-5- THE ROLE OF THE STATE IN THE NEOLIBERAL RESTRUCTURING IN TURKEY

(A. H. Yalaz)

Chapter 5

The neo-liberal restructuring of the economy of Turkey

5.1. A comprehensive economic package: The 24 January 1980 Decisions
As we have seen, the ISI model entered a structural crisis in the late 1970s. Because of Turkey’s inability to pay its foreign debt and obtain new loans in the international financial market to finance its growth strategy exerted pressure on the Turkish state. The executive institutions of the imperialist capital, such as the IMF, the WB, together with the World Trade Organisation (the former GATT) are economic and financial institutions through which international capitalist regulation takes place.

Since 1977 the Turkish governments and the IMF had been working together to formulate and implement a new economic strategy that would, inter alia, solve the balance of payment problems, limit inflation and transform ISI into an export-oriented economic strategy. Opening the economy to international competition, encouraging foreign capital, liberalisation of trade, foreign exchange regimes, financial markets, and scaling down the state sector were the most striking demands of the IMF and the WB from the Turkish state. The demands of these organisations coincided with a profound change in the view of the big ‘domestic’ capital, represented particularly by TÜSIAD which advocated closer incorporation of Turkey into the European Community (EC) regarding the economic strategy and the state’s role in the economy. TÜSIAD advocated closer incorporation of the economy of Turkey into the EC which required restructuring the economy of Turkey in order to adapt to the developments in the EC.

It was clear that the international organisations and the most advanced section of the capitalist class in Turkey saw eye to eye with each other. The neo-liberal fraction of the state bureaucracy and neo-liberal bourgeois politicians, the IMF, the WB and the big Turkish bourgeoisie together drew up a comprehensive economic programme that opened a new page in the history of Turkey. There emerged a neo-liberal collaborationist class alliance around a neo-liberal economic strategy that changed not only the economic, but also political, ideological and cultural landscape of Turkey in the 1980s and 1990s.

On 24 January 1980, the economic programme of this neo-liberal collaborationist class alliance was announced. This programme was presented as if it was self-initiated by the Demirel government without any intervention from outside. A former manager of MESS and Sabancı Holding (one of the largest holding companies in Turkey) and employee of WB, Turgut Özal, was supposed to be architect of this programme. Turgut Özal, first as the under-secretary of prime ministry, then as deputy prime minister in the government of the military fascist dictatorship and finally as prime minister and president played the leading part on the side of the Turkish state.

The introduction of this so-called ‘structural adjustment programme’ was the second most important intervention of the state in the economic life after the statism in the 1930s in the history of the Turkish Republic that has far-reaching socio-political and cultural consequences for the whole society. The state as the ‘visible hand’ (Başkaya 1997: 13) of capital played the most important role in legitimising and implementing this programme that aimed at reducing the economic role of the state. Despite claims to the contrary, this programme represented the further centralisation of the decision-making process. This programme was not a novel, but a rather standard one which combined the stabilisation policy of the IMF and the structural adjustment programme of the WB that involved, inter alia, trade and financial liberalisation, reduction and eventual liquidation of public investment in heavy industry and in production of basic goods and privatisation of some SEEs, domestic demand restraint, export promotion and the suppression of the wage rate (Boratav 1989: 122-23). According to Müftüler, ‘The short-term goal of the programme was to stabilize inflation and cope with the balance of payments problem, the long-term goal was to liberalize and restructure the Turkish economy so as to enable a convergence with the EC standards.’ (1995: 91). Given the prominent place of the EC in Turkey’s foreign trade, (27) or Turkey’s trade dependency on the EC, it is beyond any doubt that the neo-liberal programme has also been instrumental in the process of further incorporation of Turkey’s economy into the economy of EC. In order to become a full member of the EC (the present European Union) Turkish state needed an outward-looking economic order.

What was new concerning the programme, however, was the accompanying discourse, an ideological campaign launched to justify and legitimise the programme. The people of Turkey have been presented with a so-called new vision which construes the state more or less as it disciples have perceived the United States. ‘This has brought not only an ideology in favor of privatizing the state sector of the economy, but also a half-baked idea that Turkey could more or less do without the state even in spheres such as public education and public health. It advocates a reduction of the role of the state in the economy but, ironically, its proponents have, if anything, extended the state’s interference to more and more spheres of economic activity.’ (Adaman and Sertel 1997: 170-71). One of the most used arguments in favour of the above mentioned programme was that there was no alternative, and the prevailing trend towards capitalist globalisation and market-oriented economic strategies in the world economy also strengthened the arguments for restructuring the economy.

This programme was more than a stabilisation or structural adjustment programme serving to maintain the already existing economic relations. On the contrary, it was a programme of restructuring the economy aimed at inaugurating a new mode of capital accumulation based on exports. Contrary to ISI, the export-oriented economic strategy required contraction of the internal market and increase in the share of the industrial goods in the world market. This could only happen through making the Turkish industry internationally competitive. This required, in its turn, reduction in the production costs of the industrial goods. There were two ways to realise this: either introduction of capital-intensive production techniques (an increase in the productivity of labour) or reduction in the costs of the social reproduction of the labour-power (a reduction in wages). However, there already existed a substantial under-utilisation of the existing production capacity, and, above all, the existing technology was not suitable to make the Turkish industry internationally competitive because of its level of development that was only sufficient to produce for the domestic market behind the protectionist walls. In the short-term it was not possible to increase the organic composition of capital that would make the industry competitive and sustain the export-based mode of capital accumulation. Therefore, the wage rises had to be restrained, frozen and eventually reduced. The economic and social gains of the working class and other oppressed social forces had to be substantially reversed. It was about the redistribution of the national income among social classes, and therefore, not only the standard of living of the working class, but also the great majority of the people had to be lowered.

With the introduction of the programme that was the manifestation of the offensive of the internal and external big capital, the economic and political class struggles intensified. A strong opposition was centred around the trade union movement of the working class. There was also an opposition in the parliament, particularly coming from the bourgeois left. ‘During the spring of 1980 it became clear (...) that there was wide spread resistance to what was called the ‘Chilean solution’ (after the policies General Pinochet had introduced in Chile after his coup against President Allende). The continued activity of the unions, and especially DISK, made it impossible to implement Özal’s economic package. Members of DISK occupied a number of factories between January and April and there were strikes everywhere, often accompanied by clashes with the police or the army.’ (Zürcher 1994: 281-82).

There was a new economic model, but there existed no institutional framework for the implementation of this model. It soon became clear that without crushing the working class movement and the popular opposition, particularly the organised sections of it, it would be impossible to create this framework. In other words, it was not possible to restructure the economic base, without, first, or at the same time, restructuring the political superstructure. So, while the ‘24 January 1980 Programme’ was the starting point of restructuring the economy, the coup d’état of 12 September 1980 represented the beginning of the political restructuring.

5.2. The military dictatorship and political restructuring
Under the circumstances what was needed was a subjective restructuring of the economy, particularly the industrial relations, so far as the interests of the imperialist and internal big capital are concerned. This, in its turn, made the political restructuring imperative which was also deemed necessary according to the concept of ‘indirect aggression’ of the US imperialism that could lose a loyal NATO ally in the region. As Hale points out ‘Turkey’s international relations have also played a part in determining the military’s political role.’ (1994: 322-23).

The military fascist dictatorship was the agency through which restructuring of the political system was carried out. It cannot be overemphasised that understanding the political and economic role of the Turkish military bureaucracy is indispensable for understanding the history of Turkey. Therefore, before dealing with political restructuring, let us briefly analyse the Turkish military bureaucracy.

