The COVID-19 pandemic is a historical test for the capitalist system. Primarily, one of the weakest aspects of the system is that it did not and has not been able to solve the problem of capital and savings failure to be spread to the bottom. The issue of inequality among the economic stakeholders and the problem of inheritance and wealth disparity caused by capitalism's legal and justice systems have both become more visible with the social and economic troubles triggered and escalated by the global virus outbreak.
The U.S.’ wild capitalism has deepened the problem of inequality, as it neglects and overlooks the most basic duties of the state in the name of social statism, especially in health and education, while also disregarding the most basic rights to life of the citizens of every country and deepened the fractures that led to various social divisions in society. It has sparked discriminating debates in worker-employer relations instead of reconciling approaches.
Europe's inclusive, embracing capitalism provided a glimmer of hope. With the end of the Cold War, however, the European continent also chose to join the fierce competition found in U.S. capitalism. On the other hand, the essence of capitalism is the "fair sharing of added value" and an increase in the marginal benefit of production factors, for both labor and capital.
On the contrary, although we have entered the 21st century, capitalism has been successful in preserving neither the value of labor nor the value of capital. Therefore, between the bust periods of recession and economic booms, it is stuck in a vicious circle that is ascending and descending in a loop.
This situation indicates that "capitalism should be tamed" or even "rasped." The capitalist system, which we assume has existed since the 1750s, must "renew" and "reform" its approach in very fundamental topics such as supply and demand; savings, consumption, and investment; and purchasing power, living conditions, and consumption habits. It is the capitalist behavior that makes citizens of the world "spend" more than they "earn" and prioritizes consumption needs, with its "vicious marketing tactics," instead of people’s needs, is running on fumes. Now, we must have a new approach in which the national purchasing power and income generated in the economic system are more evenly distributed among all stakeholders.
Is capitalism moving toward a future where it prioritizes production, producers and hard work, strengthening the indispensable position of small and medium businesses (SME) in the countries’ economies, where it provides equal resources to its economic actors in terms of "opportunities" or toward a future where it will use the global virus outbreak in order to gain fields and say over economic actors and societies in order to preserve its current problematic structure? Turkey can be the trigger, transporter and accelerator of this "inevitable" transformation and future.
CBRT and import haven
One of the highlights of the period after the COVID-19 pandemic will be the self-sufficient country strategy. The fact that 23.8% of the global manufacturing industry is dependent on China is a subject that will now be discussed in detail. Countries will accelerate the transition to a new era, where they are determined to meet all of the raw materials, intermediate products and capital goods (machinery and equipment) required for production, except for some strategic products that are very difficult to give up and sufficient domestic production is possible only in the long term.
Therefore, the new normal also means that the phenomenon of globalization will be limited, losing its effect for a period of time. Treasury and Finance Minister Berat Albayrak emphasizes the "new normal that is on top of the agenda of the world economy as a period in which the Turkish economy will obtain significant gains in all areas." Albayrak ushered in a new era where the Turkish business world will make important gains in every field and historical opportunities will be witnessed. Producing more effectively will be on the agenda as domestic production’s competition in the world will have priority in all economic management policies.
What Albayrak underlined was that we were entering a new era where a brand new and lasting story will be written in the economy using Turkey's production capacity. In this new period, imports will not be easy. Albayrak reminds us of the time when some tried to turn Turkey into an import paradise. Unfortunately, the Central Bank of the Republic of Turkey (CBRT) was also indirectly in this group. In our articles between 2005 and 2008, we intensely criticized the CBRT's interest-exchange rate policy model, the overvaluation of the lira, the cheapening of imports and the current account deficit, together with a few respected academics.
This is why we can now happily see that the CBRT today, completely separated from an interest rate-exchange rate model that encourages imports and makes us lose our competitive edge in exports, similar to all the leading G-20 member's developing countries, is pursuing an accurate monetary policy to provide cheaper financing to its real sector and to become a more competitive economy. Therefore, a 50-basis-point rate cut, considering inflation expectations, is a very important step toward bringing dynamism to Turkey's production, investment and export skills.
The momentum package, on the other hand, is a critically important subsidy-support program designed to transform Turkey into a domestic-national production paradise instead of an import haven. The new era will be a period that will accelerate Turkey’s rise in the world economy as a safe harbor supplier country.