Turkey's great transformation

Published 17.07.2018 21:27

Last week, Turkey commemorated the second anniversary of the July 15 coup attempt with great demonstrations. Evidently, July 15, 2016 will never be erased from the memory of Turkish people and its democratic political outcomes will be permanent.

First of all, everyone should respect the Turkish people's resistance to the military coup on July 15, 2016. Quite obviously, this means that the people chose to determine their own destiny and to have a permanent say in their own future.

Exactly two years after the July 15 coup attempt, Turkey switched to the presidential system. Those who participated in the commemoration ceremony on the second anniversary on the July 15 Martyrs Bridge in Istanbul were those who had poured into the streets and gathered near the bridge on that fateful night.

Turkey's recent history is full of coups. The economic outcomes of the May 27, 1960, military coup; March 12, 1971, military memorandum; Sept. 12, 1980, military coup and Feb. 28, 1997, the postmodern coup was the further impoverishment of people, who eventually took to the streets and resisted tanks on July 15.

The economic programs implemented after each coup actualized the consolidation in favor of large capital via the mechanisms of income transfer from the poor to the rich, and external loans received with the International Monetary Fund's (IMF) approval were used to restructure the debts of large capital through the banking system.

However, the country did not make infrastructure investments or launch agricultural and production-oriented reforms for small and medium-sized enterprises (SMEs) the way that it would pay these debts and would not get into external debts again.

I do not know whether you are following the recent presidential decrees that have been issued one after another. Just like the rapid steps toward a democratic revolution, these regulations are changing the whole flow of the state and its hierarchy. They are institutionalizing a citizen-oriented state concept, which suggests that the state is for individuals, rather than individuals are for the state. They are completely removing any kind of military and bureaucratic tutelage.

Behind this rapid democratic change is undoubtedly a strong national support that has proved its will and strength – this was most strongly expressed on July 15 and in the following period. This process was also crowned by the June 24 presidential elections. Now, it is time to reflect this strong will on the economy.

Indeed, shortly after July 15, steps to further improve the income distribution and raise the small and medium-sized enterprises to a worldwide, competitive, outward-oriented, technology-intensive scale, gained momentum. This process will accelerate even more with the strengthened economy administration. A stronger, competitive and fully-open market economy that runs the market fairer and faster is the main objective.

If we cannot read the great change in the global economy today, we cannot draw an accurate and complete roadmap for the Turkish economy.

Today, the era of massive monopolies that earn increasing income according to their scale, create technology rent by using their cumulative monopolistic power and are assumed to live forever as natural monopolies, is ending. The profit rates of these large monopolies are rapidly falling, and countries with these monopolies are trying to raise the customs walls to protect their profitability.

This is the reality behind what we call trade wars and this is nothing more than the actualization of capitalism's most fundamental crisis theory in current conditions. Recently, U.S. President Donald Trump and Russian President Vladimir Putin held a one-on-one meeting. In fact, the U.S. has no fundamental problem with Russia now, unlike the Cold War period. The U.S.'s real problem is with the rapidly emerging Asian economies for it is losing its ability to compete with them. Today, knowledge-based economies are developing and taking the East as the center. The world's technology production center is shifting from the West to the East.

In knowledge-based economies, product prices and supply often do not determine the market; and the rising prices of technology-intensive products might mean more consumers, and the lower price of products might mean fewer consumers. Interestingly, however, there have been emerging production opportunities for these products outside large monopolies as well, and the exchange of software-based commodities is horizontally creating its own network externality independent of traditional market supply.

In the course of time, this will bring about the dissolution of large monopolies that work with very high profits today and that are overpriced in the global financial markets. These monopolies that focus on highly-demanded goods such as automobiles, computers and smartphones are able to survive only with their brand advantage. The software of many of the basic products of these monopolies has now begun to be built outside the central countries. Now, I would not like to give a brand name, but these companies cannot develop the new designs and software that consumers demand. Because they can't catch up with the expectations of an average consumer. Today, many products undergo renovation or relaunches which are basically facelifts made to satisfy consumer expectations, rather than because of the necessity of competition between companies.

Apart from this, the Bretton-Woods system, in which the U.S. dollar and euro are the main reserve currencies, no longer offers advantages to the U.S. and the European Union. On the contrary, countries are looking for ways to get rid of dollar-based trade, which will be actualized soon. The current level of the dollar, euro or even pound and these scales will not give the right to live for U.S., EU and U.K. companies. If Asian economies, including Turkey, unwaveringly carry out necessary reforms in this process, they will be going up rapidly.

Some time ago, while we were holding a meeting with a British delegation, I showed them my Chinese-made digital watch and told them: "Look, this watch is more valuable than the car brands you strove for a century, but had to sell later. Some of them are still being produced in the U.K. but you are losing money for every single car produced in the country – both marginally and generally. Soon you will have to dismantle the factories and thousands of people will become unemployed. It is time for cooperation. You cannot get by on the funds accumulated in London for another decade."

Today, developed countries have no other choice than to cooperate with emerging economies that are rising rapidly. For instance, Britain cannot survive the Brexit process safe and sound without close cooperation with Turkey. New trade and customs agreements and new monetary unions are inevitable. In this context, Turkey will rapidly bring up strong pro-market reforms in the areas of production, finance and taxes.

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