The Turkish military bureaucracy
Throughout the history of the Turkish nation-state the military bureaucracy (the officer corps) has played a determining role concerning the most important issues and problems facing the capitalist system as a whole that threaten to destabilise and eventually would lead to disintegration of it. Particularly after the coup d’état of 1960, this segment of the bureaucratic bourgeoisie enjoys a near-absolute autonomy with regard to the civil authority even during periods of elected civilian governments, and often exercises independent political power generally behind the scenes, sometimes on the stage. In theory, it is subordinated to the civil authority (to prime minister), but, in practice, the civil authority cannot interfere, for instance, with the internal structure of the military bureaucracy which is the case in the advanced capitalist countries. Contrary to the rhetoric that the military stands above politics, it is a highly politicised institution and the real locus of power within the Turkish state lies with it. The term Praetorianism, in Hale’s usage as reference to ‘situations in which the military, specifically, exercises independent political power, either by using force or threatening to do so.’ (1994: 305) can be employed to characterise the Turkish military establishment. Militarism is a component part of the political culture in Turkey in general, and, of course, particularly in the Turkish military bureaucracy which undergoes a lifetime of military socialisation. Military cadets and officers are taught to be different from, and superior to, their civilian counterparts and to anybody else for that matter.

The Turkish military bureaucracy has interests in the state of the economy not only as a salaried professional body, but also as an integral part of the capitalist class as a whole. It has an economic as well as a political role, and not only as the core of the state apparatus protecting the general conditions for capitalist reproduction, but also as an entrepreneur, as a body of shareholders in the joint stock companies. It is probably the most corporate form of organisation and has corporate self-interests to protect and to promote. ‘In both 1960 and 1980, military regimes seized the chance to secure increased salaries and fringe benefits for the officer corps, which enjoys a high standard of living, compared with that of most citizens.’ (Hale 1994: 329).

In the 1960s and 1970s the officer corps, particularly generals, became an integral part of the capitalist bourgeoisie as they invested in many branches of the economy through the Army Mutual Assistance Association (OYAK), the pension fund of the officer corps. The further expansion of the Turkish military-industrial complex led to the integration of the interests of the high military bureaucracy and of the industrial elite, at the national as well as the international level (Smit 1982: 163). OYAK’s ‘financial resources come from a 10% levy on the salaries of all commissioned and noncommissioned officers, and the purpose of the fund is to pay these officers pensions upon their retirement. By the middle 1970s some 80,000 officers were paying into this fund. Its assets were estimated at US$300 million by 1973, and a decade later Bianchi (1984, 70) described it as ‘the country’s largest and most diversified industrial conglomerate.’ (Richards and Waterbury 1996: 340). Richards and Waterbury sketch a picture of the changing economic position and role of the Turkish military bureaucracy since the establishment of OYAK:

‘ OYAK has bridged a gap between the military establishment and the private economic sector. Since Ottoman times and even under Atatürk, the military has seen itself as an independent entity, a guardian of the nation’s interests and, to some extent, a watchdog against private greed. It has always depended upon state budgetary appropriations for its needs. Now OYAK and other special funds are dependent on direct investments in the national economy and in joint ventures with foreign and domestic corporations. The economic interests of the officers’ corps have become firmly wedded to the performance of the Turkish economy and to that of its private sector.’ (1996: 341).

In other words, the officer corps has been incorporated into the capitalist economic system. The high military bureaucracy became more involved with the defence of the system than with any particular party. ‘The primary concern was with stability and there was an inclination to intervene against any party or political leader who appeared to be a threat to a stable order.’ (Ahmad 1993: 131). Together with the senior civilian bureaucrats, the military state bureaucrats form the bureaucratic bourgeoisie or bureaucratic class in Turkey. ‘The military provide the regime with nationalist camouflage and, as in more overtly praetorian regimes, provide the ‘order’ necessary to allow economic development to take place.’ (Ehteshami and Murphy 1996: 755). Felt threatened by the economic, social and political developments the military fraction of the capitalist class had seized the political power and established a military dictatorship.

Political restructuring
Following over a year of preparation, on 12 September 1980, the military bureaucracy seized the whole political power, formed the National Security Council, declared martial law and established a fascist military dictatorship. The constitution and all political rights were suspended. The bicameral parliament was dissolved and political parties were first suspended and later abolished, and many politicians were arrested. All mayors and municipal councils were dismissed. All other political and semi-political associations were banned. Three of the four union confederations (DISK, Hak-İş and MİSK) were closed down, strikes and lock-outs were prohibited, many trade-union bureaucrats and activists were arrested. Tens of thousands of political activists from all walks of life, especially the revolutionary-democratic and communist activists, were killed, arrested, tortured, imprisoned, and so were thousands of people who, in one way or another, opposed the existing politico-economic order. The neo-liberal restructuring of economic, social and political structures promoted the further militarisation of the political life in Turkey which have been instrumental in the authoritarian reconstruction of state-society relationship. The military bureaucracy and those social forces that collaborated with it had regarded the opposition to neo-liberal transformation as a military problem that required military means to resolve.

All political power was concentrated in the hands of the military bureaucracy, more specifically in those of the National Security Council (NSC) consisted of five generals (the ‘gang of five’). The NSC functioned as legislative as well as the highest executive organ of the military dictatorship. The head of the junta and the chief of staff, Kenan Evren, was declared as the head of the state. Through a Law on Constitutional Order, that is, the constitution of the military dictatorship, the new regime was formalised. The NSC appointed a cabinet headed by a retired admiral (Bülent Ulusu) as prime minister and Turgut Özal as deputy prime minister with special responsibility for economic affairs. This cabinet of bureaucrats and retired officers advised the NSC and executed its decisions. Regional and local commanders were given wide-ranging powers and were put in charge of many aspects of the public life.

The NSC and the in October 1981 convened Consultative Assembly together made up a 160-member Constituent Assembly (CA). 120 of the members of the assembly were appointed by the military governors, and 40 by the NSC itself. A 15-member constitutional committee elected by CA produced a first draft for a new constitution on 17 July 1982 (Zürcher 1994: 295).

The draft constitution was subjected to a voting-compulsory referendum on 7 November 1982 and was adopted. The draft included a temporary article stipulating that by approval of it Kenan Evren would automatically become president, and so did he. The 1982 constitution represented a sort of revenge upon the 1961 constitution and social and political awakening in Turkey and was in many respects a reversal of the constitution of 1961. The following features characterised the new constitution: concentration of political power in the hands of the executive and increase in the powers of the president and the NSC, limitation of the political freedoms, limitation of the freedom of trade unions, including banning of political strikes, solidarity strikes, general strikes, etc.

In March 1983, a new Political Parties Law was promulgated, according to which, politicians who had been active before the coup d’état were banned from politics for ten years, new parties could only be formed if their founders were approved by the NSC, and students, teachers and civil servants were prohibited from membership of political parties. Political parties were not allowed to develop links with trade unions, to found women and youth branches or to open branches in villages. (28) In short, the military dictatorship aimed at depoliticising society, reducing the influence of organised opposition, and increasing the state’s ability to monitor and control the social and political life.

In order to stop the proliferation of small parties and avoid the resulting political instability of the parliamentary system, the military dictatorship tried to create a two-party system. Of the fifteen parties founded, twelve were considered unacceptable by the NSC and three parties were allowed to participate in the elections of 6 November 1983: The Party of Nationalist Democracy (party of the military bureaucracy), (29) the Populist Party and the Motherland Party (ANAP) led by Özal. Against widely shared anticipation not the favoured party of the military bureaucracy, but the party of Özal, who had to resign from his post as deputy prime minister in the summer of 1982 following the crash in the financial market, had won the elections. Thanks to the new electoral system that favoured large parties, the ANAP got an absolute majority in the new parliament with 45% of the votes. Özal became prime minister on 6 December 1983. The NSC, according to Provisional Article 2 in the new constitution, constituted now the ‘Presidential Council’ that would remain in existence for six years after the reconvening of parliament.

6 November 1983 elections has been seen by many as the last act of the military regime regarding the completion of the transition from military regime to parliamentary democratic political system. It represented, in fact, the transition from the military dictatorship to semi-civilian, semi-military authoritarian dictatorship in which the NSC (not the junta, but the highest permanent organ of the state since 1961) is the highest decision making body of the state which meets at the end of every month and is not responsible to parliament. By Article 118 of the 1982 Constitution, the majority of the civil authority within the NSC was ended and the powers of the NSC were increased and with it the authority of the military bureaucracy within the civilian regime. The autonomy of the military bureaucracy in relation to the civil authority increased. Besides, the martial law still continued and the martial law commanders were not anymore responsible to the prime minister but to the chief of staff. (30) The decisions of the NSC were to be given priority consideration by the government in matters which the Council itself deems necessary for the preservation of the existence and independence of the state. In fact, the decisions of the NSC must be executed by the government.

