Academic journal article Capital & Class

Global Crisis, Turkey and the Regulation of Economic Crisis

Academic journal article Capital & Class

Global Crisis, Turkey and the Regulation of Economic Crisis

Article excerpt

Introduction

The reactions of the Turkish government to the 2008-9 global crisis were a continuation of policies designed to support financialisation. Foreign capital inflow, which had increased from $10 billion in 2003 to a total of $184 billion in 2007, led to significant increases in current-account deficits and rising international debts, from $130 billion in 2002 to $290 billion in 2008 (Boratav 2009: 13). The contraction of financial capital during 2008 and 2009 exacerbated the fragility of the Turkish economy, as $10 billion left the country, causing a 7.8 per cent decline in the national income. Turkey's imports and exports declined by 30.6 per cent and 22.1 per cent respectively in 2009, while international trade declined by 46 per cent (BSB 2011:123). Despite the fragility of the strategy of high international borrowing and current-account deficit, Turkey has retained this path since mid-2010, when hot capital returned and exacerbated the fragility of the economy. The financial crisis emanating from the USA hit Turkey at a time when its growth model was based on exports and external financing.

In order to understand why these policies were in place and why they persisted, we have to understand how policies designed to address the crises of the recent past were shaped by neoliberalism. The argument will unfold in three sections. First, the accumulation regimes pursued in the country since the establishment of the Republic in 1923 show how strongly the global economy and the systemic crises of capitalism have shaped Turkey's political economy. The second section concentrates on the impact of the crisis on Turkey, analysing the early policy responses to it. The third section focuses on the new alternative policies introduced by the AKP government in the aftermath of the 2008-9 crisis. Throughout, we shall see that despite the dominant form of the accumulation regime, the centralisation of economic and political control and the incorporation of the international economy have defined Turkey's response to the crises over time.

Development and modern accumulation regimes

Capitalism's crises and transformations have not been sequential, but simultaneous historical processes (Hoogyelt 2001: 65). Early crises in capitalism, such as those in 1825, 1836, 1847, 1857 and 1866, lasted only few months and brought about recession, reflecting falling output, business closures, unemployment and falling wages. However, in advanced industrial capitalism, crises (1893, 1896, the 1930s and the crises since 1973) were no longer short-lived events but related to the failure of long-term processes in accumulation, and could be known as 'secular system-wide downturns' (Brenner 1998). The crises of 1973-4, 1979-1981, 1990-91 and the current crises since 1997 are evidence of how deep and regular the accumulation crises have been. In the last twenty years, persistent over-capacity and over-production in world manufacturing has led to a 'long downturn' in capitalist accumulation (Brenner 1998).

The systemic crisis of capitalism was effectively 'postponed or displaced by imperialistic expansion, the growth of credit money, restructuring of physical production and social relationships between capital and labour, and capital mobility, as well as by state fiscal, monetary and other policies' (O'Connor 1989). A range of social institutions ameliorated the tendency of capitalism to fail. Economic crises in the post-Second World War period were overcome by reconstruction and Keynesian state intervention, which regulated a balanced relationship between mass production and consumption, and core economies experienced phenomenal increases in the production of both producer and consumer goods using flow-line technology. Fordism allowed some developing countries to use a developmentalist model based on import substitution. But by the mid-1960s, Fordist expansion became unsustainable as the profitability of leading industries declined, wage gains could not be reduced, and there was a global decline in demand. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.