Should economic liberalism be introduced and how?
Added: 2017-10-30
Added: 2017-10-30
Dyskusje ekonomiczne, prowadzone w Polsce, wykazują


First edition 1931. From: Adam Heydel, Liberalizm i etatyzm, Ośrodek Myśli Politycznej, Kraków 2012.



Economic discussions held in Poland show a seemingly large divergence between the aspirations of our economists[I]. Some of them strive to raise pay in Poland. Others want to increase profits. Programs of agricultural Poland and industrial Poland are fighting against each other. In connection with this matter, people are wondering whether there should be high prices for agricultural products or industrial products. The drive to develop foreign trade is clashing with the drive for self-sufficiency. Production protection and consumer protection programs are juxtaposed against each other.

Moderate people suggest a compromise and want to combine the conflicting, divergent goals, thus condemning their undertaking to failure from the start and not achieving any goal. It needs to be said that whoever sets any of these unilateral fragmentary postulates as the highest goal of economic policy is not an economist.

High pay is not achievable unless production is developing, and it cannot develop without profits. High profits cannot be obtained – because from who? – if low pay limits the market.

Unemployment cannot be combated either by artificial development of unprofitable industries or by breaking up large agricultural workshops into small ones. This way you can hire workers for starvation-level pay, but you cannot increase the amount of remuneration. Otherwise, it would be a good idea to introduce manual workshops in place of big factories in Łódź. After all, they need more workers!

Consumption is encouraged to be increased. How to do it without increasing the production? Or is it the opposite: big production without big consumption?

Consumer advocates demand low prices, forgetting that they must reduce the supply of goods. Representatives of producers would like to keep prices high while having a vast market, often they do not realize that these two postulates are mutually exclusive.

Let me say it again: an economist does not have such problems or programs. Practical activity of economists has nothing to do with solving any of these fragmentary tasks, it also cannot mean having many irons in the fire. It must be a pursuit of one ultimate goal. Their activity must be an architectural, logically linked structure. Those fragmentary issues are not indifferent to economists, that is for sure. But their solution is only a derivative of the main task. The economist solves them by solving the other one. They need to behave like a leader during a battle. Striking the enemy means striking a series of side targets.

That is why, the economist must establish the hierarchy of their goals. They need to undertake a proper assessment of their validity. This is not a compromise. This is not linking the discrepancies. The economist’s task is to find a point in which the detailed and fragmentary postulates are connected naturally.

Where is the point, where is the goal, the achievement of which relieves us of worrying about all the ills at once, because reaching it removes those ills itself?

It is not – and it cannot be – anything other than gaining the maximum income of the society. Society lives off the net income the same way an individual does. Net income is the sum of the profits and the sum of wages taken together. It is ridiculous to say that society is living off gross income in opposition to the individual. If that were the case, it would live off the assets. Society meets its current needs from net income and the net income is what provides for better fulfilment of future needs (capitalization).

We calculate the monetary amount of net income assuming that the purchasing power of money does not change. In fact, this monetary sum expresses the surplus of utility over the lost economic costs – in general terms – the amount of disutility.

Any increase in net income is an increase in the sum of profits and the sum of pay. Each increase in the sum of profits at the expense of the sum of pay is a decrease in net income. The same reduction brings the increase in pay at the expense of the sum of profits.

Increasing the sum of profits and not reducing the slow-competition total amount of pay indirectly leads to an pay increase. The same increase in the amount of pay, while not reducing the sum of profits, results in an indirect increase in the sum of profits. And this is where the interests of classes, professions and individual workshops are harmonized. The benefits of the industry become the benefits of agriculture, the benefits of the manufacturer – the benefits of consumer. This is where profitability and productivity coincide, i.e. the enrichment of the whole society in question. Productivity is profitability achieved at anyone’s cost. It is a surplus achieved from the outside, from nature.

And when do we reach the maximum social income? When the highest productivity and the greatest savings work together. The biggest savings are achieved with the most economical use of both labour and capital. Economists have been aware of it for a long time. The physiocrat, Baudeau[1] wrote:

“Sur la même étendue du sol, qui ne produisait par le travail de cent hommes que 1’entretien de cent dix – trouver le moyen de faire naître la subsistance de deux cent hommes, par le travail de cinquante seulement – voilà un vrai problème de culture”[2].

So, halving the effort to achieve a surplus to feed 90 people more in a given territory was something that Baudeau rightly considered to be the true issue of civilization. This is a goal worthy of an economist. Baudeau, by demanding that there are not 100, but 50 workers, was not worried about the fate of the 50 unemployed. They will find employment thanks to the increased demand of these 90 new consumers!

Let me say this once again: the maximum income, and therefore, the maximum wealth can be achieved by the society through:

1)the highest possible productivity,

2)the highest possible savings.

Both of these rules can be reduced to a single one: achieving labour productivity means using it just the right amount to produce a given good, and applying it where it can produce the most. This way we save money as well. Such use of labour and capital, connected with such savings in consumption can only be provided by liberalism. Liberalism allows you to fully strive for maximum profits. Liberalism makes it possible to freely transfer capital and labour to those branches and production workshops that promise the highest profits under given conditions. In a word, liberalism allows the entire social household to attain the highest profitability.

Gustav Cassel's claim on that subject is so right and obvious that it cannot be argued with[3]: the entry of a state must recruit capital and labour in a less profitable way than it would be possible with full liberalism, because if the employment given by the state to the production factors was in fact the most profitable, the state power would not need to enter the market and help private entrepreneurs.

Mises expresses this even more emphatically, saying: “The authority cannot be the source of wealth, but only the source of poverty”.

We need to face the truth. In Poland, the government constantly interferes with economic life in every field. Poland suffers losses because of that, reaching dizzying amounts, year by year, every day, every hour. There is a stream of wealth flowing around us constantly. Etatism makes it impossible to draw from it with all possible efficiency. The energy resources are scattering. The efforts and the struggles of individuals are wasted and lost forever.

It would be one-sided, bordering on crude, to not know that there are goals, indications, standards more important than the development of wealth. Adam Smith[4] rightly praised the Cromwell’s Act[5], even though economically the act was incompatible with his program. The Cromwell’s Act reduced the wealth of England, but maintained its defences. “Defence and freedom are of much more importance than opulence”, wrote the father of economics. But it would be short-sighted to not recognize that, depending on the conditions, the importance of wealth from the development and the power of the state may be greater or lesser.

There are societies for which a faster or less rapid increase in wealth is secondary. And there are those for which this is the key problem.

What does it look like in Poland?

We are several times poorer than the countries leading the culture. Our masses (about 70% of the population) live on a completely proletarian level, which does not allow rapid cultural growth. We have a population growth of about 1.5% a year. If we want future generations to maintain at least our miserable, low standard of living, each of us should capitalize 1.5% of our property annually. If that were the case, we would not be threatened with further pauperization. Otherwise, it is obvious that the wealth of the next generations must decrease. The son will be poorer than his father, the grandson – poorer than his grandfather. There will be nothing grand about his standard of living.

