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THE ROLE OF THE STATE IN THE NEOLIBERAL RESTRUCTURING IN TURKEY -7-
Opinion(A. H. Yalaz)

Chapter 5 (part-2)

5.5. Neo-liberal ‘reforms’ in the 1980s and 1990s

With the establishment of the military dictatorship as a political form of the capitalist state, the subjective restructuring of the economy picked up momentum. There was no significant organised opposition to implementation of the economic restructuring programme of the neo-liberal collaborationist class alliance. As far as institution building after 1960 is concerned, the military bureaucracy has proved to be the main agent of restructuring. The semi-civilian regimes has never succeeded to suppress and crush the socio-political opposition, particularly the working class movement. In every threatening crisis situation in Turkey, capital and the state have always recoursed to extreme politico-military measures, such as the military takeover of the whole political power. The military and military controlled regimes have implemented measures which prepared the necessary ideological, cultural and political environment for producing and reproducing the conditions for expanded capitalist reproduction. This, inter alia, shows how weak the politico-economic system is in Turkey.

Although there exists a dialectical relationship between subjective restructuring and objective restructuring, restructuring of the economy of Turkey has predominantly been a subjective restructuring. There exists, however, no ‘pure’ objective restructuring and subjective restructuring. There is always conscious intervention in or regulation of the economy. Capitalism does not operate in a purely objective way, on the contrary, it is regulated, above all, by the state. Objective restructuring happens within the regulated economic relations, within a particular institutional framework of capitalism which is itself a product of conscious, subjective intervention. What is important from a Marxist political economy approach is the interaction between economic base and the political superstructure. The question is: What is the dominant agency in restructuring the economy in a given historical context? Is it the state or the market? The main agencies through which objective restructuring takes place are the class struggle between labour and capital and competition between different fractions of capital. The state is the main agency of subjective restructuring, and the military takeover of 1980 in Turkey represented, inter alia, a conscious and collective and the most violent state intervention in the process of capital accumulation, and thus allocation of resources. ‘Normal’ or objective’ operations of capitalism have never been sufficient for restructuring the economic structures in Turkey. Moreover, the neo-colonial dependent character of ‘national’ capitalism have made it extra difficult to restructure itself through its ‘normal’ functioning. Therefore, the military dictatorship created a political and institutional framework conducive for the neo-liberal restructuring of the economy.

Within the parliamentary regime it proved to be very difficult to create such a framework. Capitalist political parties and governments in Turkey needed, inter alia, the so-called populist income-distribution policies that would expand the domestic market and, thus, and their electoral support among the people. For more than thirty years the parliamentary regime in Turkey, with two interruptions (1960 and 1971), contributed to expansion of the domestic market and, thus, served the interests of the internal as well as external capital.

The last Demirel government approved a neo-liberal economic restructuring programme that would lead to a profound restructuring of Turkey’s economy. Soon, it became, however, clear that without a wide-range and many-sided offensive against the economic, social and political gains of the vast majority of the people, particularly the working class movement, it would not be possible to implement it. The social opposition as well as parliamentary opposition had to be silenced and the parliamentary political system had to be done away with.

The military dictatorship had no such electoral considerations or anxieties that political parties had. Therefore, the military bureaucracy took over the political task of implementing the programme by establishing its monopoly on political power. Although military bureaucracy had the formal monopoly on political power, there emerged a new dominant domestic class alliance which involved the large capitalists under the leadership of the dominant fraction of big industrial/financial capital represented mainly by TÜSIAD and TISK, the high echelons of the civilian and military bureaucracy, and a segment of technocrats who supposed to be the embodiment of economic knowledge and expertise. A group of neo-liberal technocrats under the leadership of Turgut Özal was entrusted with the management of the economy.

