24 Aralık 2010 Cuma

The Rise of Neo-Liberalism and the Story of TÜSİAD


Business leaders and business associations are key actors in late industrializing societies in democratic transitions and democratic consolidation. Traditionally, business men and business associations are considered to be interested solely in profit and stability, but recent neo-liberal studies have tried to create a “heroic” image to business associations because of their support for neo-liberal transformation. However, it is not surprising to see that in the case of rising socialist/leftist movements, political instabilities and the lack of capacity of civilian governments to make necessary neo-liberal reforms, business associations have supported the authoritarian military regimes in the past in late industrializing countries (emerging markets) such as in the case of Turkey on 12 March 1971 and 12 September 1980.

TÜSİAD (Turkish Industrialists’ and Businessmen’s Association)[1] is the top business association of Turkey which has been playing significant roles in Turkey’s socioeconomic and political decision-making processes especially in the last decades. TÜSİAD is a member of “Business Europe” and has also become a global actor recently and is headed by Arzuhan Doğan Yalçındağ, the daughter of Turkish media tycoon Aydın Doğan[2]. TÜSİAD has been criticized severely in Turkey for constituting a privileged elite group that rules the country. Its role has increased consistently as Turkish economy has been neo-liberalized after the 24 January decisions in 1980 and the following military coup that supported this neo-liberal trend.

In this paper, firstly I am going to analyze the roots and the settlement of neo-liberalism in the world which can be traced back to Bretton Woods Agreement of 1944. Following this, I am going to evaluate the reasons and consequences of the rise of neo-liberalism. In the third part, I will be discussing the neo-liberal economic transformation in Turkey. Next, in relation to the analysis of how neo-liberal policies shaped the world and Turkey, I will argue the importance of institutions (business leaders and associations specifically) in the widespread of neo-liberal ideology. More specifically in the fifth part, I will be analyzing TÜSİAD, and how it triggered the neo-liberal transformation of economy in Turkey. In conclusion, I will argue that neo-liberal economic transformation of state policies make elite business interest groups -as it is seen in the example of TÜSİAD- as an important actor of political life but the strengthening of neo-liberal model also lead to the rise of ethnic nationalisms and anti-modernist fundamentalist movements, two new threats for a consolidated democracy.

I. Roots of neo-liberalism

Neo-liberalism, in other words “new liberalism” is in fact a label for classical liberalism used by its leftist opponents. Neo-liberalism takes its philosophical and ideological roots from the classical liberal theory and it is primarily based on the blessing of private property and free-market economics. The principle of invisible hand principle firstly suggested by Adam Smith, and the ultimate belief in the supremacy regulatory power of the market is the other important basis of neo-liberalism. While neo-liberalism takes its ideological roots from classical liberalism, it takes its political roots from the Bretton Woods agreement of 1944 (George: 1999, 2). By Bretton Woods treaty, two neo-liberal international institutions; the World Bank and the IMF (International Monetary Fund) were created.

However, in this first era of neo-liberalism, neo-liberal ideology was weak due to the high prestige of Keynesianism. In addition, Karl Polanyi’s critic of liberalism which is presented in his work “Great Transformation” was very influential in the conjecture and state initiative in economics was an obligation and priority of the states in order to overcome devastating effects of the World War II. That’s why; IMF and World Bank as the two institutions of liberalism could have low control over individual government’s economic decisions. Principal features of characteristic mode of economic management in this era were; governmental responsibility of economic management, emphasis of direct intervention in the management of labor, capital and finance, income policies, fiscal/monetary autonomy, centralization of policy making, international cooperation rather than integration (Burnham: 1999, 43). That is why, similar to the governments of that date “successive British governments sought to regulate labor through moral exhortation (in the national interest), increasing the exercise of centralized authority over wage determination and through the creation of new surveillance and guidance machinery”[3]. Moreover, decolonization period and Marshall Plan were supporting advance in national economies (widespread of import substitution industrialization models, also in Turkey) and the establishment of social states (George: 1999, 2-4).

II. The rise of neo-liberalism

Neo-liberal attacks started in the 1970’s with the works of two Chicago University philosophers; Friedrich von Hayek and Milton Friedman’s theories. Together with these two “false prophets” funded by rich elites of the world, neo-liberals created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly (George: 1999, 5). Neo-liberals established their own hegemonic discourse and manipulated the whole world in favor of rich elites. As neo-liberal ideology had become the new religion of the world, neo-liberal conservative political figures began to take power in US and European countries. Margaret Thatcher in United Kingdom, Ronald Reagan in United States of America and Turgut Özal in Turkey can be stated as the leaders that exercised neo-liberal ideology in their countries and had become the symbols of neo-liberal take-over.