Interest representation under the military dictatorship
As we have already seen, the military dictatorship banned the labour union confederations, with the exception of Türk-Is, and other legally founded oppositional or potentially oppositional political and semi-political associations. The military dictatorship crushed civil society and made legally organised representation of interest of the progressive and revolutionary social forces impossible. By suppressing the organised interest representation on behalf of non-propertied and anti-system social forces the military regime aimed at depoliticising society. Political parties were also suspended and later banned. The unions and associations of the capitalist class, however, operated freely, and of course, ‘responsibly’. The ideas of those organisations that represented the private big capital were put into practice. The interests of the capitalist class, particularly the interests of the big capitalist holding companies were represented, not only by their business organisations, but also by the state itself. Also the most conservative, reactionary and fascist organisations and institutions operated freely and were instrumental in the reactionary ideological and cultural campaign against the left.

5.3. Political developments and interest representation after 1983
Soon after the elections a degree of political liberalisation took place. Some political parties which had been banned to participate in November elections were allowed to participate in the municipal elections in March 1984. The results of municipal elections showed that the opposition parties in the parliament (Assembly) lost their legitimacy. ‘By the beginning of 1986 the party structure created by the military rulers had virtually disintegrated and the most prominent of the banned leaders had emerged behind proxy parties.’ (Ahmad 1993: 194). In September 1987 a referendum were held regarding the restoration of the political rights of the old party leaders, and by less than 1 per cent margin ‘yes’ vote won. The so-called old guard returned to open parliamentary politics and one of the most ‘radical’ measures of the military dictatorship had been got rid of. In November 1987 , thanks to manipulation of the election law to suit the interests of ANAP, that party retained its absolute majority, even though, it won only the 36.29 per cent of the votes. When Evren’s term expired in November 1989, Özal was elected as president in a parliamentary session boycotted by the opposition.

After 1987 there was partial liberal democratisation, but the undemocratic laws, such as the trade union laws, the law on elections and political parties, the penal code, the higher education law, the press law, etc. inherited from the military dictatorship remained unaltered. In the 1989-91 period the government introduced a number of reforms, ‘a package of constitutional amendments which dealt partly with the political system (...) but partly with human rights. At the government’s request the assembly decided to allow the use of the Kurdish language in private and it approved the deletion of Articles 141, 142 and 163 (which banned politics on the basis of class or religion) from the penal code.’ (Zürcher 1994: 305). However, the new so-called ‘anti-terrorism law’ defined the concept of ‘terrorism’ so broadly that it undid a number of liberalisation measures. By these amendments the ban on the DISK was also revoked.

In the elections of November 1991 Demirel’s True Path Party (TPP) emerged as the biggest party. The TPP and the Social Democratic Party formed a coalition government. Thus began a period of coalition governments that led to governmental instability which characterised the parliamentary politics in Turkey in the 1990s. However, the real political power still rests with the National Security Council.

What was very remarkable was that the religiously-oriented Welfare Party (WP), thanks to an election alliance with the fascist Nationalist Labour Party, was able to overcome the 10 per cent provision in the election law and got 16.9 per cent of the vote and 62 seats. The rise of political Islam has had a significant effect on political life in Turkey. The political-Islamist (WP), this time on its own, came out (for the first time in the history of Turkey) as the first party in an early election held in December 1995. In the summer of 1996 the WP and TPP formed a coalition government and thus for the first time political Islam delivered a prime minister. However, the WP-TPP coalition government could not stay in office for long due to pressure from the high military bureaucracy which was supported by pro-secular popular opposition. On 18 June 1997 the government resigned under mounting pressure.

In the late 1980s and 1990s legal progressive civil society has grown in strength and demanded democratisation. In the 1990s Turkey has become ‘country of organisations’. A striking development in the 1990s has been the militancy and the degree of unionisation of the public servants who were stripped of their short-lived right to unionise in 1971. They have organised unions and various forms of mass actions defying the legal restrictions. They have even founded the Confederation of Public Employees’ Unions (KESK). The unions demand the rights to bargain collectively and strike, improvements of salaries and working conditions and democratisation of the political system. Since they are public employees every industrial action they undertake becomes political in nature.

Against all the odds the working class, the civil servants and some other sections of society are relatively well organised. This does not, however, mean that their interests are well represented. The trade union bureaucracy has to wage struggle against the state on the one hand for its survival, and collaborate with the state on the other. The interest representation or interest management system in the labour sector in Turkey in the 1990s is a somewhat combination of neo-corporatism and state corporatism. Although the state attempted to create a state-dominated corporatism through authoritarian reconstruction of state-society relationship during the military dictatorship, it is neither a party-incorporated corporatism, nor a state-dominated corporatism. This is reflected in forming an Economic and Social Council in which the trade unions of labour as well as capital trade unions and the state are represented.

5.4. Domestic and global cultural environment and neo-liberal restructuring
A detailed analysis of the interaction between the domestic and global cultural environment and restructuring the economy of Turkey is beyond the scope of this thesis. I shall, however, sketch a general picture of the global and domestic cultural environment in which the neo-liberal restructuring has been taken place.

Domestic and global cultural environment in the 1980s and 1990s have facilitated the restructuring of the economy as well as the political structures in Turkey. However, cultural environment is not static, and it is produced and reproduced in the neo-liberal restructuring process. A given cultural environment can facilitate or hinder economic changes, and economic changes lead to ideological and cultural changes. There is a dialectical relationship between cultural practices and economic practices, as is the case between economic ideas and culture. Any study that does not involve the cultural factors with domestic as well as global dimensions would be deficient in investigating and analysing a fundamental restructuring of the existing economic system. Thus, cultural practices and changes influence and are influenced by the restructuring process, that is, they interact with each other.

What is important to emphasise in this context is that there is a close relationship between socio-economic relations and capital accumulation, and successful implementation of an economic programme is also dependent on favourable cultural and social environment. The question ‘To what extent do the economic and cultural interactions bind societies to each other or lead to disintegration of them?’ could be an interesting research question for future studies. I hope that there will emerge some clues and points of discussion concerning this issue during the analysis of internal and external cultural environment in which Turkey found itself in the 1980s and 1990s.

The announcement and implementation of neo-liberal economic restructuring programme in Turkey has been accompanied by a global as well as a domestic neo-liberal ideological offensive involving attacks against the organised labour, state intervention in the economy as a producer as well as a regulator, the so-called welfare state (the ‘social state’ in Turkey). According to neo-liberal paradigm of the 1980s and 1990s, there is a ‘natural’ relationship between the so-called free market economy and individual liberties; state’s intervention in the economic and social life limits the individual liberties and runs counter to the spirit of entrepreneurship; the state economic enterprises are inefficient, while the private sector can rationally allocate and efficiently use resources; the labour trade unions have destroyed the flexibility in the labour market etc. In the previous period the state was criticised of not intervening sufficient enough in the economy, but now it is criticised of intervening and growing too much and causing the problems that the capitalist economic system faces. This ideological offensive has been an integral part of subjective restructuring in Turkey as well as in the world as a whole. It has contributed to the preparation of the necessary ground for and deepening of the restructuring process. Ideas do not only reflect the material developments, but they have their own internal dynamic as well. ‘Ideas on their own may be insufficient to transform society but they are a vital ingredient in the process of transformation.’ (Ahmad 1993: 24).

Although the international economic and political developments are the basic external factors in explaining the economic transformation in Turkey, the ideological and cultural factors should also be taken into account, and taken seriously. The dominant ideological and cultural trends in the capitalist/neo-liberal globalisation process, including knowledge, the norms and values, behavioural and consumption patterns, mode, etc. reflect the trends produced and reproduced in the highly developed capitalist countries. The transnational corporations of those countries own huge amounts of the means of cultural production and institutions and dominate the international distribution system for the products of the intellectual and entertainment sector. In reference to the theory of ‘dependent development’ developed by Henrique Cardoso, Gill and Law note: ‘The structural condition of dependency can also be seen in cultural terms, whereby Western ideas, languages and tastes are implanted in less-developed countries. One effect of this is to raise the demand for core products and cultural artifacts, such as for French films in West Africa, Disney comics in Latin America, and Coca-Cola world-wide. A related effect is that social aspirations of many groups in the periphery come to be based on the goal of emulating the core countries’ lifestyle and consumption patterns.’ (Gill and Law 1998: 61).