Neo-liberal offensive against and counter-attack by labour
In order to pursue the neo-liberal restructuring of the economy, the organised opposition, particularly the resistance of the organised sections of the working class had to be crushed and disciplined according to the needs of the new stage of neo-colonial capitalist development. The solution which the new dominant domestic class alliance found to the crisis was, above all, restructuring and disciplining the labour-force market through extra-economic, that is, military and juridical methods. The disciplining of the organised working class was not left to the market forces as ‘pure’ economic liberalism, at least in theory, would require. The state intervened through direct political as well as juridical means in the relationship between labour and capital in favour of the latter that led to the further marginalisation of the organised labour in policy-making process. The High Arbitration Council replaced the practice of collective bargaining and agreement between labour and capital concerning the wages and working conditions. The military regime enacted restrictive laws regarding the conditions of labour and the trade unions in 1983, which still remains in effect without significant changes.

Not only the organised sections of the working class, but also the unorganised sections, civil servants, pensioners, small and middle-sized peasants suffered significant deterioration in their economic positions because of the rising prices caused by the abolition or reduction of state subsidies. ‘Price rises, a freeze on wages and high interest rates together caused a drop in real purchasing power of between 40 and 60 per cent for most wage-earners in the years 1979-89.’ (Zürcher 1994: 308). If we consider the changes in the share of real wages concerning the income distribution we see that real wages decreased by 26,6% between 1978/79 and 1984. However, in the same period the labour productivity rose nearly by 18% and the industrial production by 23%. The capitalist class won its offensive against labour and won the positions it lost in the second half of the 1970s (Boratav 1989: 134). The main winners were the big holdings of which nearly all were mainly family-owned, with their own banks, insurance companies, trading companies and production companies. These holding companies, without halting their activities in the period of ISI, became increasingly export-oriented (Zürcher 1994: 308).

At the end of the 1980s and the early 1990s the working class hit back through collective actions, such as official and unofficial economic and political strikes (political strike is always unofficial, for it is forbidden), demonstrations and other forms of actions. In January 1991 1,5 million workers and employees held a general strike. Higher wages, better working conditions, democratisation were among the demands of the working class movement. ‘The unions managed to make good their members’ loss of purchasing power since 1980, but, as before, only for those in the large modern industrial sector and in the state economic enterprises. The small family business which still made up the core of the Turkish economy were still largely outside the reach of the unions.’ (Zürcher 1994: 311-12).

In 1994, Turkey experienced, according to Boratav, the deepest crisis after 1945 as a result of outward-oriented financial liberalisation, increasing fiscal deficit, hot monetary policy (short-term capital inflow), and oligopolistic industrial behaviour that increased the profit margins (1995: 201-209). The decisions of major US credit rating agencies to lower Turkey’s debt rating, which caused a run on the Turkish Lira, played an important role in the emergence of financial crisis. The crisis compelled the government to adopt an IMF-backed austerity and structural adjustment package (‘4 April 1994 Decisions’) that included anti-labour measures, such as wage cuts, reduction of public spending and major overhaul of the social security system as well as privatisation. As a result, the economic position of workers as well as the vast majority of other working people worsened. In 1994, the people of Turkey became, on average, 11% poorer in comparison to 1993.

Mass demonstrations, meetings, spreading strikes, etc. was the response of the working class, particularly involving the state sector workers that led to collapse of the coalition government of the TPP and the Social Democratic Populist Party (or the Republican Peoples’ Party as renamed in February 1995) and the abandonment of the austerity package.

Besides higher wages and better working conditions, the working class also demanded democratisation of the political system and system of interest representation. The militancy of the rank and file compelled the trade union bureaucracy to launch a struggle against the restrictive labour laws. Because of the state’s further penetration into labour-capital relations to discipline labour, almost every action by the working class assumed a political character.

Liberalisation of the import regime
One of the first measures put into practice was gradual liberalisation of the import regime, especially after 1983. The ISI strategy involved restrictions on imports or protectionism, but now it was time to shift from ISI to the EOI strategy which required different policy regarding the foreign trade regime. Since Turkish capitalist class and the state were, and still are, eager for full membership of the EC, import liberalisation was very important. Prior to 1980, the tariffs were very high and there were strict quantitative restrictions on imports. The new economic programme made a major break with the past in this regard. Sharp reductions in stamp duty, deposit guarantees on imports, a simplification of import procedures, and a programme to abolish the list of goods subject to global quotas which represented 12 per cent of total imports in 1980 were the measures taken. Import liberalisation, which continued in the rest of the 1980s and 1990s ‘sought to open up the Turkish economy to the European forces, and to prepare the Turkish economy for full integration into the Community as an official member, because 80 per cent of all the liberalisation measures applied to imports from the EC.’ (Müftüler 1995: 92-93).

