“As an economic crisis manager, Leszek Balcerowicz has few peers,” the Wall Street Journal declared in a weekend interview with the Polish economist in December 2012. “When communism fell in Europe, he pioneered ‘shock therapy’ to slay hyperinflation and build a free market. In the late 1990s, he jammed a debt ceiling into his country’s constitution, handcuffing future free spenders. When he was central-bank governor from 2001 to 2007, his hard-money policies avoided a credit boom and likely bust.”
On May 21, in recognition of his unwavering leadership as the architect of Poland’s economic transformation, Leszek Balcerowicz was awarded the 2014 Milton Friedman Prize for Advancing Liberty. The 67-year-old economist accepted the honor in front of a sold-out crowd, joining more than 700 supporters and friends of the Institute at the historic Waldorf-Astoria in New York City.
In his keynote address that night, former world chess champion Garry Kasparov — who is currently chairman of the Human Rights Foundation and a global advocate of individual liberty — discussed the importance of American values, speaking from the vantage point of his experience growing up in the Soviet Union. “As someone who looked at America through the Iron Curtain, I have strong feelings about the relationship between the importance of freedom at home and caring about freedom globally,” he said. Fortunately, Kasparov was by no means alone in this respect.
Like many countries around the world, Poland has been a battleground for competing ideologies. In the 1980s, Polish reformers fought for individual and economic freedom, shaking communism to its core. By 1989, the country’s Soviet-backed regime agreed to free elections, ushering in Eastern Europe’s first noncommunist government since World War II. A few months later, the Berlin Wall fell. Poland was free, but on the verge of economic collapse.
It was during this time that Balcerowicz stood at the frontier of economic change in Poland. From 1989 to 1991, he served as deputy prime minister and finance minister under President Tadeusz Mazowiecki. As chief architect of what became known as the Balcerowicz Plan, he fundamentally transformed the Polish economy in the 1990s — implementing a series of reforms that included freeing prices, capping government wages, liberalizing trade, and making the Polish currency convertible.
This approach has been labeled radical, but in Balcerowicz’s assessment he was conducting a critical rescue operation. “A very risky option is always better than a hopeless one,” he recounted at the award dinner. The results seem to speak for themselves. Within three days, the market responded: prices stopped rising, goods appeared in markets, and people began buying and selling. One year into the transition, Poland recorded a budget surplus, and shortages and hyperinflation ended. Between 1989 and 2007 its economy doubled in size. Poland was the only country in the European Union to avoid recession in 2009 and has been the fastest-growing EU economy since.
It’s difficult to overstate what Balcerowicz helped achieve in a mere generation, and the lessons he taught are still applicable to this day. “First, be ready to move fast when a window of opportunity appears,” he said in his acceptance speech. “Second, work hard on public opinion to stop the spiral of state intervention.”
“In those respects, I believe, the role of Cato and other free-market think tanks is enormous,” Balcerowicz said, capping off a celebration that highlighted his achievements as well as the legacy of Nobel laureate Milton Friedman. The Friedman Prize, named in honor of the great 20th century champion of liberty, is presented biennially to an individual who has made a significant contribution to advancing human freedom. Established in 2002, the award is given out following a long process of deliberation by a distinguished panel of international judges. The honoree receives a $250,000 cash prize, which is made possible by generous earmarked donations.