Turkey: can’t see the trees for the woods

Michael Roberts looks at what triggered the protests in Turkey, reprinted here from his blog The Next Recession.

Protesters shout anti-government slogans during a demonstration in AnkaraThe explosion of protest over the last week in Turkey began when people tried to stop the pulling down of trees in Gezi Park as part of a government plan to replace the park with yet another shopping centre that would include yet another mosque, the demolition of the secular Ataturk cultural centre and its replacement with an Ottoman-era military barracks.   This was no accident of history really, because the loss of green spaces to development has been increasingly objected to by wide layers of Turks – working class and middle class.  According to the OECD,  33% of Turks feel they lack access to green spaces, much more than the 12% average of OECD European countries and the highest level of dissatisfaction in the region.

But Turkish capitalism has been on the move and, as far as the ruling AK party and domestic and foreign capital is concerned, nothing must stand in its way (including trees).  Turkey wants to move up the ladder of the rich club of the OECD and is still vying to join the EU by the end of decade.  At the same time, the government is autocratically trying to impose an Islamic style state superstructure onto this capitalist expansion, with strict rules on alcohol, religious observance, dress and the subjugation of women, Iran-style.  Up to now, the AK party has been riding high, winning election after election, enabling it to cut the former Ataturk secular military down to size and disperse the secular opposition of corrupt middle-class parties.  The AK was backed in this by the huge urban poor of the cities where it had carefully built a base over a decade or more.  But, of course, on obtaining unchallenged power, it has now become the tool of big business and foreign capital (despite the occasional rift over policy).  The government increasingly sees itself as a regional power able and willing to intervene in the various clashes of the region: Iran. Palestine and more recently, Syria.turkishprotest

On the surface, it would appear that Turkish capital is moving on and up without much problem.  And it is true that economic growth has accelerated in recent years while foreign investment has flooded in to exploit a labour force coming into the urban areas from the impoverished countryside – a classic emerging capitalist development.   But this apparent economic success is still founded on the shaky young legs of a weak capitalism and is also weighed down by corruption, religious backwardness and scant regard for human rights and laws.  Inequality of income, as measured by the gini coefficient, according to the IMF, is around 40, making it higher than the US, the most unequal of the advanced capitalist economies and the highest in emerging Europe, apart from Russia.

It’s no surprise that Turkey is ranked 154th in Reporters Without Borders’Press Freedom Index. Not only is the country “currently the world’s biggest prison for journalists”, media bosses fire journalists because of pressure from the government.  And prosperity is a relative thing and of course, not for all.  More than 48% of the working-age population aged 15 to 64 has a paid job, a figure much lower than the OECD employment average of 66% and the lowest rate in the OECD.   People in Turkey work 1 877 hours a year, more than the OECD average of 1 776 hours.  In Turkey, however, 46% of employees work very long hours, by far the highest rate in the OECD where the average is 9%.

Around 67% of people say they are satisfied with their current housing situation, much less than the OECD average of 87% and the lowest level amongst OECD countries. On Turkey, the average home contains 0.9 rooms per person, less than the OECD average of 1.6 rooms per person and one of the lowest rates across the OECD. In terms of basic facilities, 87.3% of people in Turkey live in dwellings with private access to an indoor flushing toilet, less than the OECD average of 97.8% and the lowest rate across OECD countries.

The best-performing school systems manage to provide high-quality education to all students. In Turkey, the average difference in results, between the 20% with the highest socio-economic background and the 20% with the lowest socio-economic background is 106 points, higher than the OECD average of 99 points. This suggests the school system in Turkey mainly provides higher quality education for the better off.

Total health spending accounts for 6.1% of GDP in Turkey, more than three points below the average of 9.5% across OECD countries. At $913 in 2008, Turkey’s level of health spending per person is the lowest in the OECD, where the average is of $3268.   In Turkey, only 61% of people say they are satisfied with water quality. This figure is the lowest in the OECD, where the average satisfaction level is 84%, and suggests Turkey still faces difficulties in providing good quality water to its inhabitants.

The Great Recession hit Turkish capitalism just as hard as elsewhere.  The answer of the government (against IMF advice) was to let loose a huge credit boom to fuel domestic demand.  This pushed the inflation rate to double digits and widened the current account deficit to 10% of GDP (the second largest in the world in dollar terms) in 2011, exposing Turkey to the risks of capital flow reversal at a time of continued global uncertainty.  External financing needs are around 25% of GDP so that Turkish banks rely on short-term foreign borrowing. Turkey has jumped from an agricultural to services economy within two decades and the recession weakened the manufacturing base.  Conglomerates like Eczacibasi and Zorlu have built huge shopping malls in the past few years rather than investing in their core businesses.

In the last two years, the economy slowed, driven by weakening domestic demand.  Turkey remains prone to boom-bust cycles driven by foreign capital flows.  The health of global imperialism is still the overriding factor in Turkey’s own growth.  The national saving rate has fallen dramatically over the last 15 years, from 25% of  GDP in the late 1990s to less than 15% now. This decline has been larger than in any G-20 country over this period and stands in stark contrast to the experience in peer emerging economies.  So Turkey is forced into making its labour force competitive to attract more FDI flows into the tradable sector. At around 2.0% of GDP, FDI inflows are still below the G–20 EM average , with most flows tilted toward unproductive sectors such as banking and  real estate.

Between 2003 and 2011, real GDP growth averaged 5.3% a year, but the unemployment rate remained in double-digits, thus creating a reserve army of labour to exploit.  The deficit on trade and income with other countries was over 5% of GDP on average.  But these were the good years for Turkish capitalism.  Economic growth is expected to slow to less than 4% a year for the rest of this decade, at best, while the external deficit will widen to 7.5% of GDP.   The boom of the last decade was partly based on real estate, credit and services and construction and less and less on manufacturing, exports and investment.

That’s because the profitability of Turkish capital has declined as the expansion of the labour force began to slow.  The decline was visible during the 1990s. It was no accident that the AKP won landslide victory with the backing of big business in the 2002 elections  just one year after its foundation.  Under the AKP, profitability made a dramatic recovery (albeit based partly on unproductive investment).  The Great Recession brought a new reversal and this time the recovery in profitability has faltered.  Although profitability recovered to the previous peak by early 2010, since then it has taken a tumble and is still below the peak before the Great Recession.


The green shoots in the woods of Turkish capitalism are not so healthy that the government can continue to pull up the trees.

One comment

  1. There is an assumption in some quarters that mass protests are necessarily representative of the will of the working classes and progressive forces within society. That was not the case in Chile in the lead-up to the Pinochet coup, it is not the case in Egypt where demonstrators are leading the way to the restoration of a military regime, and I suspect that it is not the case in Turkey, where the army remains a malevolent presence supported by a substantial sector of the affluent classes. Anyone who is serious about politics needs to look critically at these protest movements, and to discriminate between those who have a genuine agenda, and those who merely seeking for a pretext to restore the power of a privileged class

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