Liberalisation of the exchange-rate regime
Since the exchange rates are the most strategic instrument concerning external economic relations, the fixed and state-controlled exchange-rate regime of the ISI period had to be replaced by one compatible with EOI. In January 1980 the government devalued the Turkish Lira by 48,62% in relation to US$. Since 1 July 1981 the exchange rates were adjusted daily in order, in the long-term, to promote export. Turkey’s export became dependent on exchange rate movements. ‘The exchange rate policy adopted in Turkey since the early 1980s characterizes a passive crawling peg system [a variant of a flexible exchange rate regime]. One of the key concerns has been to maintain the competitiveness of domestic goods in international markets. In order to offset increases in domestic prices and obtain a target real exchange rate, as well as to accommodate the public expectations, the nominal exchange rate is passively adjusted.’ (Erol 1996: 47-48). However, as Kepenek and Yentürk argue, export does not only depend on the prices of goods. Continuous devaluation of the Turkish Lira increases the prices of the imported investment and intermediary goods necessary to produce for export. This means an increase in the production costs of external-dependent industries which, in its turn, has negative effects on the export of industrial goods (1996: 189).

The commitment of the Özal government to the real exchange rate was firm until 1988. ‘Since 1989, the policymakers’ concern has gradually shifted from external competitiveness to the internal stability’, because ‘the policy of higher real exchange rate feeds back on domestic inflation, and activates a spiral of devaluation-inflation.’ (Erol 1996: 158-59).

Financial liberalisation
In July 1980 all restrictions and controls on the interest rates of deposit accounts and credits were removed without first creating necessary institutions and mechanisms. The oligopolistic structure of the banking system led to ‘gentleman’s agreements’ which set upper limits to the
interest rates of deposits account. The removing of restrictions and controls on interest rates led to a severe competition between the small banks and the bankers (in fact, brokers), and in 1982 brokerage firms collapsed together with some small banks. Turgut Özal and some other ministers had to resign. At the beginning of 1983, the Central Bank, thus the government, regained the authority to determine the interest rates. This was the first big fiasco of the liberal economic policies under the military regime (Boratav 1995: 163-64). Liberalisation and deregulation of the financial sector were often interrupted by financial and bank crises. As a result, direct state control had to be re-established (1983), yet only later to be removed (1988).

New institutions and financial instruments were introduced in order to encourage deepening and widening of the financial system. In 1981, the Capital Market Board was created. ‘The year 1986 marked the beginning of a transition period in the implementation of monetary policy which shifted the emphasis from direct interference in private and public sector portfolios to the determination of money and credit expansion through the control of total reserves of banking system.’ (Müftüler 1995: 95). In 1986, the Istanbul Stock Exchange was opened and an inter-bank money market began operating with the intermediation of Central Bank. In February 1987, the Central Bank started open market operations with the purpose of implementing monetary policy. In August 1988, a system of market determined exchange rates was created. In 1989, the full convertibility of Turkish Lira became effective which opened a period of international financial liberalisation that enabled the firms to borrow directly in foreign exchange (Kepenek and Yentürk 1996: 475). ‘All in all, the banking reform and financial liberalization strategies were attempts to adjust the Turkish financial market to those of the EC.’ (Müftüler 1995: 95).

Financial liberalisation and the establishment of new institutions and the introduction of new financial instruments facilitated the accumulation and circulation of capital and financial speculation. In 1998, 87,7% of profits of the many largest corporations came not from industrial activities, as the advocates of the neo-liberal economic policies would have suggested, but from financial transactions. This witnesses once more that capital seeks to move into activities that offer highest profits in a shortest time possible. As is the case in the world economy in general, the financial capital has enhanced its position in the economy of Turkey. Since nearly all the major holding companies own banks and insurance companies, the increasing power of the financial capital do not harm them as profit and rent-seeking enterprises in the short-run. It undermines, however, their surplus-value creating industrial activities in the long-run and they become increasingly parasitic.

