Distribution Relations During The Transition Of Turkish Economy To Neoliberalism

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Please cite the paper as:
&lquo;Aykut Ozturk, (2013), Distribution Relations During The Transition Of Turkish Economy To Neoliberalism, World Economics Association (WEA) Conferences, No. 4 2013, Neoliberalism in Turkey: A Balance Sheet of Three Decades, 28th October to 16th December 2013&rquo;



From 1980s onwards, Turkey started a period of economic integration into the neoliberal global economy. For an inward-oriented economy, this was a very tough and uneven process in which forward steps, backward steps, crises and political struggles followed each other. Hence the integration process of Turkey into the neoliberal global economy is comprised of several periods with differentiated distribution relations in the each one of these periods. Following this insight, my aim in this paper is to map the huge variations of the distribution relations during these thirty years and demonstrate the winners and losers of these policies in the subsequent periods.

While mapping the distribution relations in the society, I make a normative preference to take the class relations in the society as my entry point. My theoretical framework to map the flows between the classes is borrowed from Resnick&Wolff(1987). There are several reasons for this. First, this framework helps us to overcome some questions born with the current state of the capitalism. Focusing on the “process” of extraction of the surplus value obviates the need to determine the “class” of a worker who owns some shares in a company or owns his own shop or is simply married and live off his wife. Second, Resnick&Wolff framework makes bare the heterogeneous economic relations in a society. For example, the surplus gained by an enterprise at the expense of the worker is separated from the other incomes gained by monopoly rents. This allows for the exact determination of the surplus value produced in an economy. Since the surplus value is the key Marxian concept, this framework allows me to map these terms from a truly Marxian perspective. Finally, the equation system focused on the enterprises, the state and the households helps us to better determine the winners and the losers of the neoliberal era.

I will start my paper by presenting a very brief overview of the neoliberal experience in Turkey. Then I will introduce the Resnick&Wolff framework in detail and finally I will focus on the changes in the budgets of states, industrial enterprises and the households. I will conclude by questioning the possible reasons for the households to generally concede to the economic changes that are negative for their budget.

4 responses

  • I read this paper with great interest since the topic of distributional patterns has not been receiving sufficient attention in the literature about Turkish economy.

    Obviously, there are many ways of approaching to the distributional aspects of Turkish economy. One’s choice of a theoretical perspective, i.e. mainstream vs. non-mainstream, and empirical focus/tool, i.e. income and wealth, capitalist and non-capitalist spheres, household and macroeconomic data, etc. are also important.

    A) This piece by Öztürk seemingly adopted a non-mainstream (Marxian) perspective and used macroeconomic data. The paper’s accounting framework apparently comes from the work by Resnick and Wolff. For those who are unfamiliar with the latter framework and relying only on the information supplied by Öztürk, there may be some unanswered questions. Let me list some of those:

    — Re. the inequality on p. 3:

    Why are there no Σ signs on the left hand side of the inequality given the fact that ΣNCR is used in the text?

    Do those notations SSCR and ΣSCR refer to the same thing?

    What is the basis of the assumption that ΣSCR (or SSCR?) is the exclusive source of those unemployment and welfare payments? The author should consult the ever growing literature on net-tax (or the critique of social wage hypothesis) to which Shaikh, Baker and myself contributed.

    — Re. the equation on p. 7:

    Why are those terms SV and SSCP evident? SV was previously defined as “the total surplus-value that the state gets” (seemingly, it here represents the total surplus-value that industrial enterpises get?) whereas SSCP was never defined throughout the paper!

    B) There are other sloppy references which are either misleading or useless. A couple of examples:

    — On p.1; What does this statement of “changes in the budgets of STATES” refer to?

    –On p.1; Although, there was a claim of “the exact determination of the surplus value,” no empirical information whatsoever about the extent of surplus value in Turkish economy was presented!

    — On p.5; “the graph taken from (Önder, 2009)” probably means the table above on that page?

    — On p.9; “roughly corresponds to 70% of all employment” should be “70 % of all wage earners.”

    C) The article seems rather ignored the relevant literature on the topic, e.g. the measurement of the surplus value and its rhythm, as well as the rate of surplus in the Turkish contex.

