economic and financial crises, i.e. those that were global or international in nature and occurred in the current 21st century, on economies, financial markets and on the socio-economic lives of citizens was very high. Besides, the research shows that for the recent economic and financial crises, including the global financial crisis of 2008, the pandemic economic crisis of 2020, the strong increase in inflation in 2021-2022, the energy crisis of 2022, the recession of the economy of the first half of 2023, the root factors were, among others, the overdeveloped state interventionism, including primarily the manual control of monetary and fiscal policy and the deregulation of financial markets, which has been going on since the 1970s. Economic state interventionism is usually undertaken as an anti-crisis and/or pro-development measure aimed at reducing the scale, level and probability of financial, economic crises, etc., but, on the other hand, often the aforementioned interventionist activity carried out within the framework of specific economic programs leads to escalation of risk levels and generates further crises. In 2023, the scale of bankruptcies of companies and enterprises in the SME sector in Poland was the highest for many years. The economic downturn in 2023 was the result of the negative effects of interventionist measures taken as anti-crisis measures applied during previous economic and/or financial crises. An example is the anti-inflationary raising of interest rates by central banks implemented from late 2021 or early 2022. The purpose of tightening monetary policy was to curb the growth of inflation, but the result was an increase in the cost of money lent in the form of loans by commercial banks, a decrease in the creditworthiness of economic entities, a decline in investment and a deterioration in labor markets. Another effect of the aforementioned crises and/or the anti-crisis interventionist monetary and fiscal policies applied was an increase in the indebtedness of the state's public finance system. In the perspective of the following years and decades of time, economic crises operating in different time frames will potentially develop: 1. In the relatively shorter term: the beginning of a new business cycle, inflation, monetary policy versus the situation in the capital markets, the risk of a potential stock market crash, 2. In the medium term: the low level of investment to date and the process of population aging, the problem of the growing debt of the state's public finance system, 3. in the long term: the developing global climate crisis, still increasing greenhouse gas emissions, the progressive process of climate change, global warming, the negative effects of climate change on the economy. The research shows that in the future there will probably be a reoccurrence of some past crises, but the economic reality, however, may be different. In recent years, the importance of green transformation of the economy has been growing. In the future, developing crises of various kinds will intertwine and affect each other. Innovation and new technologies should help solve problems derived from crises. In view of the above, it is therefore necessary to continue research in the problem of identifying the sources and determining the impact of economic and financial crises on socio-economic life, to diagnose the cyclically recurring processes operating during the said crises in order to develop the most appropriate system solutions, economic programs, instruments for the activation of economic activity, activation of innovation, counteracting the development of crises and implementing solutions that will result in increasing the macroeconomic stability of the economy while taking into account the issue of sustainable economic development, the implementation of sustainable development goals, the implementation of the principles of the green economy and closed loop economy, building a sustainable and emission-free economy.