Export promotion
Exchange rate management and export promotion were the two most important instruments of the new export-oriented trade policy since 1980. Indirect subsidies, such as preferential access to credit for exporters, tax exemptions, foreign exchange retention schemes for imports of intermediate goods, were the main fiscal instruments for promoting export until 1983. After 1983, as we have already seen, devaluation of the exchange rate became the main instrument for improving the competitiveness of exports (Lavy and Rapoport 1992: 320). Direct export subsidies in the form of tax rebates were also instrumental in promoting export until the end of 1988. ‘From 1981 to 1985 exporters received tax rebates and subsidized credit while nonexporting firms faced sharper increases in the real cost of borrowing.’ (Richards and Waterbury 1996: 245).

However the EC did not view the export promoting measures favourably. A resolution adopted by the European Parliament on 17 March 1989, accused the Turkish government of unfair competition because of its export promotion incentives. It also threatened Turkish government by not fulfilling its own obligations for the customs union to be realised in 1996. A few months later the government eliminated export subsidies and tax rebates on exports. ‘In 1989 all monetary incentives to exports had been lifted; however, the government adopted new measures to encourage exports, such as performance and pre-shipment credits, fund refunds, corporate income tax exclusion, and premium payments from Support and price Stability Funds which were very similar to the export incentives the Community members used for their own exporters.’ (Müftüler 1995: 93).

One of the institutional features of export promotion was the establishment of large ‘foreign trade capital companies’ which benefited most from the substantial export incentives. Many of these companies had strong links with large holding companies, and, in fact, they were subsidiaries of large business conglomerates. In order to avoid competition between the Turkish exporters that would lead to price reductions and thus to decrease in foreign exchange earnings and to enhance competitiveness in the international markets, the state supported these companies (Kepenek and Yentürk 1996: 285-86). At the end of the 1980s, however, the so-called ‘foreign trade capital companies’ system within the ‘free competitive market model’ (!) of the neo-liberal era collapsed.

The so-called free zones (export processing zones) were also instrumental in the transition from ISI to EOI and in attracting the foreign capital as well as encouraging the local capital. As it became clear in the 1970s that the relative importance of primary commodities in exports decreased and it would no longer be possible to increase export of those commodities to finance ISI and repay the debts, some countries implemented an export- substitution industrialisation (ESI). The ESI strategy involves export of industrial commodities in stead of traditional commodities to ease the crisis of ISI. The organisational representatives of the local big capital in Turkey, such as TÜSIAD and Istanbul Chamber of Industry, supported the idea of establishing free industrial and trade zones and ports. The export-substitution industrialisation takes place in these zones in which economic activities are exempted from restrictions, such as different kind of taxes, bureaucratic procedures. Capital movements in and out of the zones are free and, above all, national labour legislation does not apply. The relatively cheap labour-power and unorganised labour force were attractive to foreign capital as well as local big capital.

As a consequence of policies and measures such as these export increased and was also diversified. ‘Turkish manufactured exports responded very strongly to this new policy environment. Manufactures jumped from one-third of exports in 1980 to three-quarters in 1985, with continued strong performance thereafter (manufactures were 66% of total exports in 1989 and 72% in 1992). There was considerable diversification of manufacturing, and the sector’s efficiency rose. Turkish consumer durables became competitive in the discriminating markets of the European Union and the Gulf.’ (Richards and Waterbury 1996: 245). It must, however, be noted that increase in export in the first half of the 1980s was also due to the Iran-Iraq war. In the period 1982-85 Turkish exports to the Middle East and North Africa exceeded those to the EC. Iran was the single biggest market. ‘Thereafter, the older pattern re-established itself and the EC once again became the main Turkish export market.’ (Zürcher 1994: 310).