When it comes to the promotion of neo-liberal ideology, neo-liberal programmes were presented as they did not have any alternatives. The politicized management in state affairs was replaced by the notion of depoliticization which excluded ideology from economics and accepted the neo-liberal understanding as the only truth (Burnham: 1999, 42). Principal features of the characteristic mode of neo-liberal management were centrality of exchange rate management, institutional realignment to enhance to policy credibility, devolution of policy-making, interlinking of fiscal/monetary and exchange rate policy, deregulation and from internal cooperation to the forms of regional integration (Burnham: 1999, 44). Neo-liberals had complete trust in the market and they did not care about social policies that state is supposed to carry on such as environmental policies. Neo-liberals aimed to create an environment where free trade in goods and services, free circulation of capital and freedom of investment could take place. It is no accident that, following the neo-liberal indoctrination, depending on the year, two-thirds to three-quarters of all the money labeled “Foreign Direct Investment” is not devoted to new, job-creating investment but to Mergers and Acquisitions which almost invariably result in job losses (George: 1999, 5-6). Privatizations increased unemployment rates, unemployment increased social problems. Social state and labor movements were damaged in the whole world. In pre-Thatcher Britain, about one person in ten was classed as living below the poverty line, now one person in four is officially poor (George: 1999, 7). Although neo-liberalism is today presented as a natural human condition, according to Susan George it was dictated from above with the help of rich elite and neo-liberal theoreticians. George also remarks that neo-liberalism may be “insatiable but it is not invulnerable” (George: 1999, 13). Social movements have been gaining power in the recent years (anti-globalist, anti-imperialist, socialist movements etc.) and the recent global financial crisis probably marks the end of neo-liberal hegemony (Yeldan: 2009).

III. The neo-liberalization of Turkey

Similar to the emergence of neo-liberal hegemony in the world, Turkish economy has been neo-liberalized consistently starting from the 24 January 1980 decisions. With the so-called “stability decisions” of 24 January 1980 architected by Turgut Özal -assistant secretary of Prime Minister Süleyman Demirel at that date-, Turkey gave the start to a financial liberalization process by quitting its mixed economy model that has been implemented since the time of Atatürk. These decisions also initiated “the legal and structural reforms for ensuring transition to a completely open exchange regime that would bring the convertibility of the Turkish Lira as well as liberalization of capital movements; and these steps came to an end with the Resolution No. 32 on Protection of Value of Turkish Currency in 1989”[4]. “24 January decisions” was based on 7 main pillars; (1) to devaluate Turkish lira at the rate of 32.7 %, (2) taking some precautions for limiting the role and the share of the state in the economy, (3) lowering state subsidies in agricultural sector, abolishing all subsidies except in energy, (4) transportation and fertilizer sectors, (5) liberalizing foreign trade and the entry of foreign money, (6) promoting construction sector working in foreign countries and (7) encouraging import by giving up from import substitution industrialization policy.

Via 24 January decisions, Turkish state adopted export oriented industrialization model instead of import substitution industrialization policy and opened its market totally to foreign goods. Soon after, Turkish economy has been integrated into the global capitalism but before its ability to develop firms and industries that could compete with its Western rivals. In addition, the financial reform process in Turkey continued after 1980 as an extension of a liberalization program guided by principles of structural harmonization and market economy open to the world. Following the liberalization of international capital movements since 1990, and lacking sufficient savings and capital accumulation, Turkish economy has become more fragile in the face of currency crises. However, in the 1990’s, crises with frequent intervals were seen. The crises of April 1994 and February 2001 were the result of the external shocks, and the artificial growth policies implemented in these years that were dependent on external funds. As a result, the international reserves obviously play a determining role in the emergence of crises. In particular, dollarization and speculative attacks following the financial liberalization triggered the crises. Thus, in the crisis both in 1994 and in February 2001, the withdraws in the international reserves resulted in devaluation and the country faced with the foreign currency (monetary) crisis. According to Arıcan, therefore, in order to prevent such crises, it is necessary to “eliminate the fragile structure of the rapidly changing financial markets and to provide access to these markets through sound channels”[5]. It follows that the implementation of the policies that will improve the balance of current accounts and increase the reserves is an important factor.

IV. Pillars of neo-liberalism: Business Leaders and Business Associations

Neo-liberalism constructed its hegemony through its institutions and neo-liberal institutions constructed and developed neo-liberal ideological hegemony. This process has been a continuing process in which institutions of neo-liberalism triggered the spread of neo-liberal ideology and vice-versa is also true. Business associations marked the peak of these institutions competing for being the champion of neo-liberal transformation. In this respect, European integration process proves that neo-liberal ideology is an outcome of well-defined missions of European institutions such the Council of Europe, Customs Union, and the European Round Table of Industrialists. That is why, European integration’s success becomes questionable when the neo-liberal mission of European institutions become under question. Since institutions play significant roles in neo-liberal ideology, institutions are supposed to make the path easy to spread the neo-liberal ideology and that is why institutional rigidities and well-defined roles were considered as an obstacle for the “liberal” progress in the Union. As Apeldoorn argues, “in the context of European integration, the rising power of neo-liberal ideology became first of all manifest in the ‘Euro-sclerosis’ discourse according to which the stagflation of the European economy was the result of institutional rigidities”[6]. European firms and businessmen became champions of neo-liberal manufacturing.