  • Armagan Gezici says:

    The focus of the article, changing distributional patterns, is a very important issue indeed, and as Tonak mentioned above there are various ways of tackling the issue. The article bases its approach on “class relations” as a “normative preference” and adopts a particular approach to defining class, as suggested by Resnick and Wolff (1987). In explaining this “normative preference,” the author suggests that his approach, focusing on the extraction of surplus value, rather than other definitions of class such as power or ownership, was chosen since “(it)…. obviates the need to determine the ‘class’ of a worker…” who is engaged in various economic activities. Given the fact that the article uses macroeconomic data to analyze the distributional patterns across different classes, it isn’t clear to the reader, how this micro (site) oriented approach is particularly useful for the author’s stated goals in this article. If the aim of the article is to locate sites as state, industrial enterprise, and household, then the attempt to analyze distributional relations at the macro level should come into question. Resnick and Wolff (1987) may present innovative class analytic theories of enterprise, state, and household but offer no clear statement of how these disparate sites relate to one another in such a way as to be capable of economic reproduction. Applying their approach to singular sites doesn’t reveal much about the dynamics of distribution. A broader framework is necessary for an analysis of distributional patterns, and such class-based structure can be found in input-output tables or other types of social accounting matrices.

    In Parts 2 and 3 the author moves onto constructing the surplus value extraction equations for state and industrial enterprise. Part 4 attempts to provide a similar analysis for household, yet fails to keep the coherency analytical as it abandons surplus value methods of the previous parts and instead deploys terms of income and wealth. In these parts, the reader is assumed to be very familiar with the basics of Resnick’s and Wolff’s approach, hence no clear explanation is given as to the meaning of subsumed class processes or non-class processes. This causes further confusion as the author lumps various non-class and subsumed class revenues and expenditure items into the same categories and uses arguable proxies for these variables. Such generalization takes away from the heterogeneity of economic relations that was hoped to be revealed by use of this particular framework.

    One final issue is the lack of focus on the financial sector, considering its obvious role post-1980. Financialization process should be integrated into the macroeconomic analysis beyond the way it affects industrial enterprises. The antagonistic nature of capitalist divisions along the lines of finance, industrial and merchant capital should be at the core of any class analytic approach to distributional patterns.

  • Benan Eres says:

    It is important to point out the labor resistance and militant working class of late 1980s, which culminated into the 1989 Spring Movement. The political climate of 1990s (which is referred to as ‘populism’ in the article) somewhat relatively favoring the labor is presented only as a product of pure parliamentary political turmoil. However, it was a two way street. The resulting degeneration of union movements (their leadership was kidnapped and fused into political intrigues of center right politics) may be described as populism but it should be noted that this climate owes much also to the labor resistance. This point might seem to be a minor one. However, it also points out a significant problem regarding Resnick and Wolff’s analysis, borrowed by the author, on the political economy of capitalist state. The problem is that this approach ignores the relative strength of the classes in a general bi-class scheme of the economy. The interclass relations are reduced to a loose (that is based on inequality in the equation) constrained reminiscent to Kaynesian macroeconomic categories. Of course it is somewhat reasonable when the limited scope of analysis is concerned: the capitalist state. But still the role and position of the state in this setting is overemphasized and the class conflict is reduced to some government budget constraint.
    It is a good exercise to translate the Keynesian budget structure to a Marxian setting. This analysis helps see the state’s role in a different angle. However, that is all. It seems to contribute no more. The rest of the analysis is the repetition of hard core (critical, and sometimes even the mainstream) macroeconomic analysis. Even the interpretation of the budget equation for the Turkish economy for the concerned period is conducted through reference to already established conclusions and interpretations.
    Despite some merits mentioned above, such a Marxian analysis, I think lacks the fundamental essence of the Marxian economics: The pace of profitability with reference to intraclass conflict and the relative strength of the class obviously related to the interclass conflict.
    This analysis would be a very interesting and a good supplementary part of a more conflict oriented look at the Turkish capitalism, such as, maybe social structures of accumulation or even regulation approach.
    One last comment would be related to the evidence presented in the article. Unfortunately, the author did not prepare and compile the relevant data for the core analysis. A continuous series could have well been prepared for each variable in the fundamental equation. Instead some fragmentary data taken from other studies are used. This greatly reduces the quality of the study.

  • Lütfi Uçal says:

    I find this article beneficial as it provided me with a different framework dedicated to understanding very complex relations that dominate the entire socioeconomic panorama.

    At the same time it brought many questions to my mind:

    “Is it possible to argue a transfer of capital from conventional block to newly-emerging block of capitalist class in Turkey by way of neoliberal policies adopted during last three decades?”

    Another one is: “What was the role of ‘polarization-oriented’ policies in constructing the ruling ‘hegemony’, and to what extent did they affect the patterns of distribution?”

    I would like to thank the author again as he made me think about these questions.