Privatisation as a subject for class struggle
There is an ongoing global debate on the privatisation of the state-owned economic enterprises in the context of neo-liberal restructuring of the world economy. Privatisation is an agency in the class struggle between different national and international social forces over the allocation and re-allocation of the ‘scarce’ resources. It is also an agency through which a substantial amount of state capital form of social capital is transformed into the other forms of social capital, namely into private financial/money, industrial and commercial capital. In other words, privatisation is private capitalism’s re-appropriation or plundering of state form of social capital.

In Turkey too, privatisation has been an integral component of the ongoing neo-liberal restructuring of the economic structures and the functions of the state. Privatisation involves economic, ideological, political and even cultural forms of class struggle between those national and international forces which advocate privatisation and those which oppose it. It is a form of state intervention in the economy in general, and in the relations of forces between capital and labour in particular. It is an integral part of the neo-liberal offensive against the working class in favour of capital. According to the advocates of neo-liberalism, the state must not intervene in the economy (32) or the state’s intervention should be minimised to those activities that supplement and facilitate the private sector activities. The state must particularly withdraw from production and commerce, that is, from the production and realisation processes of surplus value. Put it differently, the state must not compete with the private sector. If realised, this would mean that privatisation is nothing but an ‘extreme’ form of state intervention in the process of capital accumulation in the interests of capital. The complete or partial abolition of state ownership of capital leads to the further concentration and centralisation of capital in private hands and enhances political power of the capitalist class. Although its participation declined in the second half of the 1980s, one of the characteristics of the state sector in Turkey has been its strong presence in manufacturing of intermediate goods as well as consumer goods. The state is still the biggest capitalist in Turkey and has been a competitor, especially in textiles, to the private sector.

Although the successive Turkish governments have tried to privatise the state-owned economic enterprises (SEEs), privatisation in Turkey has proved to be a very difficult and slow process. For decades SEEs have been used, inter alia, as a relatively cheap source for private sector’s input and technologically neglected. ‘Most of the state industries were so old-fashioned and overstaffed that investors were not interested in them.’ (Zürcher 1994: 310-11). Therefore, the successive governments have taken measures to prepare the economic and political background for privatisation and restructure and make SEEs attractive for internal and international capital. An ideological campaign in favour of privatisation involving criticisms of SEEs being inefficient and wasteful accompanied these activities.

However, this is only one aspect regarding the difficulty and postponement of privatisation until the end of the 1980s. Political considerations and patronage politics played their part as well. Privatisation in Turkey has been the most contentious issue between the state, capital and labour, because SEEs play, inter alia, a very important role concerning relatively cheaper inputs for the industry, employment and social security. SEEs have always been a significant and effective means for influencing the prices of intermediate as well as consumer goods. Moreover, they have provided jobs in a country characterised by high rates of unemployment, that is, they have functioned as safety valves. That is why postponement of privatisation reflected a tactical move on the part of the state in a country with a long tradition in the state ownership of the means of production and state capitalism.

There has been strong public opposition to privatisation, especially coming from the state sector workers who are highly organised. However, there occurred division within the trade union movement regarding the counter-arguments and counter-alternatives against privatisation. In the meantime, several trade unions participated in auctions for SEEs scheduled for privatisation in the mid-1990s. The Constitutional Court annulled several pieces of legislation concerning privatisation. The Council of State refused to clear many projects under the build-operate-transfer scheme. In August 1999, the Turkish Parliament passed a law that limited the power of the Council of State to that of giving opinion regarding privatisation.

In Turkey, there are 256 SEEs and approximately 4,600 factories and plants (Dikbaş 1997: 23). By the end of 1993 only about US$2.3 billion in shares of SEEs had been sold, and of these less than 30% were sales which turned over majority shares to private hands (Adaman and Sertel 1997: 171). In the period of 1985-August 1997, 159 SEEs were included in the privatisation portfolio of which 121 were privatised either via sale of shares or asset sale. In 102 of the privatised 121 SEEs , no state equities were left (Undersecretariat of Treasury, 1997).