When it comes to the neo-liberal European integration’s effect on state-market relations, we can easily monitor that the integration process is resulting in “more market and less state” at all levels of governance. In summary, according to the neo-liberal view, European integration should subordinate Europe’s socio-economic and industrial space to what are seen as the beneficial forces of globalization: Europe as an advanced free trade zone within a free trading world (Apeldoorn: 1998, 74). It is apparent in the European integration process since integration’s first step was European Coal and Steel community which foresee a common market beginning with the pooling of the coal and steel of France and Germany’s production. This was the first institutional attempt of European integration process. It was not a coincidence that first attempt of neo-liberal spread-out was institutional and economic. Moreover, as I stated above, European integration is reviewed by European officials when EU institutions does not work properly or lack their missions. The integration process was strengthened by the oligarchic coalition made between elite European businessmen, politicians and bureaucrats. In that sense, European Union can be considered not as the Union of people, but rather the oligarchic pact between European bureaucrats, European businessmen and European politicians. Recent rejection of European constitution in many countries in fact show that the impatient elite plans made by this coalition are away from reality and whenever something is offered European people to free voting, they would reject such thing. It is also very meaningful that as European Union deepens and enlarges, social Europe becomes weaker and weaker and social rights of European working classes have been reducing by states that are controlled by the elite coalition of EU bureaucrats, European politicians and European firms and businessmen.


TÜSİAD (Turkish Industrialists’ and Businessmen’s Association) is the top business association of Turkey which was founded in 1971. TÜSİAD was established by Turkey’s elite industrialists as a reaction to the failure of Turkish Chambers & Rooms Association (Türkiye Odalar ve Borsalar Birliği) to protect the interests of business segments. Since Turkish Chambers & Rooms Association was designed according to corporatist aims as a mechanism of the state, it was trying to balance the business and the working sectors’ interests (Özbudun: 2006). However, TÜSİAD was established as a non-governmental organization with pluralist aims. From its very beginning, TÜSİAD has tried to become an influential actor in Turkish politics although its ancient president Şahap Kocatopçu defined TÜSİAD as a “neutral organization that defends national interests”[7]. In 1979, TÜSİAD played a key role in the forceful resignation of the Republican People’s Party’s populist government headed by Bülent Ecevit and its replacement with the liberal-conservative-nationalist third National Front coalition government headed by Süleyman Demirel by its advertisements in journals calling Ecevit to resign (Özbudun: 2006). TÜSİAD today still shapes government’s decisions in many key topics and declares its views through its publication Görüş (Private View) magazine.

However, TÜSİAD’s real rise started after 24 January decisions and the new economic and political reforms by the military junta – National Security Council government (1980-1983) and Turgut Özal’s Motherland Party government (1983-1991). In this period, Turkey had renounced from import substitution industrialization (ISI) policies and it adopted an export-oriented open economy. Except for small elite TÜSİAD member enterprises, open economy in a newly developing country meant the bankruptcy of medium and small size national entrepreneurs. Turkish economy was integrated to the world economy and especially to European economy after Custom’s Union agreement in 1995, but at the expense of losing many of its small and medium size producers. TÜSİAD by using its new empowered privileged positioning toyed with the coalition governments in Turkey and even called for the military intervention in 28 February 1997 against Islamist Welfare Party government headed by Necmettin Erbakan. TÜSİAD members’ newspapers were using growing political Islam threat as a pretext but Refahyol government’s statist economic approaches and anti-Western attitudes were stated as the real reasons of 28 February process according to some analysts. As the neo-liberal hegemony was established in the world and in Turkey, TÜSİAD had become an elite group (crème de la crème segment) that has excessive powers for a non-governmental organization in a democracy and economic and political development similar to European Round Table of Industrialists[8].