Who would like to claim that in Poland the possessions of individuals amount to 1.5% of assets per year? I am deeply convinced that the possessions, taking the average of the whole post-war period, are much smaller. And yet, this figure – 1.5% increase in assets per year, is a very low and miserable postulate. It is a petrification of our economic, political and civilization vegetation for decades. This is just a guarantee that we will not regress and go downhill.

But if we were not able to achieve any bigger and faster financial goals, we will undoubtedly regress in comparison with the civilized world. There will be a growing gap between those who lead the culture and decide about the fate of the world, and our poor and tightened Homeland. Our influence in the field of culture and in the political field would have to be reduced. Because you should not delude yourself that poverty can be combined with culture and strength. It is the opposite: the relationship between wealth and higher goods is now closer than ever.

Wealth used to be equivalent to the use. Today, wealth is synonymous with power. Rich people used to spent their resources on gluttony and drunkenness. Nowadays, wealth means sport, hygiene, travelling. Rich Germany is Germany of cars, airplanes, mountain trips, mass production of literature, art, theatre and music. Poor Poland is Poland lazily crawling on foot, Poland of basement flats and tuberculosis, Poland that is defenceless.

Wealth hands in dozens of steam horses to a member of the society. Poverty leaves them struggling through life with a beggar’s rod.

This democratized wealth, this source of real power, is growing around us much faster than in Poland. Therefore, it is the last moment to do an examination of conscience and ring the alarm.

It is a duty of everyone who has their eyes open to fight the two brakes, two barriers in the way of our development, which are: etatism and state interventionism.

Let us consider each of them:

Etatism is an excessive growth of the public economy[II]. Such economy reduces social income in Poland, because a certain amount of work and capital is imprisoned in work not calculated on profitability. As a result, at the expense of the available resources, our income is less than what we could achieve.

Let a couple of figures show the extent of this loss :

Income of the public economy is approximately:

State.................................. 3     billion Polish zlotys

Local government.......... 1.3   billion Polish zlotys

Social insurance and other    0.6 billion Polish zlotys

                                         Total 4.9 billion Polish zlotys


This sum is taken from the private economy and directed towards unprofitable work. Can it affect economic life, and to what extent? What part of Poland's social income does it constitute? Calculations of social income are basically very difficult and can never be exact. As far as Polish relations are concerned, Adam Krzyżanowski[6] gives an amount of approximately 9 billion. Other economists calculate income to be bigger: 10 to 12 billion. The total revenue of the public economy is therefore 50% or 40% of the social income at best.

Of course, social income undergoes considerable fluctuations, so none of these calculations are valid year after year. Let us assume that at the intersection, the revenues of the public economy amount to about 45% of the social income. This part of it is usually economically infertile. But the public economy has its important tasks – it cannot be removed. Can it be limited though? Should it be done? Let us look at individual income items of this economy.

Taxes are the most important one. The ratio of taxes (state and local) to net income varies considerably. Below, I give three different calculations.

According to Paweł Michalski, taxes constitute 13.5% of social income, according to Szawlewski – 17% of income, according to Prof. Edw. Taylor – 20% of income.

The assessment of the tax burden can also vary. Paweł Michalski tried to defend the thesis that taxes are lighter in Poland than in other European countries. Such opinion seems quite isolated, Prof. A. Krzyżanowski, Taylor[7] and others have the opposite views. In my article called Dążności etatystyczne w Polsce, I tried to justify my opinion that is in line with the views of Krzyżanowski and Taylor[III]. Here, I just want to add that the amount of taxes is calculated on 20% of income, then – taking into account the poverty of the Polish society – their burden should be considered to be absurdly heavy, and their effect on economic life – the destruction of the wealth of the country.


Many economists-practitioners have the opinion that, although the state budget is too big, it is impossible to reduce it in our conditions. I do not share this opinion. Obviously, I see the great political difficulties. I think, however, that all efforts should be made to remove these political obstacles and reduce the state budget.

The situation of local government budgets is different and much simpler. There should be no political obstacles. They should be significantly reduced. After all, they represent 4.2% of social income. The pace of their growth, however, is completely disproportionate with the development of Poland’s economic life.

In 1924, expenditures of cities amounted to 233 million Polish zlotys, in 1928/29 – 766 million Polish zlotys. Even after calculation of the expenses from 1924, according to the current parity of the Polish zloty (they will amount to about 400 million today’s Polish zlotys) – we see an increase of over 90% in three years! A truly American tempo. It justifies the demand not only to stop, but also to significantly reduce these exuberant, fantastic budgets.

It is much more difficult to carry out a similar action for compulsory social benefits. Politics is limiting the possibilities yet again.

Let us assume, however, per maxime inconcessum, only a little of the public economy revenues can be removed. Let us consider the way of managing this economy. In addition to taxes, state-owned enterprises play a major role in the state budget.

Prof. T. Lulek[8], in his article called Przedsiębiorstwa państwowe, published in Dziesięciolecie Polski Odrodzonej[IV] (pp. 930-937), calculates their growth as follows: Among state-owned enterprises, we have 37 items of “separated enterprises”, 5 items are occupied by monopolies, 11 items of non-separated enterprises – 32 items of enterprises in which the state has a share. This gives us 82 items. Among them, there are such oddities like the fact that, in addition to 6 official state printing houses, the report of the budget committee of the Sejm on budget estimates for 1929/30 states “around 31 printing houses”. What is even more interesting, among the enterprises in which the state has a share, a large part is made of those enterprises forcibly acquired by state-owned banks when the banks were unable to enforce the loans given recklessly. In view of the applied methods of credit policy and the serious crisis, it can be said that Prof. Lulek is right when he somehow ironically says that “further growth of the Bank (Gospodarstwa Krajowego) is guaranteed...” Prof. Lulek calculates the value of these enterprises for the amount of 20 to 22 billion Polish zlotys. Other economists (defenders of government policy) estimate them at 12 to 15 billion. The difference, however, lies primarily in the divergence of opinions about the value of our railroads. Prof. Lulek evaluates them at ± 14 billion. P. Widomski gives the number of 7 billion. Given the poor depreciation of the railways, it seems reasonable to accept the figure of 10 billion. With this assessment of the railways, the value of all enterprises would amount to around 18 billion Polish zlotys.

What part of our national estate is it? The answer is even more difficult than in the case of social income.

The estimate of national wealth varies between 80 and 120 billion Polish zlotys. State-owned enterprises amount to 15-25% of national wealth. Let us assume that they amount to 1/5 of the national wealth.

State-owned enterprises are supposed to be the partial basis for the revenues of the public economy. What is their profitability? It is extremely difficult to tell. Many of these enterprises still do not have opening balances. Therefore, it is unknown whether, including depreciation, they give income or deficit. Some of them, like the Brzeszcze mine, whose balance sheet has been drawn up, showed only 1.2% of net income during the boom years, despite the fact that it benefited from a whole range of tax and other advantages unknown to private enterprises (e.g. the privilege of selling all coal production at higher domestic price). State-owned forests give reportedly 1.2 to 1.5% of income.

