Question

Economics (Turkish Economics)

Indicate the main principles of étatism. Also, explain the evolution of the economic policy during the 1923-1930 period

Answer 1

Turkey proclaimed itself Republic in 1923. At the time of proclamation the turkish economy was weak, its infrastructure had been destroyed during the independence struggle. Moreover it was founded on the social and economic heritage of ottoman empire and was devoid economic wealth that had characterized the older empire. It had a heavy burden of debt and an economic structure that had collapsed completely. Thus the new Turkish Republic had few public enterprises. The new government inherited a seriously handicapped economy, it was an economy with almost no industrial base. In the early 1930s in Turkey the government began to establish and operate economic enterprise of various kinds. The policy and measures connected with this new movement came to be referred to as "Etatism" . The word "Etaitsm " is derived from the French Etat (State) and denotes a situation in which the State takes an active and permanent part in economic affairs.

After the establishment of the Turkish Republic the first phase between 1923 and 1930 was marked by a liberal economic policy. The leaders of new Turkey were bred, both from the political and from economic point of view, on the idea of liberalism, particularly in the form in which they come from France. Immediately after the end of the war with GreeceAtaturk convened an economic Congress in Izmir in 1923, and there he stressed the need for more capital equipment, for increase in industrial and agricultural output. He focused on the importance of economic development. He issued a series of proposals to promote the import of agricultural machinery, for the manufacture of commodities using domestic raw material, for the construction of railways, the modernization of schools, and the productive utilization of forests and mines. He also spoke of the great predominance of foreign capital in trade, finance and communications and of its harmful effects. He added that economic advance was very difficult to realise. Thus, although Ataturk had grasped the importance of economics very early, he did not seem to have in mind at that time any special policy towards achievement of economic ends. He certainly did not envisage anything beyond the development pf private enterprise and capital as the normal path of advance. Down to 1930 this policy remained unchanged. Times were not too bad between 1924-1929. The world economy was booming , in turkey tax receipts increased by 60 % during the period indicating a rise in real national income. The volume of foreign trade remained high , although there was already significant drop in the value of exports in 1929. The Governments's main attention was directed to internal politics and to the big political and social reforms. A great change set in with the oncoming of the world depression , which had a shattering effect on the foreign trade of Turkey. Imports had to be drastically curtailed with the abandonment of convertibility in 1930. The aim became a strict balancing of imports and exports. The main economic role was assigned to both private and public sectors, it was remarked that the task of the state begins where that of the private enterprise ends. A mixed economic model was accepted. Some deficiencies hindered the private sector activities and complelled the government to interfere in the economy. Until the end of the first decad eof the Republic, a liberal economic policy had been tried to be implemented. Within this context , much room was accorded to the private sector and with the exception of few public economic enterprises with monopoly features. Economic policies introduced and implemented at that time were geared to spreading private ownership of land, appropriating land for the landless farmers and migrants, extending state credit for capital accumulation in agriculture, promoting private enterprises so as to develop them, protecting domestic production by custom policies and refraining from external borrowing. Despite the positive developments , the insufficiency of capital accumulation in private sector and the great depression that erupted in 1929 forced the government's's direct intervention to the economy.