The diffusion or export of the cultural trends, particularly via the international means of communication, have had significant effects in Turkey. They have effected, for instance, the existing consumption patterns in the country creating a significant market for imported material and immaterial consumer goods. The exporting of consumption patterns is one of the vehicles in the hands of big international corporations to penetrate the less-developed countries and make them dependent on technologies that make the production of those demanded consumer goods possible. The exported cultural trends have also been instrumental in furthering dependent ‘cultural incorporation’ of Turkey into the international cultural division of labour. In this international cultural division of labour, Turkey is an importer of ideological and cultural commodities rather than exporter. Export of the so-called American way of life, as well as the ‘Western way’ as a whole for that matter, via ideas, films, music, mode, and other consumption patterns have changed the appearance as well as cultural taste of the big cities, particularly in West and South West regions of Turkey. For instance, the American (the USA) movies dominate the domestic market for cinema films to a such an extent that producers of domestically produced films find it very hard to find film theatres prepared to show their products. Can we not talk about ‘cultural colonialism’ in this case? Particularly militarist ‘action’ films like Rambo etc. contributes to strengthen the already strong militarism in Turkey.

The dominant cultural practices of the imperialist states are not only imported, they are also domestically produced and reproduced. Besides creating a market for imported luxury goods, ideological and cultural commodities etc., these practices have also led to creation of a different sort of import-substitution and an ever expanding domestic market for import-substituting industries of such commodities.

The ‘innocent’ modernisation theory has also been a cultural instrument in the hands of the dominant economic and political forces of the highly industrialised capitalist countries. According to this theory, the West is an example to be followed by the less-developed countries if they wish to become developed countries like the ones in the West. The Western type capitalist democracy is still a very important ideological export commodity of the so-called Western world. It is a fact that the Western countries set the rules for the global economy and they can and do so without reference to most of the rest of the world. In this sense, capitalist globalisation has always primarily been a process of Westernisation in a Western-dominated global system.

Although the ‘national’ culture is still the dominant culture in almost every society, there is, however, an emerging global culture that accompanies the further globalisation of capitalist production. The growth of a common culture, according to Shaw, is not just that means of communication have been transformed and that global communications systems have developed, dominated by Western corporations with global reach. Nor is it merely that the standard cultural commodities, such as images, ideas, information, of Hollywood and CNN are globally diffused. What is more important is the ways that through these processes, intermeshing with economic and political globalization, people are coming to see their lives in terms of common expectations, values and goals. ‘These cultural norms include ideas of standard of living, lifestyle, entitlements to welfare, citizenship rights, democracy, ethnic and linguistic rights, nationhood, gender equality, environmental quality, etc. Many of them have originated in the West but they are increasingly, despite huge differences in their meanings in different social contexts, parts of the ways of life and of political discourse across the world. In this sense, we can talk of the emergence of a global culture, and specifically of global political culture.’ (Shaw 1994: 21-22). Cultural synchronisation is the term used by some to describe the global cultural developments. The term cultural synchronisation concerns ‘the tendency for a set of values to emerge across a range of countries, such that popular outlooks and tastes become more homogenised.’ (Gill and Law 1988: 155).

Global neo-liberal ideological offensive campaign and all these global cultural developments have interacted with the ‘national’ cultural factors and facilitated the neo-liberal transformation process in Turkey. Domestic neo-liberal offensive had to be legitimised and international cultural as well as economic and political developments have been selectively used for this purpose. Arguments like ‘Look that is happening all over the world. If we do not keep in step with the developments in the world we shall fall further behind. Whereas, we are obliged to skip an age.’ have become a commonplace about the economic developments in the 1980s and 1990s. Trying to imitate the ‘European civilisation’, to reach to the level of ‘contemporary civilisation’ has always been a part of the dominant bourgeois culture which reflected the extent of the ideological and cultural alienation or ‘auto-colonisation’ (Baskaya 199: 15).

Culture is a dynamic dimension of the social life, and there occur positive as well as negative cultural changes. In the neo-liberal restructuring process in Turkey profound cultural changes have taken place. As far as social relations, such as solidarity, friendship, etc. and ideas and attitudes concerning the economic, social and political questions and problems facing the society are concerned these changes have overwhelmingly been negative. ‘Get rich as quickly as possible’ (‘turn the corner’), ‘everyone is for herself or himself ’, etc. have been phrases that, either explicitly or implicitly, widely used by the advocates of neoliberalism and have taken root in society.

Cultural erosion or degradation has been an integral part of the neo-liberal transformation. For instance, money became the most important criterion of and a powerful means for ‘buying’ social status. The commodification of expectations has expanded and deepened. The decline of leftist culture and the rise of bourgeois individualism have accompanied the neo-liberal economic restructuring. Conservative and reactionary culture have been used as weapons of ideological mass mobilisation, particularly of urban and rural petty-bourgeoisie, against the organised labour and the progressive and revolutionary political opposition. They have also been used to persuade the working class (the military regime even accused the ‘trade union lords’ of not genuinely defending workers’ rights) and other working people of the necessity of change in the economy. The state has used the institutions of cultural domination, such as the media, educational institutions, the family etc. to persuade the people that class struggle was very harmful for the fabric of society. All problems could be solved within the framework of a ‘national’ interest represented by the traditions, norms and values of a common culture. The common cultural ground served to legitimise the economic strategy of the neo-liberal era. Developments immediately after the coup d’état of 1980, and in the whole period thereafter, have shown once again that culture is a major battleground, and a powerful weapon of persuasion as well as offensive in the class struggle.

Anti-communism has, thanks to, inter alia, the foreign policy of the USA, always been a strong part of bourgeois ‘common’ culture in Turkey. The military coup d’état was supposedly carried out against the growing communist danger. In the political history of the Turkish Republic, every opposition, even the bourgeois democratic opposition, every dissident voice has been regarded as being communist which must be silenced. Direct political repression, imprisonment, juridical and extra-juridical execution of political opponents have always been accompanied by ideological and cultural offensive.

The fascist military dictatorship in the early 1980s and the authoritarian regimes that followed it have manipulated and promoted the already powerful religious (Islamic) culture in Turkey. They have done so to such a great extent that promotion of Islam by the state was instrumental in helping political Islam to become not only a political force but also a powerful economic force that dares to challenge the dominant form of capitalist order, or at least the dominant fraction of capital and the ‘neo-liberal’ state. The military takeover was also supposed to be against manipulation of religion for political ends and ‘Islamic fundamentalism’ or theocratic danger. The military dictatorship aimed, however, at depoliticising society through, inter alia, manipulating religion as a weapon against the left. This policy led to further politicisation of religion and strengthened the position of political Islam. (31)

In the neo-liberal restructuring process, particularly in the 1980s, religion was a powerful cultural weapon in the hands of the state against the left and every organised progressive opposition for that matter, as had always been the case, particularly since the beginning of the 1950s. Ironically, the champions of Kemalist secularism, the military bureaucratic rulers, had used Islam to prepare the necessary ideological, cultural, social and political conditions for the neo-liberal economic changes. The organised left and working class had to be suppressed and the military takeover and economic ‘reforms’ had to be legitimised. Under the circumstances what other ideological and cultural weapon than Islam could be more instrumental as far as political legitimacy is concerned in an overwhelmingly Muslim and highly religious society? Islam served as one of the instruments in depoliticising the highly politicised and polarised society.