Due to the inability to precisely determine the profitability of all enterprises, Prof. Lulek uses a juxtaposition of cash surpluses from corporations to the treasury in the years 1924-1928/9. From this statement, it would appear that at that time, after counting the takings and subsidies, the treasury gained a surplus of 7 million zlotys![V] It is known that there are difficulties in determining the actual numbers of takings and subsidies, which often hide under some masked items. If, however, the calculations of prof. Lulek would be seen as too pessimistic, and if we were to use the official figures of budget closures instead, it still needs to be said that the results are disastrous. According to the Statistical Yearbook, they are as follows (in millions of zlotys):


Year     payment to the treasury     subsidies from the treasury     surplus

1925............... 68                          46                       22

1926/7........... 151                           11                    140

1927/8......... 200                          40                    160

1928/9......... 104                          20                      84

1929/30........ 101                          30                      80


If state-owned enterprises represent 1/5 of national assets, their net income should be 1/5 of the national income. Since this income is calculated by the pessimists at 9-10 billion, and by the government optimists – at 12 billion zlotys, state-owned enterprises should give an average of 2-2.5 billion zlotys in the form of net profits and wages per year. Wages in state-owned enterprises amount to about PLN 1 billion. Thus, Poland's social income has been reduced by 1-1.5 billion zlotys, because these enterprises are not run as they would be run by a private entrepreneur, i.e. with a view to maximum profit. It would be unwise to assume that the profit of state-owned enterprises would be a loss for private entrepreneurs or consumers, because the exactly same amount could be taken from the tax burden of the private economy.

The heavy functioning of the state machine, the political and social reasons, all this distorts economic calculation in state-owned enterprises. Moreover, they are burdened by the tendency of exaggerated investments. The wrong, naively technical point of view is the source for the opinion that setting up a new factory, installing the most perfect, expensive machines, but without a profit, is considered useful for the country. We are getting new walls, chimneys, buildings, which are all undoubtedly decent, useful, and necessary things, but also unprofitable. Some economists imagine that this – with general decapitalisation in Poland – is the only form of collecting social savings, that this is how the capital grows. No. This is not capitalization. Building a factory that does not give an average rate of profit is not capitalization. And how many times its profitability is equal to zero! Then, the costs of maintenance and depreciation arrive. Do we need to replace these new enterprises that are running a deficit?

In the best case, state “investments” are a thesaurization, the creation of dead and dormant capital. Since they are made out of inflated tax burdens, dead capital is created from money that, while remaining in circulation, would create capital invested in a profitable, and therefore, productive way. We must remember, however, that no reasons can obscure the economist of the principle of pursuing the maximum net income.

This criticism applies even more to the local government[VI]. Magnificent new town halls, schools and hospitals springing up like mushrooms please the eye. Let us remember, however, that we the chronic crisis of the private economy is partly owned to them.

I do not want to discuss the principle of compulsory social benefits. It is about how it is executed. In 1927/8, the income of insurance institutions amounted to 408 million. Institutions’ benefits for their members equate to a total of 247 million. It means that 160 million went to other goals. These are: expensive administration, buildings and equipment. And again, there is a serious doubt whether the sum amounting to 40% was used properly. With the reduction of administrative costs and the inhibition of the investment momentum, it might be possible to keep the benefits at the same amount, while reducing the burdens by 20-25%. This would give about 100 million – the money that would remain in the hands of the private economy and could work productively.

The most important problem, of course, lies in state-owned enterprises. Them being held in the hands of the state using the current methods of the economy harms not only the social economy, but even the fiscal economy. Someone might say that the amount of 1.5 billion that I threw as the limit that should be reached by the profitability of state-owned enterprises, is too high. I will not insist on it. It would not be easy for the railways or state forests, that account for most of the state’s assets, to reach the profitability. Let us suppose that when commercialized (in rallity, not only on paper), sold or leased, these enterprises will give only 800 million income per year. But then, you can extend taxation to them. At 20%, paid by private enterprises, the treasury, apart from the rent, would receive over 150 million Polish zlotys. Today, on the other hand, such a figure as a global income from enterprises is just an impossible dream. Such an extension of the tax base to enterprises currently operated by the state would allow to significantly reduce the burden on the private economy.

Let me make this quick. In my opinion, the current burden of the public economy is unbearable. It should be reduced. To what extent? Determining the exact number here would be naive. However, some estimates need to be made.

It seems to me that state expenditure can be reduced by ± 500 million. Expenditure of local governments must be reduced by 200-250 million zlotys. About 100 million can be saved on social benefits. This amounts to 800-850 million, which should remain in the private economy. I am further convinced that by rebuilding the foundations of the state economy, by healing state-owned enterprises, the budget can receive about 1 billion in the form of 1) rent, 2) taxation. This could then be the amount of tax reduction. The reduction of state expenditures, exploitation of enterprises and savings on self-government and insurance economy would therefore amount to 1.8 billion Polish zlotys.

I calculated the revenues of the public economy at 4.8 billion. With the transfers mentioned, they would be as follows:


State                            2.5 billion Polish zlotys

Local government               1.1 billion Polish zlotys

Insurance                    0.5 billion Polish zlotys

Total                   4.1 billion Polish zlotys


On the other hand, the burden on the private economy would be reduced to 3 billion by applying the principles of economic liberalism. This way, we would get closer to the size of the pre-war burdens. In view of our general economic conditions, it seems to be a necessity.

Such a limitation of the public economy would give a huge impetus to private enterprises, allow capitalization and lead the society onto the path of economic prosperity.




Our economic anti-liberalism is expressed, apart from etatism, in interventionism, i.e. bending economic life to artificial, non-natural goals. Economic life in Poland is oppressed as if by a corset of intervention which distorts the backbone of the economic body.

This distortion goes in two directions. The social, not the economic, angle of view of our tax legislation gives privileges, in a way unknown elsewhere, to small production workshops, while ignoring the large ones. It has been repeatedly stated that the construction of our turnover tax, the size of the progression and its application even in areas where the theory unanimously condemns it, go in such a direction. I will not spend any more time on this matter. I will only point out that the inhibition of the development of large enterprises in industry and commerce condemns us to a severe slowdown in the pace of development. A junk shop country cannot compete with countries where the technical and economic concentration multiplies productivity of labour and capital. The agrarian reform leads to the same situation, along with tax legislation in relation to agriculture. From the economic point of view and the net income, it cannot be argued that small enterprises are inferior. This is obvious. It is them, however, that are given privileges at the expense of large enterprise which are the more efficient ones.