"...this book offers in an understandable and digestible form basic information on the past and present of Poland, with particular emphasis put on the areas of policy, society and the economy. A volume designed in such a way can serve students of both the social sciences and other fields, as they seek a better understanding of the country in which they find themselves, within the framework of an academic exchange. It should be emphasized that all three parts here are on a high professional level, hence there is no doubt as to the presence here of specialists in the given fields, who have nevertheless made every effort to ensure that issues presented are accessible and understandable, as well as being carefully selected to ensure a good and wide-ranging outline of socio-political and economic issues in Poland" - from the review by K. Sobolewska-Myślik
Financial Law Review
Financial crisis is an occurrence of rapid changes in the financial market, usually associated with insufficient liquidity, insolvency, as well as the fall in production or aggravation of an already present decline. The word comes from the Latin word crisis and the Greek word krisis, meaning "screening", "settlement", "choice" 2. Other definitions relating to the crisis include economic downturn, economic weakness, economic turmoil, economic collapse and economic chaos. Analysing the crises that began to appear at the beginning of the twentieth century, as indicated in the literature of the field, the current crisis is the eleventh
The 1st All-Poland Scientific Conference on Economic Law: Innovation, Stability and Competition in Panel II: Causes of economic crises - quality of law and influence of international factors, 2024
During the recent economic and financial crises in many countries as part of anti-crisis and pro-growth stimulus measures, monetary policy, money supply formation, interest rate changes formally and/or informally cooperate with the government, which also in the framework of anti-crisis programs undertaken, instruments for the activation of economic activity of companies and enterprises, activation of consumption and investment implement fiscal, social, budgetary, housing, etc. policies. If coordinated mild fiscal policy and mild monetary policy are appropriately synergistically applied within the framework of interventionist anti-crisis and pro-development measures, then stimulating the economic activity of firms and enterprises, stimulating consumption and investment development, reducing the development of the economic crisis can work more effectively. However, the scale of the applied anti-crisis and pro-development measures should be precisely adjusted to the sectoral and industry structure of the economy and the specifics of the macroeconomic processes being implemented, and thus should not lead to a significant and sustained increase in the indebtedness of the state's public finance system, too high a level of creditization of economic processes, too high levels of acceptable credit risk by commercial banks, a strong increase in inflation, a decline in the value of the national currency, a decline in the interest of foreign financial institutions in securities issued by the state treasury and capital companies of the country, etc. Unfortunately, during the SARS-CoV-2 (Covid-19) coronavirus pandemic, first the government in Poland applied anti-pandemic, interventionist measures, including lockdowns imposed on selected sectors of the economy thus causing a deep recession of the economy and then through further interventionist measures highly costly for the state's public finance system, financial subsidies coming from the state's public finance system limited the growth of unemployment. Another negative effect of the applied interventionist measures of the government was the rapid increase in inflation, which began as early as the 2nd quarter of 2021. This was an example of erroneously applied interventionist actions of the government on too large a scale, actions involving the application of selected instruments of state interventionism, instruments of synergistically conducted extremely mild both monetary and fiscal policies, which, as a consequence of their synergistic application, negatively affected the economic processes taking place in the Polish economy. On the other hand, some of the interventionist instruments used, due to the specially created mechanism of their operation and their high scale, may have violated the norms set forth in the Basic Law, i.e. the Constitution of the Republic of Poland. This type of interventionist measure applied on an exceptionally large scale in Poland was the purchase of Treasury bonds by the National Bank of Poland to generate additional, printed money, which was then introduced extra-budgetarily into the economy mainly in the form of non-refundable financial subsidies transferred to many companies and enterprises operating in various sectors of the economy in order to limit the growth of unemployment in a situation of deep economic crisis and economic recession generated by lockdowns. However, the government's main concern was that the unemployment rates shown by the Central Statistical Office did not change significantly despite the real decline in the level of employment, entrepreneurs changing the terms and conditions of employment of employees by, for example, shortening the time and scale of employment of the same employees, a decline in the economic activity of companies and enterprises, a reduction in the scale of activities carried out by business entities, a reduction in the development opportunities of business entities affected by lockdowns, etc. The state interventionism thus applied during the pandemic consisted of actions and instruments of an also informally coordinated, politically politically ultra-mild monetary policy through an interventionist reduction of interest rates by the central bank and an ultra-mild fiscal policy based on the application of historically large-scale financial, non-refundable state aid. Synergistically and in a coordinated manner applied, the aforementioned mild monetary policy and fiscal policy effectively first limited the development of the economic crisis to then generate further economic problems in the economy. It is estimated that in Poland, since the 1st wave of the coronavirus pandemic, the central bank has created and transferred money