As noted above, privatisation was also a means of plundering the state assets in favour of domestic and international capital that collaborate in the neo-liberal restructuring process. The neo-liberal forces go so far as preparing fake reports about how inefficient and uncompetitive the enterprises are. The Iron and Steel Factory of Karabük (the first heavy industry establishment in Turkey) is a striking example. During the Tansu Çiller government, foreign advisory companies prepared a report, according to which, the enterprise had to be immediately closed down. However, the Union of the Chambers of Engineers and Architects in Turkey prepared a report based on documents argued otherwise (Dikbaş 1997: 99). Let us take a different example from the cement industry. Among the cement factories privatised by the end of 1993, five went to a French company. ‘The estimated profits over four years for the five plants purchased by the French company added, broadly speaking, to the price that was paid (Adaman and Sertel 1997: 171).

Intensified struggle among fractions of capital
The neo-liberal restructuring of the economy of Turkey has in essence been restructuring of capital itself via objective as well as subjective restructuring. The restructuring process of capital has been a process of struggle among industrial, financial and commercial fractions of the capitalist class for the distribution of surplus-value among themselves. There are, however, cross-cutting relations between different fractions of capital. Most of the large holding companies have their own banks and insurance companies and many middle and small sized capitalists function as sub-contractors for the large industrial capitalists. Each of these fractions aims at increasing its share regarding the redistribution of surplus value and maximise its profit.

In Turkey, in contrast to the highly industrialised capitalist economies, there are semi-feudal or pre-capitalist social forces, such as large semi-feudal landlords and usurer-merchants. Capitalist and pre-capitalist large landowners have still significant economic, social and political power in Turkey. These social forces have also been involved in the struggle for the redistribution of surplus value in the forms of profit, interest, ground-rent.

According to Sönmez, there took place struggle between monopoly capital and illegal commercial capital, within the financial sector and between monopoly capital and pre-capitalist social classes (1982: 180, 225). Illegal commercial capitalists were the main representatives of the hidden or parallel economy which has always been powerful in Turkey. Illegal commercial capitalists were engaged in illegal import, foreign exchange transactions and other sort of financial operations, and black-market, etc. In the process, the monopoly capitalists enhanced their economic as well as political positions within the system. Centralisation of capital was one of the aims of the new industrialisation strategy. Therefore, there took a ‘cleaning-up operation’ which aimed at reallocation of the resources from unwanted sectors to favoured sectors. This would lead to centralisation of capital which, in its turn, would make the large scale reproduction in specialised sectors possible. Centralisation of capital have been realised sometimes through incentives (tax exemption, credit), sometimes through pressure (stipulation for capital increase in the banking-sector), deflationary measures, import liberalisation etc. that led to bankruptcies, composition (a legal agreement to pay a sum in the place of a larger sum, or other obligation), liquidation, takeovers (Sönmez 1982: 98-99, 107). Here we see the interaction of objective and subjective restructuring at work.

Before 1980, there were industrial capitalists who were engaged in export of industrial goods, but ISI was the dominant mode of capital accumulation. The domestic market-oriented capitalists were also active in foreign trade. The dominant mode of accumulation of the 1980s and 1990s did not emerge out of the blue, but it grew within ISI. Those large capitalists who were the main agents of ISI in private sector are still engaged in production for domestic market, they are not entirely export-oriented. This new mode, EOI, has required a change in economic, social and political institutions to develop to its fullest potential. In the process of neo-liberal economic and political restructuring the office of prime minister, the ministry of finance, the ministry of foreign affairs and those state organs involved in foreign trade have gained importance in relation to other ministries in comparison with the ISI period.

The money-capital, particularly the banking sector and a small group of rentiers benefited most in the restructuring process. It must, however, be emphasised that most of the large industrial companies own also banks, they are holding companies. They represent the merging of the banking-capital and industrial capital into finance capital. Those industrial firms which have not owned banks, insurance companies, etc. fared worst in the redistribution of surplus-value. One striking feature of the neo-liberal restructuring is the diversion of resources away from productive investment towards unproductive, speculative activities with short-run return. The large capital in Turkey follows the global trend and there is so much talk about speculation/rent economy in Turkey.