The second abnormal distortion introduces the pressure of our customs policy. It rebuilds the Polish economy. In what direction? In a very imprecise and rough way, this direction can be defined as artificial industrialization. It is an inaccurate term, however, as the duties maintain or create certain branches of industry, while undercutting others.

The customs duty is a great example of a measure that allows you to gain profitability at the expense of others. Thus, it reduces the general profitability of society. It is anti-productive. I know that condemning customs may trigger a theoretical discussion. It might be a theoretically controversial matter. But what are the limits here? There are some extreme cases when the customs duty may increase the total net income of the country, and hence its wealth. Theoretically, it is possible to construct such a case. But duties are like poison which, when given in milligrams, can heal the patient. But in the practical economic policy, we have scales that show the differences in kilograms. Using the scales, we want to give strychnine or arsenic to the patient!

A customs protection theoretician, Ryszard Schüller, rightly argues that customs duty can be used with less damage where the spread between the production costs of individual workshops is smaller. On the other hand, where the differences in the cost of production of various workshops are large, the duty is more harmful. Customs protection results then in the existence of infirm, poor production workshops, and at the same time, the emergence of huge differential rents of workshops with lower costs. These rents are taken out of the pockets of consumers or other production departments. They are in contradiction with the principle of equalization of profits, which gives the maximum possible net income. With our technical backwardness, lack of communication, diversity of conditions in three districts, the differences in the cost of production of individual workshops are huge. The more harmful the operation of customs duties is then.

Some theoreticians tried to prove that customs duties do not burden the country which applies protection policy, because their burden is passed on to a foreign producer who pays them. It might be the case sometimes, but definitely not always. The duty is a kind of tax, and the rules of swapping customs duties result from the theory of tax shifting. However, even if the shift takes place, the finding of this fact cannot be considered as an argument in favour of customs. If the duty is shifted onto the producer, it means that the foreign goods will come to us at a non-increased price. The price will be the same as for free trade. In that case, the duty is ineffective. If the shift does not take place or occurs only partially (which is the most frequent case), then the price increase will be paid by the domestic consumer.

So: whatever one might say in defence of customs duties in individual cases, it does not disprove the general principle that the duty results in “une destruction de richesses”, as Pareto says[9], and what is vividly expressed by Mises who writes that, due to the customs duty, crop grows on worse soil than that on which it would grow without the duties, and industrial products are produced in worse, less efficient workshops. Therefore, more labour and capital is used to extract the same amount of goods.

But even those who agree that the customs duties are harmful in principle, defend the application of duties on an occasional basis and for a limited period. They mention the so-called educational customs duties. Even a liberal will agree to the use of these duties during the teething period of one branch of industry or another. However, under one condition: that they are only used for a short time, and only to those production departments that promise with a high probability that upon gaining strength they will be able to compete without customs protection. Representatives of every branch of production promise to relinquish protection after a certain time. Pareto speaks of these promises sceptically: “On ne peut nier a priori, qu’il en puisse être ainsi, mais on n’en connaît pas d’exemple”[10].

Mutatis mutandis, the same can be said about customs protection demands in three cases: bad economic situation, foreign dumping, and foreign customs protection. If each of these phenomena is of a temporary and short-term nature, then the duties can, in fact, be applied without any major damage. However, if it looks like the bad economic situation will last for a long time, if it looks like the dumping or foreign customs protection is of chronic nature, the economic life of the country would benefit from a different solution. Instead of insisting on production whose competitive abilities are weakened for a long period of time, it is necessary to shift the work and capital to other areas of production, for which the bad economic situation in one department (and thus the price reduction in this branch) creates particularly favourable conditions. The same applies to dumping and foreign customs protection.

But someone might say that liberalism in the foreign trade policy blocks the way to the development of some branches of economic life. Yes it does block the way to the development of unhealthy and unsuitable industries. Other, healthy ones will grow even more rapidly when applying liberalism. The best example here can be the economic development within one country. The modern state is a free-trade area. There are no customs walls between its districts. However, aren’t we still seeing new factories being built next to the old ones, in Poland too? Aren’t there new industries developing?

In contract, let us imagine Poland with neighbourhood duties. What would be the consequences? If the Dąbrowa Basin was separated by customs duty from Upper Silesia, then more brown coal would be dug in Poland, but less black coal. If Kuyavia was to be separated by customs duties on beets from the sandy Podlachia, then more beets would be grown on worse soil (in Podlachia), but less on better one (in Kuyavia). Certain areas of beet land in Kuyavia would be used for the cultivation of potatoes, despite the fact that the soils of Kuyavia are less suitable for this. On the other hand, potato soils of sandy districts of Poland would produce less of this crop.

At the end of the day, with the same amount of labour and capital, generally speaking, we would have less coal, fewer beets and fewer potatoes in Poland. Poland as a whole would lose out on it. But – if we transfer the analogy to international relations – we are more interested in the question, would any Polish district gain on customs duties? Will Podlachia become richer when we cut it off from the delivery of industrial products from the west of Poland? Will Upper Silesia become richer if we force its inhabitants to expand their agricultural work by means of customs duties on cereals (and reduce industrial production eo ipso)? Can the net income of any of these districts be increased because of the fact that work and capital will be used where it gives weaker results? Of course not! Net income will be severely reduced. The net income of individual countries is also reduced because of international customs protection.

Therefore, the customs duty must be considered harmful not only by an economist who evaluates them in the international context, but also by a nationalist who understands the economic processes. Economic policy is and will remain a tool of raison d'état, that is nationalism, for a long time. Whoever preaches different views, does not believe it themselves or does not understand the reality. However, it does not mean that nationalism should use false means for its own purposes. Whoever wants to enrich the country cannot do so by using customs protection.

No theoretical argument against the principle of free trade can be defended. But after abandoning those, protectionists come up with a historical argument, which is not an argument at all. They say that liberalism in international trade is a thing of the past. The whole world has entered the era of protectionism, Germany and the United States use high tariffs. Protectionist tendencies are rising even in the stronghold of liberalism – England. So we must go with the flow as well. I have already questioned the importance of this argument by demonstrating that the customs duties in the country with which you trade are no reason to introduce domestic duties.

The “fashion” argument is simply ridiculous. No one can show that the current wave of protectionism is based on some deeper theoretical motifs. It was not the economists who changed their minds. It was only the dominance of groups and classes of particular countries whose economic interest was to introduce customs duties. Unable to fight for existence on the basis of economic fair play, they try to maintain accumulated wealth or gain new one with the help of political power and political means. The customs duty becomes a convenient way of exploiting other groups of people.

Anyway, is protectionism waking up in England? Yes. But at a customs level of 10% of the value of the goods. Let us get close to at least 15% in Poland, and I am ready to accept the discussion about protectionism, moreover, I am ready to accept customs in its many aspects in advance. Customs protection, however, in the form in which it occurs in Poland, is not subject to discussion at all. How does this side of economic policy looks like in Poland? To what extent is the net income of the society decreased due to tariffs? We have one of the highest customs protection in Europe, competing only with Spain and Hungary. Higher protection was used by Soviet Russia. Outside Europe, the level of customs in the United States and Brazil (who can afford this luxury) is roughly equal to our customs protection. All other countries of the civilized world have lower customs walls than Poland.

