Louis Proyect wrote:
Although the economic situation in Turkey has probably improved since the stock market collapse of 2001, it is still very bad.
Generally, I do not think that it is a good idea to judge an economy's well-being (?) through stock market indices. Specifically, tough Louis --who is now every Turk's Eniste!!-- is not saying so, but his statement above implies that the stock market is now a better shape than 2001. That is not the case:
Here are the annual market indices, the first column is in Turkish liras, and the second one is in US $.
2000 8884 769
2001 13055 528
2002 10086 358
2003 10528 372
Moreover, the economy, both in terms of profitability and that of standard of living, so far shows no sign of improvement relative to the 2000 or 2001 levels.
For those who might be interested in Turkish economy, I am attaching below the description of a workshop on the state of Turkish economy organized by a group of economists and trade unionists from Turkey for the 3rd Social Forum, Porto Alegre.
Here is the group's web site for additional info and downloadable papers, etc.:
http://www.bagimsizsosyalbilimciler.org/iktisatg.htm
LESSONS FROM THE TURKISH ECONOMIC AND POLITICAL CRISIS
At the turn of the millennium, the neo-liberal orthodoxy juxtaposed a new set of conditionalities as part of its hegemonic agenda on the developing world: privatization, flexible labor markets, financial de-regulation, central bank independence, flexible exchange rate regimes, and fiscal austerity. To this end, integration of the developing nation-economies into the evolving world financial system has already been achieved through a series of policies aimed at liberalizing their financial sectors and privatizing major industries. The motive behind financial liberalization was to restore growth and stability by raising savings and improving economic efficiency. A major consequence, however, has been the exposure of these economies to speculative short term capital (hot money) attacks which increased instability and resulted in a series of financial crises in the developing countries. Furthermore, contrary to expectations, the post-liberalization episodes were inflicted with the divergence of domestic savings away from fixed capital investments towards speculative financial instruments with often erratic and volatile yields. As a result, developing economies with weak financial structures and shallow markets suffered from increased volatility of output growth, shortsightedness of investment decisions, and financial crises with severe economic and social consequences. Often the economic crises were realized hand in hand with the ensuing political crises.
One recent example of such economic cum political crisis episode had been the Turkish debacle of 2001/2002. With a sudden capital flight of 25 billions in the course of a few months, the contraction of the Turkish real gross domestic product reached to 9.8 percent and was accompanied with a deep political chaos and social conflict. Yet the historical importance of the Turkish crisis lies more in its significance as a serious blunder to the neo-liberal orthodoxy, rather than just the pure economic/political mishaps. The Turkish crisis, which outbreak in the midst of an IMF-directed adjustment programme, became one of the clearest examples of how in an indigenous economy, the unfettered workings of the myopic markets can serve as the main source of disequilibrium and chaos thorough the speculative attacks of the international financial capital flows.
From a historical perspective Turkey's post-1990 history of macroeconomic and political developments under the neo-liberal model is observed to suffer from persistent difficulties and wide fluctuations in national income, with conflicting policy adjustments. At the turn of the 3rd millennium, the most striking aspects of the current Turkish political economy context are the persistence of price inflation under conditions of a crisis-prone economic structure; persistent and rapidly expanding fiscal deficits; marginalization of the labor force along with the dramatic deterioration of the economic conditions of the poor; and the severe erosion of moral values with increased public corruption.
Thus, the Turkish adjustment experience throughout the post-1980 period reveals a process in which a developing market economy trapped within the needs of integration with the world markets and the distributional requirements warranted by such re-orientation, the state apparatus became the bastion of privilege, regulating the mode of income re-distribution within the society. Muddled with short sighted myopia and speculative herd behavior of the domestic and foreign financial arbiters, the IMF-directed Turkish adjustment episode all too clearly spells the dangers of restricting the development policy of an economy to speculative in-and-out-flows of short term foreign capital, which by itself, is excessively liquid, excessively volatile, and is subject to herd psychology.
In this workshop we seek to discuss lessons from the Turkish economic-political crisis with colleagues from the other crisis-inflicted Latin American countries. We hold the hypothesis that the recent wave of financial/economic/political crises in the Third World are not the end result of a series of mishaps and governance errors unique to each particular country, but they should rather be seen as an integral part of the new wave of corporate and financial globalization along with its hegemonic orthodox dogmas -the neoliberal ideology.
-- Frequently the only possible answer is a critique of the question and the only solution is to negate the question. Karl Marx, 1857, Grundrisse, "The Chapter on Money," p.127. E. Ahmet Tonak Professor of Economics Simon's Rock College of Bard 84 Alford Road Great Barrington, MA 01230 Tel: 413 528 7488 Fax: 413 528 7365 www.simons-rock.edu/~eatonak
