Poland, Free Markets, and the Eurozone
Mateusz Machaj is a former Mises Fellow, the founder of Mises Institute Poland, and is assistant professor at the Institute of Economic Sciences at the University of Wroclaw in Wroclaw, Poland.
He spoke with us recently about his work at the Mises Institute and the state of free-market thinking in Poland. An excerpt of this interview appeared in July/August issue of The Austrian.
The Austrian: Why did you decide to apply for a Mises Institute fellowship?
Mateusz Machaj: The summer fellowship program is the best place on Earth to take the first steps in developing your career and learning how to do scientific research. The fellowship program and Mises University are of incredible value for young scholars, and it is impossible to overstate their importance. The online resources, books, and articles of the Mises Institute are definitely the building blocks of our knowledge, yet I found personal interaction with the Mises faculty to really be key in advancing my knowledge. Once we learn anything it is necessary to share our thoughts, insights, and discuss them with our teachers, mentors, and other students. The publications at the Institute are the bricks, but the summer programs are the necessary mortar.
TA: Why did you decide to obtain a PhD? What role, if any did the Mises Institute play in the direction of your academic studies?
MM: I decided to take the academic route, because I am passionate about economics as a discipline. The Mises Institute was the main factor in sparking that passion, first as a supplier of the online library, and then as a sponsor of my attendance at the summer programs. When I first came to Mises University I already knew almost all of the lectures (because I had watched them online in the previous years), but it was my personal interactions with students and scholars at the Institute that were a key stimulus for further studies. Then, I was fortunate enough to work as a summer fellow under the supportive guidance of Professor Salerno. Most of the work on my PhD thesis was done within the walls of the Mises Institute. The Institute is truly the “indispensable framework,” to borrow a phrase from Rothbard.
TA: What research topics are you working on right now?
MM: Currently I am working on monetary policy, which has become even more important to the global economy thanks to the rise of “special” monetary policy. Once upon a time, the debate was dominated by “conventional” monetary policy, which, according to the mainstream, should be performed in “normal” times, and applied according to certain guidelines such as the Taylor Rule. More and more, however, monetary policy consists of “special” monetary tools — which we might call “Bernanke Bazookas” — that are nearly turning the central banks into financial pawnshops ready to supply additional liquidity in exchange for almost anything.
The tools are special because with their usage, central banks are beginning to flirt with zero interest rate ideas and other monetary-crank proposals. In the light of recent rage against the money printing machines, both topics deserve a careful scrutiny. Especially because there is lots of demagoguery and amateurish criticism of monetary policy out there.
TA: What is the state of free-market thinking in Poland?
MM: Younger people are very interested in the pro-market ideas. We have two very unique programs at the Polish Mises Institute, for example. The first one is composed of the Austrian Economics Clubs which are at the main Polish universities that focus on economics, and they attract young and intelligent people.
We also prepare lesson plans and curricula for teaching economics at high schools. Currently, we are attempting to create a free-of-charge online elementary book for this subject, as well. Both of the programs are very successful, and younger people who are genuinely interested in economics are usually seduced by the Austrian approach. This can be seen in the demand for our Austrian books. We already publish a dozen of them, and we thank the Mises Institute for most of the content.
TA: Why did you decide to start Poland’s Mises Institute?
MM: Austrian economics is the best way to learn good economics. Moreover, I believe that even if one dislikes the ideologies of Mises, Rothbard, and Hayek, the works of those thinkers are the best place to start to learn economics.
This is especially true of Rothbard. Man, Economy, and State is the best introduction to pricing theory, bargaining theory, production theory, competition theory, monetary theory, etc. I think even the opponents of free markets would do well to start with reading Rothbard, because he is the Mozart of economics.
You may prefer to play Wagner, but Eine Kleine Nachtmusik is where you should start. Similarly the Austrians are the best way to study economics, even when one disagrees with some of their premises. They are so much better in explaining the basics of economics than the mainstream textbooks, and no one comes near the writing and lecturing skills of many Austrians.
TA: Some eastern European countries, such as Estonia and Slovakia, have a reputation for continuing to liberalize their economies long after the fall of communism. Does Poland have a similar reputation?
MM: In the case of Poland, the glass is one-third full and two-thirds empty. There are two ways of comparing transformation economies. You can compare Poland to Russia, Belarus, and Ukraine. In those comparisons, Poland’s transformation is a huge success. On the other hand, you can compare Poland to developed Western economies, and then we see huge deficiencies and unfinished reforms. And let us remember that Germany, the United Kingdom, and the United States are very far from any free market paradise.
In terms of broadly defined economic freedom, Poland is behind the Western countries. In comparison, what is particularly burdensome is higher regime uncertainty due to a less predictable (and relatively more oppressive) legal system.
TA: With all the news about the eurozone lately, I have to ask if Poland will be adopting the euro soon. Is there a lot of local support for this?
MM: There’s not really much local support for the euro right now. The recent economic crisis has effectively killed any quest for quick adoption of the euro in Poland. Even the supporters of the euro currency are saying that the eurozone first needs to fix itself, before Poland joins the zone. Let us all hope the euro fixes itself permanently and fully — to gold of course.