The military fascist dictatorship had manipulated the religious characteristics of the common cultural ground in the Anatolian society. The head of the junta, Kenan Evren, had held speeches in state-organised meetings with Koran in his hand. ‘The military regime encouraged Islam to combat the left, but the conservative, modernizing urban elites have employed the state to maintain a firm control over religious forces and to channel them in regime-supporting directions.’ (Bromley 1993: 392). As Hale also points out, the military regime sponsored Islam and adopted an ambiguous position on the secularist issue. ‘On the one hand, the military continued to regard itself as the guardian of Kemalism; on the other, it had approved the insertion of a clause in the constitution providing that ‘education and instruction in religion and ethics’ should be a compulsory part of the curriculum in all primary and secondary schools.’ (1994: 298). Promoting Islam in Turkey served the foreign policy of the USA too that advocated to build a so-called ‘green belt ’ in order to contain the so-called communist danger.

The so-called ‘Turkish-Islamic Synthesis’ was another ideological instrument used as a weapon of suppression as well as persuasion. This ‘synthesis’, which combined Turkish reactionary nationalism with Islam, was developed by the ‘Hearths of the Enlightened’. ‘Its aim was to break the monopoly of left-wing intellectuals on the social, political and cultural debate in Turkey’ (Zürcher 1994: 303). The basic tenet of the ‘Synthesis’ was that Islam held a special attraction for the Turks because of a number of supposedly striking similarities between their pre-Islamic Turkish culture and Islamic civilisation. According to the ‘Synthesis’, pre-Islamic Turkish culture and Islamic civilisation shared a deep sense of justice, monotheism and a belief in the immortal soul, and a strong emphasis on family life and morality. The mission of the Turks, according to it, was a special one, to be the ‘soldiers of Islam’. ‘After 1983, it became a guiding principle in Özal’s MP, but there it was linked to a strong belief in technological innovation to catch up with the West (or, in Özal’s phrase, ‘to skip an age’)’ (Zürcher 1994: 303).

Although the neo-liberal changes in the economic, social and political structures have drawn many criticisms and caused relatively strong popular opposition following political liberalisation after 1983 and partial liberal democratisation after 1987, the successive governments have carried on with the state policies. We have seen above that, apart from direct political and military repression, several factors have been instrumental in facilitating this.

It must be emphasised that the mainly authoritarian ‘common’ culture in Turkey has also facilitated the neo-liberal transformation and the state’s role in it. National identity is still the most powerful principle regarding people’s identity-formation in Turkey. The Turkish state has been, though with decreasing conviction I think, regarded as embodiment of this principle by the vast majority of people. The Turkish state, particularly the military establishment, has been mythicised as well as mystified as ‘Father State’ which has been strengthened by strong tradition of etatism. This has, in its turn, led too often to unquestioning obedience to the state. The military is feared as well as respected, and doing military service, for instance, is considered as a national duty and a very important lifelong personal experience. The dominant social values, traditions, principles and expectations in Turkey are, among other political institutions, embedded in the Turkish state too. Short-cut solutions to economic, social and political problems have always been very popular. In the eyes of the vast majority, the ‘Father State’ is the modern and institutionalised Alexander the Great who can undo the Gordion knot by cutting it.

Mythicisation as well as mystification of the Turkish armed forces are also embedded in cultural traditions and together with the tendency towards finding short-cut solutions to problems have strengthened militarism which is an important ingredient in the dominant political culture in Turkey. In the absence of a well developed civil society this has always been a big problem in every aspect of the social life and the state has done its utmost to exploit the situation.

The domestic and global neo-liberal forces have been trying to change the relationship between the state and economy in Turkey. A long and strong tradition in state ownership, the enmeshing of the state and economy is a part of ‘common’ culture in Turkey. Opposition to privatisation should also be considered from this point of view. Changing the relationship between economy and the state, thus the economic role of the state in Turkey means a profound cultural transformation. Given the strength and persistency of traditions in general, this would be a very difficult transformation to be realised.

In short, global as well as domestic cultural practices and developments have influenced and generally facilitated the neo-liberal restructuring process. Domestic cultural practices are influenced, produced and reproduced in the same process. In other words, the restructuring process of economic and political structures has also been one of restructuring the cultural structures.

Read more... Chapter 5 (part 2)

5.5. Neo-liberal ‘reforms’ in the 1980s and 1990s

With the establishment of the military dictatorship as a political form of the capitalist state, the subjective restructuring of the economy picked up momentum. There was no significant organised opposition to implementation of the economic restructuring programme of the neo-liberal collaborationist class alliance. As far as institution building after 1960 is concerned, the military bureaucracy has proved to be the main agent of restructuring. The semi-civilian regimes has never succeeded to suppress and crush the socio-political opposition, particularly the working class movement. In every threatening crisis situation in Turkey, capital and the state have always recoursed to extreme politico-military measures, such as the military takeover of the whole political power. The military and military controlled regimes have implemented measures which prepared the necessary ideological, cultural and political environment for producing and reproducing the conditions for expanded capitalist reproduction. This, inter alia, shows how weak the politico-economic system is in Turkey.

Although there exists a dialectical relationship between subjective restructuring and objective restructuring, restructuring of the economy of Turkey has predominantly been a subjective restructuring. There exists, however, no ‘pure’ objective restructuring and subjective restructuring. There is always conscious intervention in or regulation of the economy. Capitalism does not operate in a purely objective way, on the contrary, it is regulated, above all, by the state. Objective restructuring happens within the regulated economic relations, within a particular institutional framework of capitalism which is itself a product of conscious, subjective intervention. What is important from a Marxist political economy approach is the interaction between economic base and the political superstructure. The question is: What is the dominant agency in restructuring the economy in a given historical context? Is it the state or the market? The main agencies through which objective restructuring takes place are the class struggle between labour and capital and competition between different fractions of capital. The state is the main agency of subjective restructuring, and the military takeover of 1980 in Turkey represented, inter alia, a conscious and collective and the most violent state intervention in the process of capital accumulation, and thus allocation of resources. ‘Normal’ or objective’ operations of capitalism have never been sufficient for restructuring the economic structures in Turkey. Moreover, the neo-colonial dependent character of ‘national’ capitalism have made it extra difficult to restructure itself through its ‘normal’ functioning. Therefore, the military dictatorship created a political and institutional framework conducive for the neo-liberal restructuring of the economy.

Within the parliamentary regime it proved to be very difficult to create such a framework. Capitalist political parties and governments in Turkey needed, inter alia, the so-called populist income-distribution policies that would expand the domestic market and, thus, and their electoral support among the people. For more than thirty years the parliamentary regime in Turkey, with two interruptions (1960 and 1971), contributed to expansion of the domestic market and, thus, served the interests of the internal as well as external capital.

The last Demirel government approved a neo-liberal economic restructuring programme that would lead to a profound restructuring of Turkey’s economy. Soon, it became, however, clear that without a wide-range and many-sided offensive against the economic, social and political gains of the vast majority of the people, particularly the working class movement, it would not be possible to implement it. The social opposition as well as parliamentary opposition had to be silenced and the parliamentary political system had to be done away with.

The military dictatorship had no such electoral considerations or anxieties that political parties had. Therefore, the military bureaucracy took over the political task of implementing the programme by establishing its monopoly on political power. Although military bureaucracy had the formal monopoly on political power, there emerged a new dominant domestic class alliance which involved the large capitalists under the leadership of the dominant fraction of big industrial/financial capital represented mainly by TÜSIAD and TISK, the high echelons of the civilian and military bureaucracy, and a segment of technocrats who supposed to be the embodiment of economic knowledge and expertise. A group of neo-liberal technocrats under the leadership of Turgut Özal was entrusted with the management of the economy.

Neo-liberal offensive against and counter-attack by labour
In order to pursue the neo-liberal restructuring of the economy, the organised opposition, particularly the resistance of the organised sections of the working class had to be crushed and disciplined according to the needs of the new stage of neo-colonial capitalist development. The solution which the new dominant domestic class alliance found to the crisis was, above all, restructuring and disciplining the labour-force market through extra-economic, that is, military and juridical methods. The disciplining of the organised working class was not left to the market forces as ‘pure’ economic liberalism, at least in theory, would require. The state intervened through direct political as well as juridical means in the relationship between labour and capital in favour of the latter that led to the further marginalisation of the organised labour in policy-making process. The High Arbitration Council replaced the practice of collective bargaining and agreement between labour and capital concerning the wages and working conditions. The military regime enacted restrictive laws regarding the conditions of labour and the trade unions in 1983, which still remains in effect without significant changes.