What is the level of our protection? Again, as in so many other cases, the calculations differ. Most often, the value of our customs duties is estimated at the intersection of 26% ad valorem. But the Austrian Chamber of Commerce calculates them at 43%, and Stefan Konopski at 37% of the value of goods. Even if we accept the lowest estimate, we still exceed the maximum rate for the average which is academically considered acceptable in exceptional cases, i.e. 25% of the value of goods. Contrary to all theoretical recommendations, we use export and transit duties, which have been a weapon abandoned by science for the last hundred years. We apply bans and quotas for export and import. Our foreign trade is choking in a complicated, dense and constantly changing network of laws.

What is the ideological basis of this policy (apart from the direct interest of individual economic groups)?

It is a belief, or rather a superstition, that tariffs increase production, and that customs duties will help us overcome the unemployment plague associated with the “overpopulation”[VII]. It is a widespread belief. I defended it years ago, talking to Gustav Cassel in Kraków. Cassel’s eyes widened, he spread his arms and said: “Please show me your data saying that with local customs duties you will feed more people than with free trade. Economic goods and wealth are generated by work and savings – there is no other way. You cannot produce bread with tariffs”. What is more, tariffs reduce the amount of goods, because they do not allow to benefit from work and savings in the most efficient and the most economical way.

This is where the policy of joining conflicting goals, or the policy of compromise, has the most visible effects. What is it? It is the compensation for damages caused by customs duties, applied to one of the production branches – the use of duties in other branches of production.

Poland has high customs protection of industrial production. Since the agricultural crisis, customs duties for agricultural products have been demanded. This demand itself is badly targeted (farmers should demand reduction of industrial tariffs). This is not only how economic circles think, but also the government ones. The classic example of this way of thinking can be found in the so-called “Motives for the position taken by the Ministry of Agriculture on the cereals and feed policy” from the beginning of the marketing year 1929/30. The Ministry of Agriculture goes through various types of cereals and makes the following demands: for wheat – since there are tariffs already — it only requires free export; for barley – tariffs are necessary, „because when applying customs protection to other cereals and duty-free import of barley, the profitability ratio of barley could easily break down, which would risk diminishing the cultivation of this cereal. So far, foreign competition has not been dangerous, however, the caution suggests to use customs protection for this type of cereal as well. It is an indispensable element of the whole customs system in relation to cereals”.

According to the Ministry of Agriculture, the case of oats is similar: “The introduction of import duties on oats can be also justified by the motive of equal treatment of cereal production. Poland has import duties on wheat and rye. Analogous customs protection should be applied to oats, because depriving oats of this protection may result in the unprofitability of its cultivation and excessive import of oats from abroad”.

The Ministry provides the same protection for maize. Although the cultivation of maize takes only 0.5% of arable land, but according to the Ministry “production of maize in Poland is not developed sufficiently (!), as it requires a long period of vegetation and significant amounts of heat”.[VIII]

I will not argue with the opinion whether the production of maize is “sufficiently” developed, since I have already stated that any production that is profitable without customs duties is sufficiently developed; nor will I discuss that it is necessary to protect the maize because its cultivation involves a lot of working hands. I will discuss this issue elsewhere. The Ministry of Agriculture found one more serious argument that additional import of maize, which may replace other cereals in consumption, threatens to compete with these cereals; it concludes: “As can be seen from the above, the import duty on maize is an indispensable link in the cereal customs protection chain.”

The same argument is used to justify customs duties on cereal products: “The duty for rye flour must be raised, because the tariff cannot be designed so that the flour would pay lower customs than rye.”

Thus, the Ministry of Agriculture has extended its “chain” of customs protection to all cereals production departments. It was seemingly right in its scope. However, it was the managers of our economy thinking that this chain, once launched, could be stopped, who were not right. Because anyone who thinks that a tariff increase does not bring harm to industry is wrong. Customs duty on cereals is, on the one hand, an increase in food prices, and thus an increase in workers' pay, and on the other hand – a reduction in demand for industrial products. Therefore, if the Ministry of Industry agrees to the increases in agricultural tariffs, then going further into protectionism, it should apply the reasoning of the Ministry of Agriculture to the departments under its protection. It should say: “while increasing customs protection for cereals and maintaining the former level of duties on industrial products, the profitability ratio of industrial products could easily break down, which would threaten to reduce industrial production.” This would be consistent and at the same time it would lead the ideology of protection to a complete absurd.

If a compromise-minded minister of agriculture accepts this reasoning, then eo ipso they cancel the benefits of the previous increase of duties on agricultural products and the entire operation should start da capo. The Ministry of Agriculture will once again introduce an increase in agricultural tariffs, and the Ministry of Industry will again demand an increase in industrial tariffs. The “chain of customs protection” turned into a vicious circle.

This imaginary bidding of two offices is not as far from real life as it might seem. Here is a fact: to support the chemical industry, customs duties on dyes used to dye yarn were introduced in Poland. The coloured yarn was free of duty. Colouring was also cheaper abroad. Weaving plants began to import dyed yarn instead of non-dyed yarn. Dying plants decided to demand tariffs on coloured yarn from the government. The delegation left for Warsaw – I do not know what the result was. If it was successful, what is the indication for weaving plants? Of course, they will demand an increase in customs duties on textiles, because the former customs level will not protect them from foreign competition. The vicious circle was set in motion. Is there no way out?

The way out is simple, bright, close, but in one direction only. You have to brake the whole circle and go backwards. It must be understood clearly that, by favouring one branch of production, the duty harms the other to a higher degree. Some entrepreneurs are aware of this. Paper manufacturers complain that they suffer from customs duties imposed on the import of the raw materials they need[IX].

A Warsaw manufacturer of alarm clocks will sell them for 50 zlotys each. In Germany, they make the same ones at 30 zlotys. Where does the difference come from? There are two reasons: first, because the duties on the components of the alarm clock raise the cost of production, and secondly: because the alarm clock, whose cost of production is so large, cannot be exported. It cannot withstand the foreign competition market with cheaper German production. The manufacturer is therefore condemned to the small-scale Polish market. Hence, they cannot move to mass production and reduce its general costs.

This is where it all begins. This point of view should be thought through and accepted by the leaders of our economic life. Our “economic class” should also understand that even looking directly at their own interest, they can increase the profitability of their workshops in a more confident way when they demand a tariff discount of their contractors than when they demand an increase in duties on their products. Farmers should not demand an increase in agricultural tariffs, but tariff cuts on industrial products. They will earn twice then: they will have cheaper machines, tools, fertilizers; apart from that, they will expand their market, because the consumers of their products will buy more eggs, butter, bacon – if they pay less for clothes, hats, shoes, tea or books.

