Capitalism with Islamic Characteristics


BOOK REVIEW: New Capitalism in Turkey: The Relationship between Politics, Religion and Business by Ayşe Buğra and Osman Savaşkan (Edward Elgar, 2014, ISBN: 9781783473120, 224 pages, £60.24)

This book is about the developments that have transformed the coordinates of business activity, which led to the emergence of new layers of economic/political elite and a changing role of the government in economy in Turkey during the last 30 years. The authors analyse the reshaping of the Turkish business environment within a wider context of the transformations taking place against the historical background set by twentieth century experience of economic, political and cultural change in the country. An analysis of the relationship between Turkish capitalism and capitalist globalization is also provided as the background within which to understand the last 30 years’ significant changes in Turkey.

This is the story of the emergence of the “Turkish way of combining ‘moderate’ Islam with rational economic management and political democracy, which has been widely presented as a model for other Muslim countries” (p.3). The official beginning of this new phase is 3 November 2002, the date when Turkey had broken sensationally with its political old guard. The former governing parties all recorded less than 10 per cent of the national threshold and were no longer represented in the National Assembly. During the November 2002 elections, voters turned in vast numbers to a new political party with firm Islamic roots. The Justice and Development Party (AK Party) was formed in August 2001, by ‘moderate’ members of Turkey’s outlawed pro-Islamic Virtue Party.

The first part of the book presents an overview of economic developments and cultural modernisation in the republican period of Turkish history. From the start of this period, in 1923, the republic emerged as a state with a military backbone, possessed of an official ideology—known as Kemalism after the founder of the republic, Mustafa Kemal, committed to strict laicism and administered by militantly secular modernizing elite. In the mainstream accounts, this has been conventionally described as an epic struggle led by Westernising secularist establishment against a deeply religious and conservative population.

During those early years, Mustafa Kemal and his associates by their actions resolved a fundamental question— whether the new Turkish regime would reach an accommodation with the people or rule over them. Any genuine accommodation with people would have required a serious modification of the militantly secular Turkish nationalism. The leadership chose to decide what the country needed and enforced its decisions, regardless of what the majority of the people thought about the matter. In this way, a critical mass of repression was built up in Turkey, and a huge gap created between the governing elite at the centre and the people on the periphery.

In the eight subsequent decades, secularism itself has come to resemble a state religion in Turkey. The Kemalist-Turkish nationalists’ denial of the Ottoman – Islamic heritage constituted a major problem particularly in terms of understanding and connecting the majority of Turkey’s Muslim population, both Turkish and Kurdish. The power and legitimacy of the new republic were from the start based on this conflictual relationship.

From the 1950s onwards, some of the harsh policies of the state were softened to allow some moderate Islamist groups to operate legally. Later from the mid-1980s flexible, perhaps even encouraging, response to Islamic activism and political liberalization opened up new opportunities for Islamist groups. All this political process was also accompanied by a social/ economic transformation which eventually prepared the ground for the rise of a moderate Islamist ideology of the ruling elite, which is the topic of the rest of the book. In this later period, the centre—made up of the civil servants, soldiers, bureaucrats, intellectuals, and state-protected businessmen—started to break up in the 1970s, assuming new social and cultural characteristics. The main reason for this was the fast growing and persistent movement from the periphery towards the centre. Some of those social groups that once made up the periphery started to gain more and more socio-economic mobility and moved to the big cities in large numbers. These made up an important section of the young and dynamic middle class. Many of them have become effective social/ economic actors through their business activities and entrepreneurship. This new group of people brought their provincial identity and more traditional values/ demands with them into the centre. Such values and demands, differentiating them from the more urban and secular old business elite, have found a place in the centre, all of which led to a significant tension in Turkish society that has shaped most of political and cultural conflicts up to current day.

Politically and economically, AKP rule corresponds to the requirements of Turkish capitalism of the 21st century. As Bugra and Savaskan write, AKP is a typical bourgeoisie party with its mix of social/ cultural/ religious conservatism and nationalism and total reliance of neoliberal free-market policies. (pp. 2, 49, 59-61) It is a conservative centre-right party in the tradition of the Democrat Party (DP) of the 1950s, the Justice Party (AP) that dominated the 1960s and 1970s, and the Motherland Party (ANAP) of the 1980s and 1990s. Just like its predecessors, AKP has looked at the dominant economic elite of international capital, and continued with policies of neoliberal privatisation and de-regulation. Even the 1980 military coup, which marched in the footsteps of Chile’s coup under Pinochet, helped the capitalist process by preparing the ground for a harsh neoliberal programme of privatisation/ deregulation by quashing the left and trade union movement. Erdogan’s AKP took the neoliberal capitalist development in Turkey one step further and secured a full integration of Turkish economy within the global capitalist system. In this period, the class basis of Turkish capitalism was broadened by turning small rural bourgeoisie of small-to-medium scale producers of Anatolia into a globally active industrial bourgeoisie. (pp. 151-165) “The rise of political Islam did not create an obstacle to the development of capitalism in the country” (p.172) The Turkish case is an obvious reminder that Islam and capitalism are mutually reinforcing and compatible as the religiously observant provincial bourgeoisie acting as the kingpin of this recent economic progress.

