Economic Journalism

The Łódź to which Michał Kalecki returned in 1925 was not a buoyant or even a confident city, as it had been in the last years of the nineteenth century. The optimism that followed Polish independence had been quashed by the political instability and ineffectiveness that marked the new democracy. The domestic turmoil in Germany and Russia, which facilitated the establishment and expansion of the new Polish state, also robbed the industrialists in that state of their largest markets. With the economy in depression, the new fiscal and financial arrangements put in place by the Polish government succumbed easily to hyperinflation and growing unemployment. Kalecki joined the ranks of the many thousands of urban underemployed who got by with occasional casual and short-term jobs. He arrived to better prospects than were apparent. By the time of his return to Łódź, the economy was starting to stabilise, albeit at low levels of production and employment, as Lenin’s New Economic Policy reopened the Russian market to Polish exports. Without a functioning system of international credit through which payments for trade with the Soviet Union could take place, there was a build-up of gold deposits in the Polish commercial banks in eastern Poland. The prime minister and finance minister of the time, Wladyslaw Grabski, took advantage of this to introduce a new currency which was placed on the gold standard, establishing his lasting reputation as a monetary stabiliser.