In Poland, we apply customs protection to all branches of production. This is the so-called “Solidarzollschutz” invented by Bismarck[11] in 1878, who hoped to reconcile the “conflicting” interests of various groups of people this way. From the point of view of political tactics, he was probably right, since so far people have let themselves be beguiled with this apparition. For the economist, however, this concept is only a proof that political genius cannot replace the lack of economic “training”.

Unilateral customs protection, protecting only some of the production branches, leads to an economically erroneous goal, because it reduces social income. But at least it allows to achieve this goal (which can be important for other reasons). With the help of unilateral duties, it is possible to rebuild economic life in a specific direction, shift work and capital from one branch of production to another. For example, it is possible to extend industrial production, at the same time limiting agricultural production or vice versa. On the other hand, the introduction of tariffs on all products does not lead anywhere.[X]. Its only result is the reduction of the country's wealth.

The fact that this is indeed the case results from the simplest calculation. The introduction of tariffs is an increase in the price of the duty-paid goods. If we introduce duties on all goods, all prices must rise. With the same amount of money as previously, this can only happen due to the decrease in the amount of goods. The reason why the quantity of goods decreases after the introduction of customs duties is the fact that labour and capital work under the influence of duties in areas where their productivity is lower and shift there from branches where their productivity is higher, but whose profitability has been picked up by duties. Nobody profits from the “loyal customs protection”. On the contrary, everyone loses. If products a, b, c, d are more expensive, then, of course, what a consumer pays more for a, must be deducted from the purchase of b, c, or d. The reduction of production is therefore matched by the severe constriction of the internal market.

What are the dimensions of the customs burden in Poland? The sum of duties paid annually exceeds the figure of 400 million. This is the size of the burden that a Polish citizen pays, paying for all foreign goods an additional sum equal to the customs duty. But this is not the entire loss that the social economy incurs thanks to our customs policy. Because if we assume that the surplus of the price of foreign product is equal to the intersection of 25% of its price, then the same – i.e. 25% - is paid by the consumer on every product developed in the country for which the duty has been extended. True – domestic producers of duty-paid goods make earning on this. But they earn money at the expense of other fellow citizens. If the customs duties were abolished, they would lose those earnings drawn from the pockets of their customers not entirely, but only partly. Customers, on the other hand, would make a profit then. Would it be just a balance of the producers’ loss? Or just a shift from pocket to pocket? No! Because, apart from the profit coming from the cheaper goods purchased, these customers could expand their production in other branches. The production is indeed capable of competition with foreign countries. An actually profitable production whose profitability does not come from the customer’s pocket, but from the proper, efficient use of labour and capital. Imports of foreign goods would increase. Yes. But this import can only increase if export of Polish products increases, namely of those in the production of which Poland has an absolute or relative (in Ricardo’s terms[12]) advantage.

There will be two consequences: 1) the economy in Poland will become specialized, 2) production will increase. All this will be expressed in the net income increase.

Let us imagine a reverse policy. Tariffs increase up to 50% of the value of imported goods. The import will decrease. Of course, exports will decrease as well, because our foreign suppliers, not being able to export to Poland, will not be able to buy our goods. How will production change in Poland? New workshops will be created which could have not paid off at 25%. But at the same time, the production of the previous workshops must be reduced. Workshops will be created that will produce goods, using more hours of work and capital, than the sums of labour and capital that have had to be sacrificed so far to buy goods from abroad. On the other hand, the production will be reduced in those branches which could not compete with foreign countries without customs duties, but they withstood competition already at 25% tariffs. There will be a serious structural deterioration of production, which means that the same amount of labour and capital will give us less goods and less net income.

Anyone who is aware of these consequences: 1) the abolition of duties, 2) the doubling of duties, must pass a sentence condemning our customs policy.

Of course, the realization of liberal policy in this point encounters some serious practical obstacles. Everyone in Poland demands tariffs. Economic circles, in the misunderstood and short-term calculated own interest, official circles, for reasons of a misunderstood national interest.

Andrzej Wierzbicki[13] in his discussions on etatism with priest Janusz Radziwiłł[14] quoted a number of proofs of the efficiency of our industry and the courage of its organizers. The Polish industry, according to A. Wierzbicki, a) used inflation and developed thanks to it, b) used the inflation-related customs bonus and won new markets, c) used the customs war with Germany, creating new production branches.

I have never doubted the entrepreneurship and creative abilities of our industry leaders. Wierzbicki's arguments are convincing. If this is the case, then perhaps the circles representing our heavy industry would agree to the tariff discount? I do not think I would get a favourable and polite answer to this question.

I mentioned the necessity of a duty discount in a lecture titled “Industry and agriculture” which I gave in Łódź a year ago. That point was severely criticized in the reviews of my lecture. Mentioning that ugly word was considered an inopportune idea by itself.

I have not, however, appealed to the victims, to the patriotism of industrialists. I only appeal to the understanding that either tariffs do not increase prices and they are ineffective or do increase them, and in that case the consumer who pays more for clothes, hats, shoes and a plough and a fertilizer, must buy fewer of these products.

No industrialist can, therefore, be interested in customs protection of industry as a whole. Imposing a customs duty only for the products of its branch could bring benefits (in the short run), but it is clear that the demand for increasing or maintaining customs protection for branch A will result in the demand to maintain protection for branches B, C, D, N. And all this, let me say it again, will cancel all the benefits.

I will probably be proclaimed as an opponent of the industry, and a supporter of the agrarian Poland program. No. I am not a fan of such a program. This distinction does not exist for me at all. I am a supporter of every production, which has natural conditions for profitability. I think nobody will risk the absurd claim that Poland is the only one that has no conditions for reaching absolute or relative advantage in any branch of production.

I am not an opponent of the industrialization of Poland. I am, however, a definite opponent of artificial industrialization of Poland, because it leads to the impoverishment of society.

Coal and the chemical industry based on it, production of agricultural tools, production of lower-grade textiles, production of all goods in which human work plays a big role – all this has exceptionally favourable conditions in Poland and has great development prospects. For the time being, the burden of public services and customs protection of other frail branches hampers such development.

Poland is “one big health care fund”, as St. Wyrobisz[XI] rightly says. We need to brake it off. The industry needs to be remodelled. Branches grown in greenhouse conditions should be eliminated. Then, with a surplus, it will pay off the development of healthy branches. Industry will grow and agriculture will flourish. Life itself will indicate the directions of development and proportions in which particular branches will be able to develop.

Only such a natural production structure will increase the net income of the society, enable capitalization and eliminate unemployment. However, such a structure will develop only with the transition to free trade. I consider the transition to liberalism in this field as a fundamental and urgent postulate.

It does not mean that I would advise to change the attitude of our policy in a revolutionary way. I remember the fate of Turgot[15] - the crisis, which resulted from his liberal orders, exposed him to the political defeat and hatred of his contemporaries. The first principle of introducing liberalism in Poland must be careful and cautious gradation.