New Capitalism in Turkey is a highly valuable contribution to established and ongoing debates about the nature of capitalist transformation in Turkey. It provides a convincing narrative to understand the multi-level relationship between politics, religion and business through an analysis of the contemporary Turkish business environment. This book is a welcome addition to the growing literature on Turkish economy, capitalism and Islamism.

Bulent Gokay
Keele University

[First published by Political Quarterly, vol 86, no.2, April-June 2015, pp. 331- 333.]

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Maduro and the market: Can Chavistas keep the revolution on track? | Steve Ellner


May 13, 2015 – versions of this article were published in Red Pepper (April-May issue) and Alborada.net, posted at Links International Journal of Socialist Renewal with permission of the author — It’s a point of honour for Venezuela’s government that despite the sharp plunge in oil prices and acute shortages of goods, President Nicolás Maduro has ruled out austerity measures. In a recent TV interview conducted by former vice-president José Vicente Rangel, Central Bank president Nelson Merentes explained why, when he asked: “Do you remember what happened on February 27, 1989?”

On that date massive nationwide disturbances broke out after the government of Carlos Andrés Pérez announced sharp price hikes and negotiations with the International Monetary Fund, setting the stage for the 1992 military uprising led by Hugo Chávez. The memory of February 27 and the decision of the formerly left-leaning Pérez to come to terms with powerful economic groups as a way out of pressing economic difficulties undoubtedly weigh on Maduro’s response to the current situation.

Since assuming the presidency following Hugo Chávez’s death in March 2013, Maduro has faced intense economic and political problems. In the first place, he inherited a highly depreciated bolivar, the local currency, which began to lose value in late 2012, when Chávez was undoubtedly suffering intense pain from the cancer that killed him but when immediate government action was required. Any attempt by Maduro to devaluate the official exchange rate once he assumed the presidency would have run the risk of setting off an inflationary spiral.

Additionally, throughout Maduro’s two years as president, opposition forces have engaged in numerous disruptive and sometimes violent protests, with dozens of fatalities, including 10 security force officers. The perpetrators have been abetted by an international media that minimises the gravity of their actions, and the US government, which has imposed sanctions on Venezuelan government officials for alleged violation of human rights. In March, US President Barack Obama issued an executive order that condemned Venezuela’s supposed human rights abuses and then declared the country “an extraordinary threat” to US “national security,” a move that legally paves the way for economic sanctions.

Taking the middle ground

In an economic policy announcement by the government on February 10, Maduro took a middle ground between regulated prices that are completely out of sync with the market, or even production costs, and prices pegged to market conditions. On the one hand, in recognition of economic reality, the government legalised and regulated the open market for the purchase of foreign currency, transactions that had previously constituted a black market. On the other hand, in a deviation from market economics, Maduro retained the exchange rate at 6.3 bolivars to the dollar for the import of basic commodities. This rate was 27 times less than that of the open market.

The ever-widening disparity between the official exchange rate and the unofficial one over the last two and a half years has generated acute problems of contraband, hoarding and price speculation. In addition, the black market rate has undoubtedly been fertile ground for money laundering. The government sets artificially low prices not only on foreign currencies, but also basic commodities, a practice that also contributes to the problem of contraband and the black market for scarce goods.

The most blatant example of artificial prices is petrol, which is the cheapest in the world. The policy of subsidised prices undermines the viability of state companies that are forced to sell below cost. In contrast, private firms are sometimes able to get around price regulation by altering the content of products in order to market them as non-regulated.

The recent legalisation of the open market for the purchase of foreign currencies is designed to check speculation. The main service that quoted the price of the dollar on the black market was the vocally anti-Chavista on-line Dollar Today, operating out of Miami, thus indicating that the bolívar’s rapid depreciation may have been at least partly politically motivated. A second motive behind the new measure was the promotion of exports by allowing enterprises to repatriate profits legally at the open-market rate.

The government has also avoided extremes in its enforcement of legislation prohibiting hoarding, contraband and price speculation. On the one hand, the government through the Just Price Superintendence (SUNDDE) has fined, confiscated merchandise and in some cases occupied hundreds of commercial establishments, including large ones. In recent months the government took over eight warehouses of Herrera C.A., exclusive distributors of the products of Kellogg’s, Nestle, General Mills, Procter and Gamble, and Pfizer, and detained leading executives of the oligopolistic pharmacy FARMATODO.

Large companies such as Herrera C.A. that engage in hoarding have more to lose than smaller ones, and thus political motives most likely enter into play. Their hoarding practices and probable complicity in the black market and contraband lend credibility to the government’s claim that powerful groups are engaged in an “economic war” against it.

On the other hand, the government has accepted the insistence of the country’s chamber of commerce, FEDECAMARAS, that the government proceed according to established legal channels. Consequently the government has ruled out a fast track, which may be justified in emergency situations, and at the same time has refrained from publicising the judicial proceedings against accused businesspeople.