Not only the organised sections of the working class, but also the unorganised sections, civil servants, pensioners, small and middle-sized peasants suffered significant deterioration in their economic positions because of the rising prices caused by the abolition or reduction of state subsidies. ‘Price rises, a freeze on wages and high interest rates together caused a drop in real purchasing power of between 40 and 60 per cent for most wage-earners in the years 1979-89.’ (Zürcher 1994: 308). If we consider the changes in the share of real wages concerning the income distribution we see that real wages decreased by 26,6% between 1978/79 and 1984. However, in the same period the labour productivity rose nearly by 18% and the industrial production by 23%. The capitalist class won its offensive against labour and won the positions it lost in the second half of the 1970s (Boratav 1989: 134). The main winners were the big holdings of which nearly all were mainly family-owned, with their own banks, insurance companies, trading companies and production companies. These holding companies, without halting their activities in the period of ISI, became increasingly export-oriented (Zürcher 1994: 308).

At the end of the 1980s and the early 1990s the working class hit back through collective actions, such as official and unofficial economic and political strikes (political strike is always unofficial, for it is forbidden), demonstrations and other forms of actions. In January 1991 1,5 million workers and employees held a general strike. Higher wages, better working conditions, democratisation were among the demands of the working class movement. ‘The unions managed to make good their members’ loss of purchasing power since 1980, but, as before, only for those in the large modern industrial sector and in the state economic enterprises. The small family business which still made up the core of the Turkish economy were still largely outside the reach of the unions.’ (Zürcher 1994: 311-12).

In 1994, Turkey experienced, according to Boratav, the deepest crisis after 1945 as a result of outward-oriented financial liberalisation, increasing fiscal deficit, hot monetary policy (short-term capital inflow), and oligopolistic industrial behaviour that increased the profit margins (1995: 201-209). The decisions of major US credit rating agencies to lower Turkey’s debt rating, which caused a run on the Turkish Lira, played an important role in the emergence of financial crisis. The crisis compelled the government to adopt an IMF-backed austerity and structural adjustment package (‘4 April 1994 Decisions’) that included anti-labour measures, such as wage cuts, reduction of public spending and major overhaul of the social security system as well as privatisation. As a result, the economic position of workers as well as the vast majority of other working people worsened. In 1994, the people of Turkey became, on average, 11% poorer in comparison to 1993.

Mass demonstrations, meetings, spreading strikes, etc. was the response of the working class, particularly involving the state sector workers that led to collapse of the coalition government of the TPP and the Social Democratic Populist Party (or the Republican Peoples’ Party as renamed in February 1995) and the abandonment of the austerity package.

Besides higher wages and better working conditions, the working class also demanded democratisation of the political system and system of interest representation. The militancy of the rank and file compelled the trade union bureaucracy to launch a struggle against the restrictive labour laws. Because of the state’s further penetration into labour-capital relations to discipline labour, almost every action by the working class assumed a political character.

Liberalisation of the import regime
One of the first measures put into practice was gradual liberalisation of the import regime, especially after 1983. The ISI strategy involved restrictions on imports or protectionism, but now it was time to shift from ISI to the EOI strategy which required different policy regarding the foreign trade regime. Since Turkish capitalist class and the state were, and still are, eager for full membership of the EC, import liberalisation was very important. Prior to 1980, the tariffs were very high and there were strict quantitative restrictions on imports. The new economic programme made a major break with the past in this regard. Sharp reductions in stamp duty, deposit guarantees on imports, a simplification of import procedures, and a programme to abolish the list of goods subject to global quotas which represented 12 per cent of total imports in 1980 were the measures taken. Import liberalisation, which continued in the rest of the 1980s and 1990s ‘sought to open up the Turkish economy to the European forces, and to prepare the Turkish economy for full integration into the Community as an official member, because 80 per cent of all the liberalisation measures applied to imports from the EC.’ (Müftüler 1995: 92-93).

Liberalisation of the exchange-rate regime
Since the exchange rates are the most strategic instrument concerning external economic relations, the fixed and state-controlled exchange-rate regime of the ISI period had to be replaced by one compatible with EOI. In January 1980 the government devalued the Turkish Lira by 48,62% in relation to US$. Since 1 July 1981 the exchange rates were adjusted daily in order, in the long-term, to promote export. Turkey’s export became dependent on exchange rate movements. ‘The exchange rate policy adopted in Turkey since the early 1980s characterizes a passive crawling peg system [a variant of a flexible exchange rate regime]. One of the key concerns has been to maintain the competitiveness of domestic goods in international markets. In order to offset increases in domestic prices and obtain a target real exchange rate, as well as to accommodate the public expectations, the nominal exchange rate is passively adjusted.’ (Erol 1996: 47-48). However, as Kepenek and Yentürk argue, export does not only depend on the prices of goods. Continuous devaluation of the Turkish Lira increases the prices of the imported investment and intermediary goods necessary to produce for export. This means an increase in the production costs of external-dependent industries which, in its turn, has negative effects on the export of industrial goods (1996: 189).

The commitment of the Özal government to the real exchange rate was firm until 1988. ‘Since 1989, the policymakers’ concern has gradually shifted from external competitiveness to the internal stability’, because ‘the policy of higher real exchange rate feeds back on domestic inflation, and activates a spiral of devaluation-inflation.’ (Erol 1996: 158-59).

Financial liberalisation
In July 1980 all restrictions and controls on the interest rates of deposit accounts and credits were removed without first creating necessary institutions and mechanisms. The oligopolistic structure of the banking system led to ‘gentleman’s agreements’ which set upper limits to the
interest rates of deposits account. The removing of restrictions and controls on interest rates led to a severe competition between the small banks and the bankers (in fact, brokers), and in 1982 brokerage firms collapsed together with some small banks. Turgut Özal and some other ministers had to resign. At the beginning of 1983, the Central Bank, thus the government, regained the authority to determine the interest rates. This was the first big fiasco of the liberal economic policies under the military regime (Boratav 1995: 163-64). Liberalisation and deregulation of the financial sector were often interrupted by financial and bank crises. As a result, direct state control had to be re-established (1983), yet only later to be removed (1988).

New institutions and financial instruments were introduced in order to encourage deepening and widening of the financial system. In 1981, the Capital Market Board was created. ‘The year 1986 marked the beginning of a transition period in the implementation of monetary policy which shifted the emphasis from direct interference in private and public sector portfolios to the determination of money and credit expansion through the control of total reserves of banking system.’ (Müftüler 1995: 95). In 1986, the Istanbul Stock Exchange was opened and an inter-bank money market began operating with the intermediation of Central Bank. In February 1987, the Central Bank started open market operations with the purpose of implementing monetary policy. In August 1988, a system of market determined exchange rates was created. In 1989, the full convertibility of Turkish Lira became effective which opened a period of international financial liberalisation that enabled the firms to borrow directly in foreign exchange (Kepenek and Yentürk 1996: 475). ‘All in all, the banking reform and financial liberalization strategies were attempts to adjust the Turkish financial market to those of the EC.’ (Müftüler 1995: 95).

Financial liberalisation and the establishment of new institutions and the introduction of new financial instruments facilitated the accumulation and circulation of capital and financial speculation. In 1998, 87,7% of profits of the many largest corporations came not from industrial activities, as the advocates of the neo-liberal economic policies would have suggested, but from financial transactions. This witnesses once more that capital seeks to move into activities that offer highest profits in a shortest time possible. As is the case in the world economy in general, the financial capital has enhanced its position in the economy of Turkey. Since nearly all the major holding companies own banks and insurance companies, the increasing power of the financial capital do not harm them as profit and rent-seeking enterprises in the short-run. It undermines, however, their surplus-value creating industrial activities in the long-run and they become increasingly parasitic.

Export promotion
Exchange rate management and export promotion were the two most important instruments of the new export-oriented trade policy since 1980. Indirect subsidies, such as preferential access to credit for exporters, tax exemptions, foreign exchange retention schemes for imports of intermediate goods, were the main fiscal instruments for promoting export until 1983. After 1983, as we have already seen, devaluation of the exchange rate became the main instrument for improving the competitiveness of exports (Lavy and Rapoport 1992: 320). Direct export subsidies in the form of tax rebates were also instrumental in promoting export until the end of 1988. ‘From 1981 to 1985 exporters received tax rebates and subsidized credit while nonexporting firms faced sharper increases in the real cost of borrowing.’ (Richards and Waterbury 1996: 245).

