NEARLY A DECADE AGO, Edward Gierek and the workers of Poland forged an informal compact out of the trauma of a bloody rebellion. As long as wages, benefits and living standards rose, the workers would maintain labor peace and preserve the political stability of the nation. In return, the workers would receive a virtual veto power over the nation's economic policies.
At the time, many in the West hailed this informal modus vivendi as a significant step toward a stronger voice for the people of one east European communist country. But with the benefit of hindsight, it is also clear that arrangement also contained the seeds of the present crisis.
To placate the workers, the government borrowed huge sums of money in the West, subsidized the price of food, increased wages, imported consumer goods, tolerated featherbedding and generally lived beyond its means. It also left basically unchanged an economic system that, in many ways, remains as centralized, bureaucratic and orthodox as it was when Gierek first came to power.
Given the nation's extraordinary economic problems, a number of experts both in and out of the country feel that a sweeping economic reform must be the first order of business. That might entail some steps that would please the workers, such as giving factory hands more say over decisions affecting their own enterprises. But it would almost certainly also mean exposing the Polish economy to the "discipline" of world markets -- a change that could mean much higher prices of many essential goods and the closing of some industries.
Far more is at stake in the debate over economic policy than the health of the Polish economy. Since the ouster of Soviet leader Nikita Khrushchev in 1964, the Kremlin leadership has stubbornly resisted deviations in eastern Europe from its own orthodox economic model. While it has tolerated some structural innovations in Hungary and East Germany, neither of these countries depart drastically from the centralized Soviet system.
In Soviet thinking, political instability is an inevitable -- and unwelcome -- counterpart of economic reform. The fear is that as the government loosens its control over the economy, it risks losing its authority as well.
Yet some Polish commentators have been writing that these risks must be taken if Poland is to provide lasting prosperity for the people.
The sweeping changes that the workers want in the political system, ranging from the abolition of censorship to full independence for trade unions, flow from their perception that the regime failed to fulfill its part of the economic bargain.
The irony is that the power of the workers has, in itself, been a major obstacle to the deep structural reforms that many experts inside as well as outside Poland believe are necessary to modernize the economy.
This power, and the overall weakness of the Polish communist regime, has thwarted even modest initiatives, such as the recent attempt to charge consumers more realistic prices for meat.
Early in July, the man who is probably Poland's most politically influential journalist published an article calling for economic restructuring and harshly criticizing attempts by the bureaucracy to cover up the problems.
The writer, Mieczyslaw F. Rakowski, is editor of the weekly Polityka in which the article appeared. But perhaps more significantly, Rakowski is also a member of the party's central committee and a man with access to Gierek and his associates.
In his article, Rakowski criticized featherbedding, observing that "many hard working Poles deem it immoral that some offices and plants employ unnecessary crowds of workers who do almost nothing." Rakowski contended that the "legitimate aspirations of Poles have been shattered," and called for "structural changes."
"To adopt a program of structural changes, a program which would be clear and understandable to the working people, certainly requires a great deal of courage," he acknowledged. "But only such a program could create a psychological climate that might facilitate spurring the people to reject all those phenomena which make it so difficult to overcome the existing difficulties."
Thus, the rationale for reforms is that, risky as they may be, they offer the only hope for long-range stability.
They would, however, run the risk of antagonizing the Soviet Union, the other force in Polish politics possessing a veto power over economic decisions.
The Soviet economic model has now had 35 years to work in the nations of eastern Europe. Given the recurring upheavals over economic issues, and the deepening economic problems, it is not necessary to be a hardened anti-communist to ask whether the time has come for the Soviet Union itself to ask if its model works.
This is why senior U.S. officials speculated privately last week that the events in Poland may presage a new political era in the Soviet empire, in which Poland becomes the test case for the most far-reaching changes since Khrushchev's ill-fated flirtation with liberalization. If the current crisis is resolved peacefully, they suggest, the outcome may well be a "new social order" inside Poland -- and, in time, inside the whole bloc. "It has immense systemic implications for the bloc if the situation doesn't erupt," said one top official. Capitalist and communist societies differ in their priorities. When Chrysler employes are laid off in Detroit, communist propagandists see in it the ruthless capitalist drive that puts profits and efficiency ahead of the welfare of workers.
Yet even some communist countries, such as Yugoslavia, now accept the need to let some supply and demand forces course through their economies, even when the results are painful to wage earners.
Poles, on the other hand, have been protected from the forces in the international economy which routinely affect the lives of auto workers in Detroit and farmers in Brazil.
From the beginning, Gierek has shunned reform in favor of investments in modern technology -- much of which was purchased abroad. But Gierek now appears to have lost the race to make these investments productive before payment was due.
The nation was $19.4 billion in debt to western banks at the end of 1979, and $7.18 billion of its export earnings were going to pay interest and principal on foreign bank loans. The gross national product declined 2 percent in 1979. Meanwhile, the costs of imported oil and grain (mainly from the United States) have reached billions of dollars and meat shortages are running at 500,000 tons a year in part, perhaps, because artificially low prices encourage Poles to eat more.
In some respects, Poland's economic problems resemble those of some developing countries, such as Jamaica, more closely than other communist countries. Like Jamaica's leader Michael Manley, Poland's Gierek is caught up in a crisis of staggering debts, pressure to tighten belts, and strong domestic political challenges which he dare not put down with force.
Agriculture provides a striking example of Gierek's dilemma. Like the workers, hundreds of thousands of Polish farmers also hold a veto power over economic decisions, ever since efforts to collectivize the nation's agriculture failed in the 1950s.
Private farming ended up being permitted -- but only on plots that are too small and too undercapitalized to produce food efficiently. Many of the farmers are old, and horses are still the main source of power for many of them. The result is that Polish agriculture today resembles New England agriculture at the turn of the century. Meanwhile, the government, fearful of making fundamental changes that could anger the farmers, imports vast amounts of food to make up the deficit.
Gierek's special dilemma, distinguishing him from other eastern European leaders, is that the very weakness of his government has enabled Poles to gain freedoms which add to the pressures for fundamental reforms.
The Catholic Church, a powerful structure of authority positioned parallel to the Communist Party, is only one outlet for expression. In addition to the compromises that the party has made with the church, Gierek's government has already made numerous political concessions, ranging from tolerance of openly critical dissident newspapers to wide latitude for Poles to travel abroad and communicate with foreigners.
In Poland, neither the party nor its leaders have the authority of Janos Kadar in Hungary or the late president Tito in Yugoslavia, both of whom were able to carry out structural economic reforms. It is this bleak reality that makes the future so uncertain in the Soviet Union's most volatile political ally.