This is where I come to the answer to the question: How to introduce liberalism?

Fortunately, in Poland, we have a specific example of the transition to relative liberalism in the field that in its time was subject to the most extreme restrictions. I am thinking about the protection of tenants. It once seemed like a Gordian knot. A lot of people thought that letting the rents rise would lead to a catastrophe. Thousands of families would be on the street. Where would they find the money to pay the increased rents, which had practically fallen to zero? After all, it was said: officials, workers, etc. spend every penny on food, fuel and clothes.

In Austria, this case was of the same nature, but in a much more severe form, thanks to the protection for a longer period. The solution found in Poland turned out to be quite fortunate. The income of tenants, their repartition for other needs, automatically adapted to the gradual increase in rent. We can say for certain that thanks to this we are now in a better situation in terms of housing than we would be if we had not enter this path, even though we have not yet fully implemented the liberalism in this area.

The same method should be applied to other areas of economic life. Rationing, intervention, and etatism should be removed gradually, but without hesitation and without backing up in this action.

The inconsequence of our current policy has been directly extremely harmful, because it led to contradictions, to a bent development, to abnormalities. But it is this inconsequence that make it easier for us to get out of the dead street of etatism, as we can follow the path of equivalents.

Let us look again at the points that need to be fixed before we can implement the maximum program with t the implementation of its initial stages.

1. It is possible to maintain the current state's income and reduce the tax burden, provided there is simultaneous actual commercialization, sales or lease of most state-owned enterprises. This will allow us to expand the tax base.

2. It is possible to reduce the rate of burdens for the purpose of social benefits if we are able to use them more directly.

3. It is possible to lower industrial duties while lowering customs duties on agricultural produce.

4. The reduction of customs duties, which are acute for the poorer population, will also allow for a part of the tax burden to be transferred to wide masses, that has been almost untaxed so far.

5. A larger reduction in industrial tariffs may be offset by the transfer of part of the tax burden from industry to agriculture.

The reader may once again ask whether all these changes will be fruitless. I claim that they will not. Every such shift brings a benefit of the whole society. A series of these changes will undoubtedly raise our net income.

I have previously given a number of examples of a vicious circle and state interference growing like an avalanche. It always led to the reduction in social income and resulted from contradictory assumptions. Two assumptions were at the basis of this false policy: 1) recognizing the principle of profitability (cost-effectiveness), 2) artificial nurturing of profitability.

The obvious contradiction here is that the actually profitable production does not need artificial care. Artificial maintenance of the profitability of one workshop means reducing the profitability of the other. That is why we make one step forward and two steps backwards in our policy. Customs duties on the industry cause the introduction of duties on the crops. But their introduction moves us back to the starting point.

We cannot miss that we are returning to this starting point (i.e. the former ratio of profitability of industry and agriculture) on another, lower level. We return while tightening the tax base, reducing the sales market for production, closing the labour market, limiting foreign trade, etc.

Every medication causes some adverse reactions. These reactions can be neutralized by using an antidote.

Let us imagine, however, a doctor who, in order to stimulate heart action, prescribes caffeine to the patient, but to counteract insomnia (as a result of caffeine), he injects the patient with morphine. In order for the patient not to become a morphinist, he will use “corporal punishment” that is thought to be effective in such cases. The patient received a cure for all ailments. They should have a healthy heart, sleep well and not become a morphinist. It will probably happen if they have not given up the ghost yet. This is the image of a vicious circle in which we were driven by a false economic policy. We need to realize that there is a way out from this vicious circle, from this labyrinth, this network of nonsense. At the same time, we need to remember that this way out leads in one direction only. This direction is indicated by an economist's compass: it is the possible increase of the net income of the society.

Whoever forgets about this purpose and will seek to build another factory, more new houses, improve the lives of the working class, or help agriculture or industry, contrary to this principle and at the expense of net income, they must get tangled back into the network of etatism and intervention. And then they will not achieve any of their goals: Poland will have no residential houses, factories, prosperity of the working class, prosperity of agriculture, prosperity of industry, if there is no income and no capitalization.

They are guaranteed by economic liberalism, but only by liberalism. The demand for liberalism logically results from the recognition of the maximum net income principle as the goal of economic policy.

Therefore, anyone who wants to fight liberalism must first break this rule. Every criticism that adopts the net income principle while making economic reservations against the introduction of liberalism, is a pitiful misunderstanding. Those who for some reason or other claim that the economic policy of Poland cannot be changed, are responsible for its misery, for the low level of culture and for falling more and more behind not only in the labour race, but also in the iron race and in the blood race.

[I] This brochure was written down on the base of a lecture at the Society of Economists in Warsaw in April 1930. It does not include the problems of the moment arising from the exacerbating crisis.

[II] Understood as economy of forced relationships.

[III] Let me summarize my reasoning. According to P. Michalski, taxes in Poland collect 13.5% of social income, in France: 23.1%, in England: 21.3%, in Germany: 26.6%. A Pole of average wealth spends

                                                                               %         Englishman %

                                   on food............................ 54.2................ 30.3

                                   on flat/house................... 24.2................ 14.5

                                   on clothing........................ 9.2................ 14.3

                                   on fuel and electricity..... 6.2................... 3.1

                                                  other expenses............... 10.2................ 36.8

Therefore, an Englishman, by paying the tax from the item "other expenses", still has about 15% of this item left for cultural expenses, luxury and capitalization. For the Pole, on the other hand, taxes take away all this item and part of the necessary expenditure items. This way, they lower consumption below the cultural minimum of existence and prevent capitalization.

[IV] Kraków 1928, publishing house of “Ilustrowany Kurier Codzienny”.

[V] We need to remember that, according to prof. Lulek, the sum of treasury subsidies does not include treasury investment expenditures on non-separate enterprises, nor expenses to cover their shortages, nor expenditure on providing state-owned banks with necessary share capital, nor the expenditure on acquisition of shares in private enterprises. According to prof. Lulek, these expenditures exceed PLN 500 million: “Non-monopoly enterprises, taken as a whole, have not been a source of income for the treasury so far, but only given the opportunity to invest tax and loan money.” (op. cit.).

[VI] I skipped the construction of roads.

[VII] The theoretical article by Ivanka in the “Droga” magazine, defending this view, is discussed in “Ruch Prawniczy i Ekonomiczny”.

[VIII] By the way, this way one could defend the thesis that production of oranges is not “sufficiently” developed in Poland.

[IX] Compare Heydel, Refleksje o wystawie poznańskiej.

[X] Compare Zweig, O programie gospodarczym Polski, s. 43-45.

[XI] Liberalizm czy etatyzm?, Wydawnictwa Towarzystwa Ekonomicznego in Kraków, Volume XXXIII.

[1] Nicolas Baudeau (1730-1792), Catholic priest, theologian, historian and French economist, published the first French journal devoted to economic issues called "Ephémérides du citoyen", at first an opponent, then a supporter of physiocracy – the first doctrine proclaiming economic liberalism.

