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