Etatism—Turkey

Etatism (statism), derived from the French word état (state), was adopted as one of six ideological principles of Kemalism, the founding ideology of the Republic of Turkey, named after Mustafa Kemal (later Ataturk). The others are republicanism, secularism, nationalism, reformism, and populism. The Republican People's Party (RPP), which was founded in 1924 and ruled until 1950 as the single and, therefore, dominant party, incorporated the principle of etatism into its program as the term defining the official economic strategy at its 1931 congress. In 1937 the principle was incorporated into the Turkish constitution.

Etatism has two interrelated meanings. Broadly, it referred to the state-centric component of Kemalist ideology, which stressed the autonomous role of the state in shaping policy outcomes and societal forces. It reflected the Kemalists' intentions to use the state as a pioneering and active agent of modernization. Etatism gained a more limited meaning after the fourth RPP congress, which was held in 1935. There the term was used to refer specifically to the economic strategy of the ruling RPP, which called for state involvement in the economy to advance the nation's welfare and prosperity. The state's involvement in the economy did not mean the abolishment of private initiative, as was the case of Soviet-style collectivism. Private enterprise was to play a fundamental role in the economy, but coordinated government intervention was considered to be essential to accelerate the accumulation of initial capital necessary for rapid economic development, since the private sector was too weak to undertake this task. Etatism encouraged indigenous capitalist development by shielding the local infant industries through various protectionist policies.

The Republic of Turkey was founded in 1923, the same year in which the Allies recognized Turkey as an independent state with the signing of the Lausanne Treaty. Successive wars since the Ottoman Empire's entry into World War I in 1915 and the War of Independence between 1919 and 1922 had had a devastating impact on the economy of the Anatolian peninsula. The Lausanne Treaty contained some restrictive clauses that set the tone for the economic policies of the new republic. Turkey was not required to pay war reparations, but it agreed to pay the debts of the former Ottoman empire—the last installment was paid in 1953. The treaty also prohibited Turkey from adopting a protective customs regime until 1929. The underlying rationale was to protect the rights of the foreign firms operating in Turkey. In exchange for its recognition as an independent state, Turkey agreed to that term, but the state then gave support to Turkey's weak private sector through a complex system of incentives and subsidies in line with the guiding principles adopted at the Izmir Economic Congress of 1923. The passage of the Law for the Encouragement of Industry in 1927 was the first sign of the expansion of state control over industry.

Having faced the aftereffects of the Great Depression of 1929, which signaled a collapse of liberal laissez-faire economics in Europe and the United States, republican governments began to formulate conscious etatist policies. Having been influenced by the interventionist trend in Western European economic theory and the practical insights drawn from the successes of the planned industrialization efforts (1928–1933) of the Soviet Union, the Kemalist elites, in search of some alternatives to laissez-faire economics, revised their earlier liberal economic policies along etatist lines. One of the first measures they imposed was the nationalization of foreign companies operating in such various sectors as infrastructure and the service sector. The nationalization program, completed in 1939, paved the way for further state control of the economy through expanding public ownership into different branches of the economy. In addition to the failure of laissez-faire liberalism in the late 1920s, the lack of initial capital formation and entrepreneurial spirit, as well as the need for protectionism, can be counted as three basic reasons for the state's turn to etatism in the 1930s.

The state took two crucial steps that constituted the backbone of etatist policies: first, large state-owned or -controlled companies, known as state economic enterprises (SEEs), were founded; second, industrial development plans were formulated. The state's active involvement in the economy under the guise of etatism created the earliest patterns of an inward-looking industrialization strategy in which the SEEs such as Sumerbank (1933) and Etibank (1935) would play a leading role. These were giant state companies, specialized in diverse manufacturing industries such textiles, mining, and extraction and founded for the production of intermediate, consumer, and producer goods. The foundation of People's Bank of Turkey (1935) and the reorganization of Agricultural Bank of Turkey (1937) on etatist principles signaled the state's expansion in the financial sector through a network of credit facilities, grants, and subsidies.

To coordinate public and private industrialization efforts, the state launched comprehensive plans. The First Five-Year Industrial Plan was launched in 1934. The second one, launched in 1938, became obsolete with the outbreak of World War II in 1939. Some minor plans were also designed on a sectoral basis, as in the case of mining. Centrally planned industrialization strengthened etatist control over the economy, since the state began to intervene intensely in industry, commerce, and finance to achieve the objectives set in the plans.

Under etatist policies, the public sector had a pioneering role in the economy; etatism also provided a new basis of political legitimacy for Kemalism by making the state the most active institution, one that would lead the nation to the highest levels of material welfare. Etatist policies in effect from the 1930s until 1980 made the state a significant economic actor in Turkey.

After Turkey's transition to multiparty politics in 1950, all the major parties on both the left and the right supported the etatist policies that the RPP had launched in the 1930s. Therefore, vestiges of etatism survived until the 1980s in the form of central planning, protectionism, and the state's pioneering role in the import-substitution method of industrialization. These vestiges impeded the development of a full market economy. Etatist practices created an economic system that suffered from weak export capacity, chronic trade deficits, shortages of foreign currency, and balance-of-payment deficits.

Influenced by the West's popular supply-side economic policies, the Turkish economy was reoriented at the beginning of the 1980s and moved from a stateled model of industrialization to an export-oriented growth strategy. The etatist policies that the state had followed since the 1930s were severely challenged as the Turkish economy embarked on a journey of restructuring according to liberal principles.

Barlas, Dilek. (1998) Etatism and Diplomacy in Turkey: Economic and Foreign Policy Strategies in an Uncertain World, 1929–1939. Boston, MA: Brill Academic Publishers.

Boratav, Korkut. (1974) Turkiye'de Devletcilik (Etatism in Turkey). Istanbul, Turkey: Gercek Yayinlari.

Heper, Metin. (1985) The State Tradition in Turkey. Walkington, U.K.: The Eothen Press.

Koker, Levent. (1990) Modernlesme, Kemalizm ve Demokrasi (Modernization, Kemalism, and Democracy). Istanbul, Turkey: Iletisim Yayinlari.

Landau, M. Jacob, ed. (1984) Ataturk and the Modernization of Turkey. Boulder, CO: Westview Press.

Lovatt, Debbie, ed. (2001) Turkey since 1970: Politics, Economics and Society. New York: Palgrave Publishers Ltd.

Parla, Taha. (1989) Ziya Gokalp, Kemalizm ve Turkiye'de Korporatizm (Ziya Gokalp, Kemalism, and Corporatism in Turkey). Istanbul, Turkey: Iletisim Yayinlari.

Singer, Morris. (1977) The Economic Advance of Turkey, 1938–1960. Ankara, Turkey: Ayyildiz Matbaasi A.S.

Tekeli, Ilhan, and Selim Ilkin. (1982) Uygulamaya Gecerken Turkiye'de Devletciligin Olusumu (Development of Etatism in Turkey in Transition to Implementation). Ankara, Turkey: Middle East Technical University.

——. (1982) 1929 Dunya Buhraninda Turkiye'nin Iktisadi Politika Arayisi (Turkey's Search for an Economic Policy during the World Depression of 1929). Ankara, Turkey: Middle East Technical University.

Tuncay, Mete. (1981) Turkiye Cumhuriyetinde Tek Parti Yonetiminin Kurulmasi, 1923–31 (The Establishment of One-Party Regime in the Turkish Republic: 1923–31). Ankara, Turkey: Yurt Yayinlari.

This is the complete article, containing 1,273 words (approx. 4 pages at 300 words per page).