However the EC did not view the export promoting measures favourably. A resolution adopted by the European Parliament on 17 March 1989, accused the Turkish government of unfair competition because of its export promotion incentives. It also threatened Turkish government by not fulfilling its own obligations for the customs union to be realised in 1996. A few months later the government eliminated export subsidies and tax rebates on exports. ‘In 1989 all monetary incentives to exports had been lifted; however, the government adopted new measures to encourage exports, such as performance and pre-shipment credits, fund refunds, corporate income tax exclusion, and premium payments from Support and price Stability Funds which were very similar to the export incentives the Community members used for their own exporters.’ (Müftüler 1995: 93).

One of the institutional features of export promotion was the establishment of large ‘foreign trade capital companies’ which benefited most from the substantial export incentives. Many of these companies had strong links with large holding companies, and, in fact, they were subsidiaries of large business conglomerates. In order to avoid competition between the Turkish exporters that would lead to price reductions and thus to decrease in foreign exchange earnings and to enhance competitiveness in the international markets, the state supported these companies (Kepenek and Yentürk 1996: 285-86). At the end of the 1980s, however, the so-called ‘foreign trade capital companies’ system within the ‘free competitive market model’ (!) of the neo-liberal era collapsed.

The so-called free zones (export processing zones) were also instrumental in the transition from ISI to EOI and in attracting the foreign capital as well as encouraging the local capital. As it became clear in the 1970s that the relative importance of primary commodities in exports decreased and it would no longer be possible to increase export of those commodities to finance ISI and repay the debts, some countries implemented an export- substitution industrialisation (ESI). The ESI strategy involves export of industrial commodities in stead of traditional commodities to ease the crisis of ISI. The organisational representatives of the local big capital in Turkey, such as TÜSIAD and Istanbul Chamber of Industry, supported the idea of establishing free industrial and trade zones and ports. The export-substitution industrialisation takes place in these zones in which economic activities are exempted from restrictions, such as different kind of taxes, bureaucratic procedures. Capital movements in and out of the zones are free and, above all, national labour legislation does not apply. The relatively cheap labour-power and unorganised labour force were attractive to foreign capital as well as local big capital.

As a consequence of policies and measures such as these export increased and was also diversified. ‘Turkish manufactured exports responded very strongly to this new policy environment. Manufactures jumped from one-third of exports in 1980 to three-quarters in 1985, with continued strong performance thereafter (manufactures were 66% of total exports in 1989 and 72% in 1992). There was considerable diversification of manufacturing, and the sector’s efficiency rose. Turkish consumer durables became competitive in the discriminating markets of the European Union and the Gulf.’ (Richards and Waterbury 1996: 245). It must, however, be noted that increase in export in the first half of the 1980s was also due to the Iran-Iraq war. In the period 1982-85 Turkish exports to the Middle East and North Africa exceeded those to the EC. Iran was the single biggest market. ‘Thereafter, the older pattern re-established itself and the EC once again became the main Turkish export market.’ (Zürcher 1994: 310).

Privatisation as a subject for class struggle
There is an ongoing global debate on the privatisation of the state-owned economic enterprises in the context of neo-liberal restructuring of the world economy. Privatisation is an agency in the class struggle between different national and international social forces over the allocation and re-allocation of the ‘scarce’ resources. It is also an agency through which a substantial amount of state capital form of social capital is transformed into the other forms of social capital, namely into private financial/money, industrial and commercial capital. In other words, privatisation is private capitalism’s re-appropriation or plundering of state form of social capital.

In Turkey too, privatisation has been an integral component of the ongoing neo-liberal restructuring of the economic structures and the functions of the state. Privatisation involves economic, ideological, political and even cultural forms of class struggle between those national and international forces which advocate privatisation and those which oppose it. It is a form of state intervention in the economy in general, and in the relations of forces between capital and labour in particular. It is an integral part of the neo-liberal offensive against the working class in favour of capital. According to the advocates of neo-liberalism, the state must not intervene in the economy (32) or the state’s intervention should be minimised to those activities that supplement and facilitate the private sector activities. The state must particularly withdraw from production and commerce, that is, from the production and realisation processes of surplus value. Put it differently, the state must not compete with the private sector. If realised, this would mean that privatisation is nothing but an ‘extreme’ form of state intervention in the process of capital accumulation in the interests of capital. The complete or partial abolition of state ownership of capital leads to the further concentration and centralisation of capital in private hands and enhances political power of the capitalist class. Although its participation declined in the second half of the 1980s, one of the characteristics of the state sector in Turkey has been its strong presence in manufacturing of intermediate goods as well as consumer goods. The state is still the biggest capitalist in Turkey and has been a competitor, especially in textiles, to the private sector.

Although the successive Turkish governments have tried to privatise the state-owned economic enterprises (SEEs), privatisation in Turkey has proved to be a very difficult and slow process. For decades SEEs have been used, inter alia, as a relatively cheap source for private sector’s input and technologically neglected. ‘Most of the state industries were so old-fashioned and overstaffed that investors were not interested in them.’ (Zürcher 1994: 310-11). Therefore, the successive governments have taken measures to prepare the economic and political background for privatisation and restructure and make SEEs attractive for internal and international capital. An ideological campaign in favour of privatisation involving criticisms of SEEs being inefficient and wasteful accompanied these activities.

However, this is only one aspect regarding the difficulty and postponement of privatisation until the end of the 1980s. Political considerations and patronage politics played their part as well. Privatisation in Turkey has been the most contentious issue between the state, capital and labour, because SEEs play, inter alia, a very important role concerning relatively cheaper inputs for the industry, employment and social security. SEEs have always been a significant and effective means for influencing the prices of intermediate as well as consumer goods. Moreover, they have provided jobs in a country characterised by high rates of unemployment, that is, they have functioned as safety valves. That is why postponement of privatisation reflected a tactical move on the part of the state in a country with a long tradition in the state ownership of the means of production and state capitalism.

There has been strong public opposition to privatisation, especially coming from the state sector workers who are highly organised. However, there occurred division within the trade union movement regarding the counter-arguments and counter-alternatives against privatisation. In the meantime, several trade unions participated in auctions for SEEs scheduled for privatisation in the mid-1990s. The Constitutional Court annulled several pieces of legislation concerning privatisation. The Council of State refused to clear many projects under the build-operate-transfer scheme. In August 1999, the Turkish Parliament passed a law that limited the power of the Council of State to that of giving opinion regarding privatisation.

In Turkey, there are 256 SEEs and approximately 4,600 factories and plants (Dikbaş 1997: 23). By the end of 1993 only about US$2.3 billion in shares of SEEs had been sold, and of these less than 30% were sales which turned over majority shares to private hands (Adaman and Sertel 1997: 171). In the period of 1985-August 1997, 159 SEEs were included in the privatisation portfolio of which 121 were privatised either via sale of shares or asset sale. In 102 of the privatised 121 SEEs , no state equities were left (Undersecretariat of Treasury, 1997).

As noted above, privatisation was also a means of plundering the state assets in favour of domestic and international capital that collaborate in the neo-liberal restructuring process. The neo-liberal forces go so far as preparing fake reports about how inefficient and uncompetitive the enterprises are. The Iron and Steel Factory of Karabük (the first heavy industry establishment in Turkey) is a striking example. During the Tansu Çiller government, foreign advisory companies prepared a report, according to which, the enterprise had to be immediately closed down. However, the Union of the Chambers of Engineers and Architects in Turkey prepared a report based on documents argued otherwise (Dikbaş 1997: 99). Let us take a different example from the cement industry. Among the cement factories privatised by the end of 1993, five went to a French company. ‘The estimated profits over four years for the five plants purchased by the French company added, broadly speaking, to the price that was paid (Adaman and Sertel 1997: 171).