Maduro has insisted that political conditions are not suitable for the implementation of drastic economic measures that an intransigent and aggressive opposition could exploit. In addition, Maduro told José Vicente Rangel that the issue of petrol prices “is always a delicate one with regard to the sensibilities of Venezuelans”. He added that given the existence of “mafia speculators in Venezuela, a decision like this may add fire to the flame” and thus the government needs to wait for the right moment to act.

Leftist hardliners and dogmatists ignore the importance of the market and thus write off the black market as the creation of speculators that could be eliminated by efficient government policing.

At the opposite extreme, some pro-Chavista economists call for the discontinuance of the 6.3 exchange rate and its fusion with others so that the official rate would be pegged and close to the open-market one. While logical in the abstract,such a plan ignores the ensuing detrimental social effects. The elimination of highly subsidised prices (which are made possible by an overvalued currency for the import of basic products), in order to stimulate production and commerce, will disproportionately hit the population.

Urgent political imperative

Although the Chavistas have managed to win elections held during the last two and a half years, solving the problem of scarcities, or at least getting it under control, is an urgent political imperative. According to the respectable polling firm, Hinterlaces, the country’s pressing economic problems ,and specifically shortages, now surpass other issues as the principal source of concern for eight out of 10 Venezuelans. Furthermore, the pro-opposition polling company Datanálisis reports that 51 per cent of government supporters consider the situation in the country “negative”. Hinterlaces president Oscar Schemel maintains that the main Chavista challenge does not come from the camp of the opposition, which lacks a viable program, but rather undecided voters and the likelihood of a “punishment vote” in future elections.

Elections for the General Assembly are slated for the end of the year. Just as opposition standard bearer Henrique Capriles called the previous 2013 municipal elections a “plebiscite”, opposition leaders now announce that a triumph in the upcoming elections will pave the way for regime change and that the appalling scarcity of goods will guarantee such an outcome. (This strategy is ironic: political scientists – such as the anti-leftist Jorge Castañeda – who questioned Chávez’s democratic credentials accused him of establishing what they pejoratively call a “plebiscitary democracy”, in which all attention is focused on the country’s head of state, rather than those running for office.)

Furthermore, the government has denounced the radical opposition’s plans to transform agitation on the long and slow-moving lines outside of stores into violent disruptions leading to regime change. Shortly after the beginning of the new year, Federal District head Ernesto Villegas warned Chavistas of provocations, saying: “when you are on line and see an infiltrator calling on people to loot, respond with the symbol of peace.”

The danger of disruptions of this type comes from an opposition that for more than a decade has kept open the possibility of the non-democratic road to power; in February Maduro presented alleged evidence of a coup plot for which it jailed the mayor of the greater Caracas area, Antonio Ledezma.

Shortages

Venezuela finds itself in uncharted waters, with a sharp political polarisation without parallel among governments committed to democratic socialism.  The Chavistas have been in power for 16 years. Nevertheless, the challenges generated by shortages and the inconveniences associated with the awkward distribution of goods, as well as the knotty issue of the role of the market, hold implications for all governments committed to socialism. The Soviet Union, for instance, was plagued by corruption stemming from an extensive black market, a problem that had much to do with its demise, while Cuba is currently grappling with similar predicaments.

Maduro’s recent measures were a step in the right direction in that he recognised that market conditions must enter into the equation, even while the government cannot renounce its strong interventionist role, which includes the regulation of exchange rates and prices of basic commodities. At the same time he announced social initiatives and made clear that the decline of the oil price cannot be a prelude for austerity measures that fall on the backs of the non-privileged.

Nevertheless, until the government reduces the colossal disparity between official prices for goods and for foreign currency and the going value on the open market, contraband and corruption will be virtually inevitable, a problem exacerbated by unscrupulous and politically motivated powerful members of the private sector. Subsidised prices both for currency and merchandise are perfectly legitimate correctives to neoliberalism, but the Chavista government needs to avoid extremes by staking out a middle ground between production costs and market prices. Otherwise the consequences may be the same as those faced by socialist regimes in the past.

Radical measures on the left side of the ideological spectrum, such as expropriations of large companies, may have to wait until the government has delivered heavy blows against an enemy that refuses to recognise its legitimacy. Maduro is following a strategy of attempting to gain breathing space in the context of extensive discontent and well-organised insurgent tactics, and has thus pushed for a “peace dialogue” to achieve stability, which the political opposition has rejected.

Maduro also prioritises political objectives out of fear of further destabilisation if the opposition were to gain control of the National Assembly in the elections later this year. In light of these political and social considerations a middle ground between radical devaluation, on the one hand, and highly subsidised prices for basic commodities and currency, on the other, represents the most viable formula for the Chavistas at this critical juncture.

[Steve Ellner has taught at the Universidad de Oriente in Venezuela since 1977. He is the author of Rethinking Venezuelan Politics: Class, Conflict and the Chávez Phenomenon (2008) and editor of Latin America’s Radical Left: Challenges and Complexities of Political Power in the Twenty-First Century (2014).]

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