Turkey’s capital-owning class and COVID-19

It appears that Turkey’s capital-owning class largely agrees that the pandemic has brought two opportunities. The first has to do with broadening their vast exploitation of labor. The second has to do with obtaining a strategic place in the global supply chain, which is expected to break off from China. 

As the supply chain is based on cheap labor, the former opportunity is a sine qua non condition for the latter. Soaring unemployment and low pay coupled with an oppressive government produce ideal conditions for capital owners. In that sense, the coronavirus outbreak is a godsend for the capital-owning class. 

With regards to the second opportunity induced by the coronavirus, let us examine the perspectives of Turkey’s two largest capital owner organizations. 

The following analysis is based on a COVID-19 report published by MÜSİAD, the Independent Industrialists’ and Businessmen’s Association, a conservative business association, from a letter by Simone Kaslowski, the head of TÜSİAD, the Turkish Industry and Business Association - another, longer running business association – that Bloomberg HT published on May 20. It also draws on elements from an interview with Simone Kaslowski published by the Sabah daily on May 18. As we will see, MÜSIAD and TÜSIAD present strikingly similar assessments and objectives with regards to the COVID-19 crisis.

The Global Political Situation 

MÜSİAD: Our objective is to achieve a self-sufficient economy alongside a strong nation-state that is able to protect its borders. Europe is waning. European companies, and especially Italian ones, are crippled with debt. This will inevitably lead to bankruptcies. It was widely argued that declining oil prices amid the coronavirus epidemic would deeply affect Russia, Iran and the Gulf countries. Yet countries like Qatar have such large reserves that have not been affected. Russia will also likely recover in time. In Iran, on the other hand, the economic fallout of the pandemic could usher in a regime change.  

TÜSİAD: The West’s economic might is picking up. The pandemic will cause economies to shrink in China and Asia as a whole, which in turn, could trigger shifts and reactions. The region will have to swap its export-oriented model for policies that focus on domestic demand. If the drop in oil prices persists, countries like Russia that balance their budget with natural resource revenues will be hard hit. This, in turn, will lead to political troubles. At a time when populist movements are gaining ground, people have come to understand that their rulers have ignored crucial issues. Protectionist, import-substitution policies would cause further damage. 

Target Markets 

MÜSİAD: We share certain affectionate ties with countries like Russia and the US. We also harbor mutual commercial and tourism ties with those states. Those could be further deepened. Still, we should not relinquish our China-focused strategy. Besides, we should build ties with countries like Pakistan and the Philippines whose relationship with Turkey is growing. In the post-Brexit era, the UK and Turkey could also bolster their ties. As for Africa, the continent should be treated with utmost importance. 

TÜSİAD: The change in the US and EU supply chains presents us with a great opportunity. We should seize it and drawn on creative destruction. As Turkey, we are fortunate to be placed right next to Europe and enjoy sound industrial infrastructure. Yet Turkey isn’t the only country that wishes to make use of the situation. Eastern and Southern European countries have also rolled up their sleeves and are seeking their share of the pie. In that sense, our Customs Union must be overhauled. Steps should be undertaken on both sides, Turkish and European. 

New Financial Opportunities 

MÜSİAD: We ought to grant more space to labor-capital partnerships, capital partnerships and the local versions of such partnerships. This should be done under the
guarantee of the state and the leadership of MÜSİAD. Such a partnerships could prove favourable to those who wish to invest in Turkey. Gulf capital, for instance, would be eager to form such partnerships. Investments from abroad should be encouraged through such incentives. 

TÜSİAD: As a country inside the supply chain, access to finances, credit notes and currency fluctuations in international markets are of crucial importance. Unofficial international arrangements in the financial sector and the government’s economic policies will affect market and consumer confidence. We should never give up on free market principles and the convertibility of the Turkish lira.    

Political Expectations 

MÜSİAD: Opportunities should be expanded for people with commerce and industry backgrounds to take up more ministerial positions. Turkish citizenship and residence have become more valuable. The principles for acquiring Turkish citizenship should be reviewed. With regards to self-sufficiency, we should focus on foreign direct investments, as well as on investments and partnerships related to the provision of supplies to our business community abroad.  

TÜSİAD: It is crucial that Turkey returns to its reform process with regards to democracy and the rule of law. In the early 2000s, with the EU anchor and our transatlantic alliance, we were able to develop our ties not only with the West, but also with our neighboring countries. The development of alliances in the international area coupled with diplomacy and cooperation are key to solving our problems. 

The contrast in the respective rhetoric of both business associations does not stem from competition or rivalry. One should bear in mind the strong ties between central and sub-industries. Still, the historical trajectory of capital formation in Turkey has resulted in important differences. Despite that, the solving of economic crises can only be achieved through a “consensus” led by centralized and monopoly-holding entities that have the means to uphold their regime of capital accumulation. 

Amid the pandemic, the concepts of ‘supply chain’ and ‘authoritarianism’ have been widely discussed. Both belong to the same overall structure. 

Whist examining the Turkish economic crises of 1979 and 2001 as well as their aftermaths, one notices that the concepts of authoritarian and democracy are interchangeable.  

This applies to this day. As Karl Marx once said, “the state does not hang in the air.” Dominance over labor power and society does not entail a capacity to overcome problems related to capital accumulation. State supremacy lies in its capacity to manage both. 

If the government is able to solve this puzzle, that is, by using its dominance on society to seize the “supply chain” opportunity, one could view our current times as a period of authoritarianism that is to be followed by a democratic resurgence. For that is what happened in the aftermath of the 1980 coup and the AKP’s ascent to power in 2002.