The rise of ‘Islamic capital’ and political Islam
The rise of political Islam and ‘Islamic capital’ have been two striking phenomena of the neo-liberal restructuring process in Turkey which deserve attention. As we have already seen, the ‘Kemalist’ military dictatorship as well as the right-wing civilian governments have used Islam as a weapon against the organised opposition as well as a means to legitimise the restructuring of the economy. This facilitated the emergence of ‘Islamic capital’ or, in words of Bulut, ‘tarikat-capital’ (33) (1995: 14) in the restructuring process as a relatively powerful economic force. Thanks to the economic environment created in the neo-liberal restructuring process in which politicians like Özal played a crucial role, the ‘tarikat-capital’ has gathered strength. Turgut Özal was a member of the Nakşibendi order and his brother, who became very rich in the process, had been a leading member of the religiously-oriented National Salvation Party (the predecessor of the WP). Some sections of the ‘tarikat-capital’ have become an integral part of large capital and holding company is one form of organisation of the ‘tarikat-capital’.

Bulut distinguishes four stages in the development of the ‘tarikat-capital’ in Turkey: 1923-50; 1950-1973; 1973-1983; 1983-1994. (34) In the first stage, the ‘Islamic capital’ and Islamic circles in general were in defensive. In the second stage, with the help of the DP and AP governments, it became a middle-sized economic power. In the third stage, it grew very fast and got international support, particularly from the Saudi capital. In the forth stage, particularly in the Özal period, the state facilitated the development of the ‘tarikat-capital’. In this stage many large ‘Islamic’ companies were established of which some organised themselves as holding companies with international links in Europe as well as in other parts of the world (Bulut 1995: 364-71).

Although they are still weak compared to the well established ‘secular’ large holding companies, the ‘Islamic holdings’ are an economic force to be taken into account. Besides the clandestine organisations of which tarikats are the main ones, the ‘tarikat-capital’ is also organised as a political party, (35) foundations, business associations, etc. On 5 May 1990, The Independent Businessmen Association (MÜSIAD) which represented the ‘tarikat-capital’ was founded in Istanbul: MÜSIAD (Moslem capitalists) against TÜSIAD (secular capitalists). Most of the members of MÜSIAD are predominantly domestic market-oriented and own small and middle-sized firms.

Perhaps the ‘tarikat-capital’ and MÜSIAD are more neo-liberal and supporter of the ‘free’ market economy than those capitalists who are organised in TÜSIAD and some other associations Perhaps they are much more against the state intervention (against the intervention of the present state anyway) in the public life in general, and in the economy in particular. In general, the present state intervention runs counter to the interests of the ‘tarikat-capital’ and political Islam. As Bulut points out, MÜSIAD advocates privatisation and regards SEEs as ‘Frankenstein’. According to MÜSIAD, the state must become smaller and occupy itself with security issues and let the production of tanks, canons, plate, fork, etc. to them (the private sector) (1995: 430-31). MÜSIAD argues that privatisation is an appropriate means to strengthen the free market economy and private sector, renew the technology, improve the productivity of the enterprises, redistribute the wealth to broad masses and realise the minimal state, etc.(MÜSIAD 1993: 78).

An economically powerful political Islam is, to a certain extent, the product of the neo-liberal transformation of the economic and political structures. The ‘tarikat-capital’ has provided an economic basis to the rising political Islam in Turkey. Put differently, religious political radicalism has established itself as a significant economic power to be reckoned with. With their increasing economic powers, the religious sects and the capitalists connected to them have become major players in political life in Turkey. In the 1980 and 1990s, we have witnessed to the rise of political Islam as an economic, social, political, ideological and cultural force that, for the first time in the history of the Turkish Republic, managed to be the main partner in a coalition government. The coalition government of political Islamist WP and ‘secular’ TPP continued with neo-liberal policies.

Read more... Conclision

(32) The state has intervened several times to save some privately owned large companies and banks from bankruptcy in the age of neo-liberalism in Turkey..
(33) Tarikat means religious order and there are many religious orders in Turkey which play active role in every aspect of society.
(34) As far as the present position of the ‘tarikat-capital’ is concerned, this stage still continues.
(35) Not all the religious orders are organised in a single party. Because of differences of interests and opinions they are represented in different right-wing parties. Some even refuse to be involved in party politics.