Intensified struggle among fractions of capital
The neo-liberal restructuring of the economy of Turkey has in essence been restructuring of capital itself via objective as well as subjective restructuring. The restructuring process of capital has been a process of struggle among industrial, financial and commercial fractions of the capitalist class for the distribution of surplus-value among themselves. There are, however, cross-cutting relations between different fractions of capital. Most of the large holding companies have their own banks and insurance companies and many middle and small sized capitalists function as sub-contractors for the large industrial capitalists. Each of these fractions aims at increasing its share regarding the redistribution of surplus value and maximise its profit.

In Turkey, in contrast to the highly industrialised capitalist economies, there are semi-feudal or pre-capitalist social forces, such as large semi-feudal landlords and usurer-merchants. Capitalist and pre-capitalist large landowners have still significant economic, social and political power in Turkey. These social forces have also been involved in the struggle for the redistribution of surplus value in the forms of profit, interest, ground-rent.

According to Sönmez, there took place struggle between monopoly capital and illegal commercial capital, within the financial sector and between monopoly capital and pre-capitalist social classes (1982: 180, 225). Illegal commercial capitalists were the main representatives of the hidden or parallel economy which has always been powerful in Turkey. Illegal commercial capitalists were engaged in illegal import, foreign exchange transactions and other sort of financial operations, and black-market, etc. In the process, the monopoly capitalists enhanced their economic as well as political positions within the system. Centralisation of capital was one of the aims of the new industrialisation strategy. Therefore, there took a ‘cleaning-up operation’ which aimed at reallocation of the resources from unwanted sectors to favoured sectors. This would lead to centralisation of capital which, in its turn, would make the large scale reproduction in specialised sectors possible. Centralisation of capital have been realised sometimes through incentives (tax exemption, credit), sometimes through pressure (stipulation for capital increase in the banking-sector), deflationary measures, import liberalisation etc. that led to bankruptcies, composition (a legal agreement to pay a sum in the place of a larger sum, or other obligation), liquidation, takeovers (Sönmez 1982: 98-99, 107). Here we see the interaction of objective and subjective restructuring at work.

Before 1980, there were industrial capitalists who were engaged in export of industrial goods, but ISI was the dominant mode of capital accumulation. The domestic market-oriented capitalists were also active in foreign trade. The dominant mode of accumulation of the 1980s and 1990s did not emerge out of the blue, but it grew within ISI. Those large capitalists who were the main agents of ISI in private sector are still engaged in production for domestic market, they are not entirely export-oriented. This new mode, EOI, has required a change in economic, social and political institutions to develop to its fullest potential. In the process of neo-liberal economic and political restructuring the office of prime minister, the ministry of finance, the ministry of foreign affairs and those state organs involved in foreign trade have gained importance in relation to other ministries in comparison with the ISI period.

The money-capital, particularly the banking sector and a small group of rentiers benefited most in the restructuring process. It must, however, be emphasised that most of the large industrial companies own also banks, they are holding companies. They represent the merging of the banking-capital and industrial capital into finance capital. Those industrial firms which have not owned banks, insurance companies, etc. fared worst in the redistribution of surplus-value. One striking feature of the neo-liberal restructuring is the diversion of resources away from productive investment towards unproductive, speculative activities with short-run return. The large capital in Turkey follows the global trend and there is so much talk about speculation/rent economy in Turkey.

The rise of ‘Islamic capital’ and political Islam
The rise of political Islam and ‘Islamic capital’ have been two striking phenomena of the neo-liberal restructuring process in Turkey which deserve attention. As we have already seen, the ‘Kemalist’ military dictatorship as well as the right-wing civilian governments have used Islam as a weapon against the organised opposition as well as a means to legitimise the restructuring of the economy. This facilitated the emergence of ‘Islamic capital’ or, in words of Bulut, ‘tarikat-capital’ (33) (1995: 14) in the restructuring process as a relatively powerful economic force. Thanks to the economic environment created in the neo-liberal restructuring process in which politicians like Özal played a crucial role, the ‘tarikat-capital’ has gathered strength. Turgut Özal was a member of the Nakşibendi order and his brother, who became very rich in the process, had been a leading member of the religiously-oriented National Salvation Party (the predecessor of the WP). Some sections of the ‘tarikat-capital’ have become an integral part of large capital and holding company is one form of organisation of the ‘tarikat-capital’.

Bulut distinguishes four stages in the development of the ‘tarikat-capital’ in Turkey: 1923-50; 1950-1973; 1973-1983; 1983-1994. (34) In the first stage, the ‘Islamic capital’ and Islamic circles in general were in defensive. In the second stage, with the help of the DP and AP governments, it became a middle-sized economic power. In the third stage, it grew very fast and got international support, particularly from the Saudi capital. In the forth stage, particularly in the Özal period, the state facilitated the development of the ‘tarikat-capital’. In this stage many large ‘Islamic’ companies were established of which some organised themselves as holding companies with international links in Europe as well as in other parts of the world (Bulut 1995: 364-71).

Although they are still weak compared to the well established ‘secular’ large holding companies, the ‘Islamic holdings’ are an economic force to be taken into account. Besides the clandestine organisations of which tarikats are the main ones, the ‘tarikat-capital’ is also organised as a political party, (35) foundations, business associations, etc. On 5 May 1990, The Independent Businessmen Association (MÜSIAD) which represented the ‘tarikat-capital’ was founded in Istanbul: MÜSIAD (Moslem capitalists) against TÜSIAD (secular capitalists). Most of the members of MÜSIAD are predominantly domestic market-oriented and own small and middle-sized firms.

Perhaps the ‘tarikat-capital’ and MÜSIAD are more neo-liberal and supporter of the ‘free’ market economy than those capitalists who are organised in TÜSIAD and some other associations Perhaps they are much more against the state intervention (against the intervention of the present state anyway) in the public life in general, and in the economy in particular. In general, the present state intervention runs counter to the interests of the ‘tarikat-capital’ and political Islam. As Bulut points out, MÜSIAD advocates privatisation and regards SEEs as ‘Frankenstein’. According to MÜSIAD, the state must become smaller and occupy itself with security issues and let the production of tanks, canons, plate, fork, etc. to them (the private sector) (1995: 430-31). MÜSIAD argues that privatisation is an appropriate means to strengthen the free market economy and private sector, renew the technology, improve the productivity of the enterprises, redistribute the wealth to broad masses and realise the minimal state, etc.(MÜSIAD 1993: 78).

An economically powerful political Islam is, to a certain extent, the product of the neo-liberal transformation of the economic and political structures. The ‘tarikat-capital’ has provided an economic basis to the rising political Islam in Turkey. Put differently, religious political radicalism has established itself as a significant economic power to be reckoned with. With their increasing economic powers, the religious sects and the capitalists connected to them have become major players in political life in Turkey. In the 1980 and 1990s, we have witnessed to the rise of political Islam as an economic, social, political, ideological and cultural force that, for the first time in the history of the Turkish Republic, managed to be the main partner in a coalition government. The coalition government of political Islamist WP and ‘secular’ TPP continued with neo-liberal policies.

(27) In 1979 the shares of exports to and imports from EC were 50.0% and 34.5% and in 1993 47.2% and 41.8%, respectively (Müftüler 1995: 89).
(28) Changes in the Political Parties Law in August 1999 made it possible for political parties to found women and youth branches and party branches abroad.
(29) The military bureaucracy tried to ensure the political reproduction of its domination through establishing a political party headed by a retired general. It also tried to secure the consolidation of the institutional structures of the 1982 Constitution.
(30) Today, the state of emergency is still in force in some cities mainly populated by the Kurdish people.
(31) Below, I shall deal with the rise of ‘tarikat (religious sect)-capital’ or ‘Islamic capital’ and political Islam in an separate sub-paragraph.
(32) The state has intervened several times to save some privately owned large companies and banks from bankruptcy in the age of neo-liberalism in Turkey..
(33) Tarikat means religious order and there are many religious orders in Turkey which play active role in every aspect of society.
(34) As far as the present position of the ‘tarikat-capital’ is concerned, this stage still continues.
(35) Not all the religious orders are organised in a single party. Because of differences of interests and opinions they are represented in different right-wing parties. Some even refuse to be involved in party politics.