to the government with a total value of almost 400 billion zlotys. On the other hand, the economic policy unjustifiably referred to in the media by the government as an economic policy pursuing sustainable economic development has failed to take advantage of the opportunities that arose during the pandemic to accelerate the processes of green transformation of the economy, and this despite the fact that opportunities to do so have arisen. As the indebtedness of the state's public finance system has increased in many countries in recent years, the importance of considering what categories of risks this may lead to is growing. The increase in the indebtedness of the system of state public finances has occurred mainly due to, on the one hand, objective factors such as the occurrence of financial and economic crises that are difficult to predict in advance, and, on the other hand, is the result of misguided economic policies, mistakes made in the management of the system of state public finances, the formation of central state budgets and/or financial budgets of local government units, budgets of state public institutions, etc. Mistakes made in the formulation of fiscal policy are due, among other things, to the mismatch of the expenditure side with the revenue side of the state budget and the specific structure of budget expenditures and receipts. On the other hand, the extent to which the mistakes made will manifest themselves and generate problems in public finances and the financial risks resulting therefrom is also largely likely to result from the economic and financial crises that are appearing with increasing frequency. Over the past few decades of time, the frequency and scale of emerging economic, financial, energy and other crises have been steadily increasing. The financial crisis of the late 20th century generated by the overvaluation and stock market crash of Internet dotcom stocks. Then the global financial crisis of 2008 derived from overly lax monetary policies, overly relaxed mortgage lending policies and the moral gambling of financial institutions involved in the process of financing these loans carried out mainly through the issuance and sale of subprime bonds. After a little more than a decade, a pandemic economic crisis emerges in 2020, which originally stems from the occurrence of panic in the capital markets, when the World Health Organization on March 11, 2020 declares a pandemic state of Covid-19 and then the economic crisis and recession of the economy is exacerbated by the introduced lockdowns imposed on business entities operating in selected, service sectors of the economy and the so-called national quarantines also introduced in some countries. During the Covid-19 pandemic, historically record amounts of added money were injected into the economy in some countries in order to limit the scale of the rise in unemployment, which is referred to as a kind of interventionist financial anti-crisis measure. However, the inevitable result of this kind of ultra-lenient fiscal policy and at the same time the relaxed monetary policy also applied at the time with interest rates lowered by central banks was a strong increase in inflation. The increase in inflation caused an increase in the cost of economic activity and a decrease in the activity of the economic processes of companies and enterprises. Then anti-inflationary central banks raised interest rates. The result was an increase in the cost of borrowed money in loans, advances and Treasury debt securities. This then generated a significant decline in the level of investment in many sectors of the economy, a process that worked most rapidly and on the largest scale in the cyclical sectors, i.e., the housing sector, for example. The decline in investment in the housing sector was also associated with a decline in the creditworthiness of potential borrowers interested in buying an apartment or house on credit. In 2022, there was an energy crisis, which was initially inspired by the outbreak of war in Ukraine and then by a strong increase in energy commodity prices. The energy crisis was particularly profound in those countries where, as in Poland, for example, the processes of green energy transition were carried out on a limited scale resulting in energy generation still from conventional combustion energy based on burning fossil fuels, mainly coal and/or lignite. The result of the economic crises of 2020-2022 was the occurrence of economic recession in a large part of the countries in the first half of 2023. During all these crises, many countries anti-crisis increased spending from the state's public finance system, and this despite the decline in tax revenues to the state budget. Thus, the obvious result of these processes and anti-crisis state financial interventionism was an increase in debt in the public finance systems of many countries. By 2024, in some countries, inflation had fallen around the inflation target and the rate of economic growth began to slowly recover from crisis and recessionary levels. However, the level of debt growth in a country's public finance system has been particularly high during this period, and it will probably take many years to reduce this level of debt to a level cons...
The Impact of the Economic Crisis on Social Policy in Interwar Poland
Studies in Logic, Grammar and Rhetoric, 2021
The aim of this paper is to determine how the economic crisis, and the ad hoc attempts made by the authorities to counteract it, affected the Polish society and, above all, to prepare a multidimensional analysis of how the crisis impacted systemic changes in the Polish social policy. The author will examine both positive changes that followed the relevant global trends and also negative changes that resulted from the developmental lag, the country’s economic situation and especially the generally low involvement of the state via public funding in activities that were part of the state’s social policy. Assessment of Polish social policy during the crisis must be ambiguous. On the one hand, systemic changes in social policy introduced as a result of the economic collapse can be clearly distinguished, on the other hand, however, the severity of the crisis visibly affected many activities of state and local governments in the social sphere. These activities posed unsuccessful attempts t...
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