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FOR Communication 7/2019: Capital Investment Fund - Another Instrument for the Nationalization of the Economy

  • On Thursday, February 21, the Sejm adopted an amendment to the Act on the Principles of State Property Management. It provides for the establishment of a Capital Investment Fund - a special purpose fund through which the Prime Minister will be able to finance the purchase or acquisition by the state of shares in companies. This will be another instrument in the nationalization arsenal of the Law and Justice party.
  • Private ownership is the cornerstone of a market economy and democratic system. In socialism, a system based on the monopoly of state ownership, the market has been replaced by orders and allocations (central planning). The result was a growing backwardness of the socialist countries towards the capitalist countries of the West. It is impossible to reconcile the political monopoly of state property with democracy. All socialist and quasi-socialist countries (like modern Belarus) are dictatorships.
  • Privatization of the economy after socialism, i.e. increasing the share of private companies in it, was a key reform, both economic and political. In Poland, contrary to many political objections, the private sector was able to cover the majority of the economy (about 79% of GDP).
  • However, according to the OECD, even before the Law and Justice party came to power, Poland was characterized by the largest range of state ownership of enterprises among all European Union countries. Nevertheless, since 2016, under the propaganda slogan of "repolonization", the Law and Justice government has been implementing a process of politicising the economy, unprecedented in the last thirty years, using various tools in its nationalization activities, such as the Polish Development Fund and the Reprivatisation Fund.
  • The recent process of increasing the state sector is dangerous for the economy, as it gives final control over companies to politicians who, unlike private investors, do not risk their resources. Therefore, it is necessary to carry out a privatization in Poland and not to nationalize private companies.
  • An additional danger lies in the fact that the Capital Investment Fund is created in a double election year. With nearly PLN 2 billion of funds at its disposal, the government can use them for electoral campaign purposes, directing funds to rescue or create companies in those districts in which the ruling party could most easily increase its ownership of votes.


Marcin Zieliński, economist

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