Debating ‘State Capitalism’ in Turkey: Beyond False Dichotomies

Following the 2016 failed coup attempt, and in the context of increasing mistrust towards the West, Turkey’s president Erdogan reflected his discontent with the EU and argued that Turkey should instead join the Shanghai Five, namely the Shanghai Cooperation Organisation (SCO) led primarily by China and Russia. Soon after, despite being a NATO member, Turkey signed a deal with Russia to buy the S-400 air defence missile system. Taken together with Turkey’s other ‘adventures’ in its region, these developments were perceived as manifestations of a changing political economy of Turkey, and were deeply disturbing to Western powers. After all, since the end of the Second World War, Turkey had been a close ally of the US-led Western capitalist bloc, it continued to be one during the Cold War; and had remained very close to US and EU interests following the end of the Cold War in 1991.

For some accounts[i], these developments are related to the changing world order and global power shifts following the 2008 crisis, as the decline of the ‘liberal international order’ and the rise of BRICS (Brazil, Russia, India, China and South Africa) marked transformations of the global political economy. Hence, there is a tendency to explain Turkey’s late political economy in this context. It is argued that, in this ‘post-liberal international order’ where two competing political economies come to the fore, Turkey is moving towards the ‘East’ or ‘non-West’ – mainly China and Russia. As such, Turkey’s engagement with non-Western ‘great powers’ (which are generally characterised by ‘authoritarian state capitalism’ as opposed to the ‘neoliberal political economy’/liberal democracy/’democratic capitalism’ of the West), shapes Turkey’s political economy and paves the way for ‘authoritarianism’, ‘illiberal democracy’ and ‘state capitalism’. Put differently, as the legitimacy crisis of ‘Western neoliberalism’ makes it less desirable for countries like Turkey, Turkey is regarded to have deviated from neoliberalism and liberal democracy and moved to state capitalism and authoritarianism.

These accounts seem to provide a coherent picture, and these arguments are backed by various examples demonstrating increased authoritarianism and changes in economic policies. For example the transition to a ‘Russian style presidentialism’ (from parliamentary democracy), increased state economic intervention (via the recently created Turkey Wealth Fund and intensified ‘crony practices’), abandonment of rule-based economic policy and de facto ending of Central Bank independence, as well as ‘de-Europeanisation and de-Westernisation’ processes are all argued to be related to this paradigm shift. It is also argued that there are still elements of continuity with the earlier ‘neoliberal’ period; but authoritarian state capitalist practices are much more prominent in shaping the character of the late political economy of Turkey under the Justice and Development Party (‘the AKP’) government.

Despite grasping significant aspects of the transformation of the global political economy, these accounts suffer from essential flaws. These include various problematic ‘dualisms’ and dichotomies such as national and global, state and market (or state capitalism and liberal democratic capitalism), authoritarianism and democracy, all of which are not understood relationally. First of all, they implicitly or explicitly share what I call the ‘good AKP goes bad’ perspective. As such, the early AKP years in the 2000s are characterised by progressive political economy and Western-backed ‘democratisation’ as well as ‘social’ and regulatory neoliberalism while the 2010s are characterised by authoritarianism under the influence of non-Western powers. The neoliberal authoritarianism of the earlier periods is dismissed. Second, as Alami and Dixon criticised elsewhere, a very clear-cut dichotomy of ‘state capitalism’ and ‘neoliberalism/free-market capitalism’ as two radically different political economies is suggested. An idealised image of Western free-market capitalism, where the liberal democratic state does not interfere with the economy (or this intervention is quite limited), is portrayed in contrast to the authoritarian Eastern state capitalism, which is characterised by the state’s heavy economic intervention, strongman regimes and weak checks and balances. Third, a state-market dichotomy is emphasised in these accounts (i.e. the market was dominant in the 2000s and the state is dominant in the 2010s), hence, the notion of class is absent in these analyses. There is hardly any analysis of labour market restructuring and the continuity thereof. Fourth, it is argued that the recent economic turmoil in Turkey since the summer of 2018 is somewhat resultant of these state capitalist practices, not of neoliberalism per se.

We should take recent developments, changes and ambiguities in Turkey’s political economy seriously, and attempts to conceptualise and make sense of these developments are useful. However, As Nicos Poulantzas once said, ‘concepts and notions are never innocent’. I contend that this needs to be done through critical concepts and notions which allow us to see the continuities in state activism that ‘strive to manage labour-power, money, and land/nature in ways consistent with expanded capitalist reproduction’. Critical political economists tend to conceptualise these developments and make sense of the new forms of neoliberalism under nationalist and authoritarian-developmentalist guises. Furthermore, the recent turmoil in the AKP government’s economic management and a ‘U-turn’ both in discourse and policy demonstrate the ongoing value of critical concepts such as ‘dependent/subordinate financialisation’.  

In this context, the concept of state capitalism in its current renewed form since the late 2000s is uncritical and its analytical value remains weak; and in the Turkish context amounts to an exaggeration of practices that reflect contradictory crisis management by the capitalist state. To what extent do continuation of liberal finance and trade regimes (ongoing capital account  openness and EU Customs Union membership; despite occasional ‘soft capital controls’ against currency crises and soft protectionism in line with global trends), financialisation, ongoing privatisations, deregulations and flexibilisation of the labour markets mark a real rupture? To what extent do they deserve the term ‘state capitalism’? Or, as Bedirhanoglu puts it, does the ‘shift of axis’ argument stand up to scrutiny if Turkey’s ongoing political and defence engagements with the West are considered?

Arbitrary periodisations and false dichotomies often lead to misconceptualisations that fail to grasp the complex, contradictory and uneven processes of capitalism, their totality and inner connections. Hence the analytical value of these concepts remains very limited. This is also important for political reasons and has significant political implications. What would be a progressive response to Turkey’s ongoing crises? President Erdogan’s recent remarks that Turkey sees its future in Europe would be welcome by commentators who sustain their critique on ‘authoritarian state capitalism’ lines and endorse ‘democratic capitalism’ and  ‘core EU values and norms’ including the ‘rule-based market economy’. A more progressive vision, however, entails a more radical, labour-centred development/strategies that challenges and goes beyond existing conventional paradigms.

Mehmet Erman Erol is a Postdoctoral Researcher at the University of Cambridge. Photo: A view of Levent financial district in Istanbul from the observation deck of Istanbul Sapphire. Source: Derrick Brutel.

Read a Portuguese translation of this post on Disparada.

[i] The works I refer to in this piece in the context of state capitalism in Turkey are produced by prominent political economists Ziya Onis and Mustafa Kutlay. See Öniş (2019); Kutlay (2020); and Öniş & Kutlay (2020)

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