Lesson 2: A Short History of Poland

Introduction

For four decades during the latter half of the 20th Century Poland was the subject of a grand socio-economic experiment, that was the transformation of a mixed economy into a centrally planned, socialist state.  This lesson documents the wide chasm between the goals of socialist ideology and the realities of the socialism that was experienced by the Polish people.  It also shows the transition back from a socialist to a mixed economy.  

Materials

Lesson 2 slide deck: download available

Optional: Lesson 2 Background Information, “A Short History of Poland.”  1 copy per student (if assigned as student reading)

Key Terms

Inflation A general increase in the price level

Market
A place or situation where buyers and sellers come together to voluntarily exchange goods and services.

Market Economy
An economic system characterized by private property, individual decision making, and open, competitive markets.  

Nationalization
The process of taking private property and transferring ownership to the state.

Price System
A decentralized system in which the forces of supply and demand determine the prices of goods and services.

Private Enterprise
A system wherein businesses are managed by independent companies or private individuals rather than by the state.

Property Rights
Legal protection for the ownership of tangible or intangible resources.  Property rights give the holder the ability to do with that property what they choose, including holding on to it, selling it or transferring it to someone else.

Real Gross Domestic Product
The market value of all goods and services produced in a nation in a year, adjusted for inflation.

Socialism
A society in which the state controls resources and makes decisions about production and equitable distribution.

Shortage
A situation where the quantity demanded exceeds the quantity supplied

Objectives

Students will be able to 

• Identify examples of nationalization that occurred in Poland under Soviet control.
• Describe the relationship between the lack of prices and shortages.
• Explain how a transition back to markets alleviated the Polish economic crisis.

Time Required

45 minutes

Voluntary National Content Standards in Economics

CONTENT STANDARD 8: Role of Prices

Students will understand that prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives. 

• Benchmark 4: Scarce goods and services are allocated in a market economy through the influence of prices on production and consumption decisions.

CONTENT STANDARD 9: Competition and Market Structure

Students will understand that Competition among sellers usually lowers costs and prices, and encourages producers to produce what consumers are willing and able to buy. Competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them. 

• Benchmark 1: The pursuit of self-interest in competitive markets usually leads to choices and behavior that also promote the national level of well-being.

CONTENT STANDARD 10: Institutions

Students will understand that Institutions evolve and are created to help individuals and groups accomplish their goals. Banks, labor unions, markets, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy. 

• Benchmark 1: Property rights, contract enforcement, standards for weights and measures, and liability rules affect incentives for people to produce and exchange goods and services.

Procedures

• Prior to this lesson, use Activity 2 – Let’s Make it Fair to illustrate how difficult it is for centrally planned economies to overcome the knowledge problem.
• Prepare by reading the Background Information included at the end of this lesson.
• Use the Lesson 2 slide deck to teach the key ideas about the socialism experiment in Poland. 

Alternate Activity: Assign the Background Information as a student reading.