[2] French: on the soil of a given area, which will not sustain one hundred ten people out of the work of one hundred people – to earn a decent living for two hundred people with the work of ninety – this is the real problem of [land] cultivation.

[3] Gustav Cassel (1866-1945), a Swedish economist, professor at the Uppsala University, together with Knut Wicksell a co-founder of the so-called Swedish school in economics. In his works, he developed the neoclassical theory of economics, popularized, among others, the general equilibrium theory of Walras and Pareto. His main work was Theoretische Sozialoeconomie (1918), soon translated into English, thanks to which Cassel was one of the most popular economists in the 1820s. He was undoubtedly one of the "classic" economists, strongly criticized by Keynes.

[4] Adam Smith (1723-1790), a Scottish philosopher, professor at the University of Glasgow, author of important works: The Theory of Moral Sentiments, containing a system of ethics based on compassion and An Inquiry into the Nature and Causes of the Wealth of Nations, which started a new science – political economy. In the latter - his main – work, Smith showed the interdependence between the division of labour and the market. In his opinion, the freedom of market exchange favours specialization (division of labour), which in turn is a condition for the expansion of markets. The ultimate source of Smith's wealth is human work and saving, allowing for the accumulation of production resources (capital). The main conclusion from Smith's analyses was the postulate of economic freedom, which was to enable the operation of natural economic laws. The market mechanism was supposed to be guided only by selfish motives of individuals seeking to increase their own well-being. Smith, however, believed that the state should provide three types of services: security, good education, and roads and channels.

[5] Oliver Cromwell (1599-1658), English politician and military, supporter of Puritanism. In 1640 he became a member of the House of Commons. He was in favour of the anti-royal opposition, after the outbreak of the civil war he became the head of the driving force, which grew to the size of a division called the New Model Army – its soldiers were fanatical Puritans. In 1647, Cromwell led a coup, his soldiers carried out a purge in the parliament and he became the actual head of the government. He led to the conviction and prosecution of King Charles I, then conquered Scotland and Ireland with his army, where he confiscated the land of the Catholic and royalist holders. From 1653, he was formally the head of state as the Lord Protector.

[6] Adam Krzyżanowski (1873-1963), Polish economist, professor at the Jagiellonian University, author of textbooks, theoretical dissertations and numerous journalistic texts. In his youth, a conservative and supporter of top-down remodeling of the economy, in the Second Polish Republic, he declared himself a liberal and defended the principles of laissez-faire (economic liberalism), although he remained associated with conservative circles. He was a co-founder and then the president of the Economic Society in Krakow, he remained an environmental authority among the supporters of the free market. In the years 1928-1931, a Sejm deputy from the BBWR list, gave up his the mandate after protesting against the unlawful imprisonment of a group of deputies in the fortress in Brest, to which he was called on by professors of the Jagiellonian University in the open letter. The initiator of this letter was Adam Heydel.

[7] Edward Taylor (1884-1964), Polish economist, professor at Poznań University, advocate of neoclassical theory, quantitative theory of money and economic liberalism. He was a supporter of national democracy, which he supported with his journalism. Author of a valuable study Inflacja polska (1925), methodological dissertation Wstęp do ekonomiki (1936-1938) and Historia rozwoju ekonomiki (Vol. 1-2, 1957-1958).

[8] Tomasz Lulek (1878-1962), Polish lawyer, professor at the Jagiellonian University, taught the subject called the theory of treasury, containing elements of fiscal and budgetary law, public finances and economic policy.

[9] Vilfredo Pareto (1848-1923), Italian sociologist and economist, professor at the University of Lausanne, co-creator of the so-called "Lausanne School of Economics", the author of the famous circulation of elite theory. He wrote Cours d'économie politique (1896-1897) and Trattato di sociologia generale (1916), among others.

[10] French: I do not deny a priori that such behaviour is possible, but I do not know such case.

[11] Otto von Bismarck (1815-1898), German politician, member of the Prussian Landtag, then the Prussian ambassador: in Frankfurt am Main (by the German Union), in Petersburg and Paris, in the years 1862-1890 Minister President of Prussia, in 1867-1871 the Chancellor of the North German Confederation, in the years 1871-1890, the Chancellor of the German Empire; he was raised to the rank of Prince. His political successes in the international arena included the victories in wars with Austria (1866) and France (1870-1871), and the rise of the German Empire (the Second Reich), and finally the maintenance of Reich’s friendly relations with other superpowers (except France). In internal policy, Bismarck's unquestionable achievement was the establishment of universal health insurance from accidents, and pensions. Bismarck was also the initiator of the anti-Catholic (Kulturkampf) and anti-socialist campaigns, consistently pursuing anti-Polish and Germanizing policies.

[12] David Ricardo (1772-1823), British economist, co-founder of classical political economy. His most important work was the Principles of Political Economy and Taxation (1817). Ricardo was the creator of the theory of comparative advantage explaining the regularity of foreign trade, and theory of differential rent describing pure income from land. In his theory of wages, he remained an advocate of the wages fund theory, referring to Malthus' "law of population". In connection with the latter, he formulated a value theory based on work that inspired Karl Marx and the Ricardian socialists.

[13] Andrzej Wierzbicki (1877-1961), Polish engineer and economic activist, in the years 1903-1912, secretary of the Society of Manufacturers in Petersburg, then from 1912, secretary of the Society of Industrialists of the Kingdom of Poland, from 1919, the general director and later president of the Central Union of Polish Industry, Mining, Trade and Finance (only humorously called Lewiatan). Due to these functions, he represented the industrial circles of politicians and public opinion. In 1919-1927 and 1935-1937, he was a member of the Sejm, initially associated with national democracy, and after 1928 – with the government camp. In September 1939, he was active in the Council for the Defence of the Capital. After the Poland’s defeat, he did not return to public activity.

[14] Janusz Radziwiłł (1880-1967), Polish landowner and conservative politician, one of the leaders of the Stronnictwo Prawicy Narodowej party, later – Stronnictwo Zachowawcze. After the May Coup, he supported the rule of Józef Piłsudski; in the years 1928-1935, he was a member of the Sejm, elected from the BBWR list, in the years 1935-1939, he was a senator of the Republic of Poland. In the BBWR parliamentary club, he created the Economic Circle, gathering conservative MPs, mainly representing landowners and industrialists.

[15] Anne Robert Turgot (1774-1776), French economist and politician, supporter of physiocracy. His most important work was: Réflexions sur la formation et la distribution des Richesses. In the years 1774-1776, the general finance controller, pursued a policy of trade liberalization, abolished restrictions on grain trade and internal customs, announced the dissolution of guilds and taxation of privileged states. The introduction of the freedom of grain trade coincided with poor harvest, which resulted in local shortages of bread and riots. Turgot was accused of causing such state and then dismissed by King Louis XVI.

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