Nearly for a decade, TÜSİAD has been actively supporting Turkey’s full accession to European Union, which could be perceived as a positive positioning supporting further democratization in the country although there are serious doubts in Turkish left whether EU is the organization of European people or European capital. TÜSİAD as an important political actor in the country also played a key role in the dissolution of three party coalition (Democratic Left Party & Nationalistic Action Party & Motherland Party) headed by Bülent Ecevit in 2001 and the take-over of Justice and Development Party and Recep Tayyip Erdoğan in 2002. Similar to 1979, TÜSİAD members’ newspapers and television channels called Prime Minister Bülent Ecevit to resign because of his health problems in a very ugly way. Starting from the mid 1990’s TÜSİAD also began to publish reports on controversial topics. For instance, TÜSİAD report on the Kurdish question in 1995 became sensational and played a positive role in Turkey’s democratization. TÜSİAD has been supporting Turkey’s democratization in the 2000s, but threats towards modern life coming from political Islamist groups and Kurdish secessionism backed up by PKK terrorism make further democratization very difficult in Turkey since these two political waves do not have democratic characteristics and the general democratic culture of the society is very low in Turkey. It must be also noted that the rise of political Islam and Kurdish secessionism in Turkey gained power after the takeover of neo-liberal politics since the fall and failure of class-based social democracy and socialism pushed rural and urban poor in Turkey to these radical movements.


Finally, as far as I am concerned, similar to the developments in Europe, business elite in Turkey represented by TÜSİAD has become the champion of neo-liberalization trend and TÜSİAD became a very important actor in democratic political life. However, this neo-liberal trend which aimed to weaken real and class-based leftism, caused the rise of anti-modernist fundamentalist movements (political Islam) and ethnic nationalisms (both Kurdish and Turkish nationalism). It is not surprising to see that in Europe too, with the hegemony of neo-liberalism, the extreme-right has been gaining power in many countries and new democratic problems have began to emerge related to the situation of foreign workers, Gypsies, Muslims etc. Neo-liberalism created more profitable firms and richer businessmen but at the expense of rising fundamentalist and ethnic nationalist movements. These movements threaten modern democratic life with their dogmatic stance and their acceptance of violence as a necessary political tool as in the case of PKK and Kurdish nationalism in Turkey.


- Bastiaan Van Apeldoorn, “The Struggle over European Order: Transnational Class Agency in the Making of Embedded Neo-Liberalism”, in Social Forces in the Making of the New Europe: The Restructuring of European Social Relations in the Global Political Economy, ed. by Andreas Bieler and Adam David Morton, 2001, New York: Palgrave

- Bastiaan Van Apeldoorn, “Transnational Class Agency and European Governance: The Case of the European Round Table of Industrialists”, New Political Economy, 1469-9923, Volume 5, Issue 2, 2000, Pages 157-181

- Al Rainnie & Peter Fairbrother, “The State We Are In (And Against)”, retrieved on 21.06.2009 from http://www.buseco.monash.edu.au/mgt/research/working-papers/2002/wp54-02.pdf

- Ulrich Brand, “The Internationalization of the State as the Reconstitution of Hegemony”, retrieved on 21.06.2009 from http://politikwissenschaft.univie.ac.at/fileadmin/user_upload/inst_politikwiss/IPW_Working_Papers/IPW-Working-Papers-01-2007-Brand.pdf

- Susan George, “A Short History of Neoliberalism”, Conference on Economic Sovereignty in a Globalising World, March 24-26, 1999

- Ziya Öniş & Umut Türem, “Entrepreneurs, Democracy, and Citizenship in Turkey”, Comparative Politics, vol. 34, no: 4, July 2002, pp 439-456 published by PhD program in Political Science of the City University of New York

- Peter Burnham, “The Politics of Economic Management in the 1990s”, New Political Economy, vol:4 no:1, 1999

- Erişah, Arıcan, “Relation Between Financial Liberalization and Foreign Currency Crises in Turkey: An Applications in terms of Foreign Currency Crises (1990 - 2004), Journal of American Academy of Business, vol. 7 no. 2, September 2005

- Ergun Özbudun, “Türk Siyasal Hayatı”, TC Anadolu Üniversitesi Yayını No: 1689, Açıköğretim Fakültesi Yayını No: 875, Haziran 2006: Eskişehir.

- Erinç Yeldan, “2009 ve Sonrası Üzerine Düşünceler”, 07/01/2009 Cumhuriyet newspaper

- Türk Sanayicileri ve İş Adamları Derneği (TÜSİAD) web site , http://www.tusiad.org/

[1] TÜSİAD web site can be seen at; http://www.tusiad.org/.

[2] Yalçındağ was replaced by Ümit Boyner recently.

[3] Peter Burnham, “The Politics of Economic Management in 1990s”, p. 43.

[4] Erişah Arıcan, “Relation Between Financial Liberalization and Foreign Currency Crises in Turkey: An Applications in terms of Foreign Currency Crises (1990 - 2004), p. 236.

[5] Erişah Arıcan, “Relation Between Financial Liberalization and Foreign Currency Crises in Turkey: An Applications in terms of Foreign Currency Crises (1990 - 2004), p. 245.

[6] Bastian van Apeldoorn, “The Struggle over European Order: Transnational Class Agency in the Making of Embedded Neo-Liberalism”, p. 74.

[7] Ergun Özbudun, “Türk Siyasal Hayatı”, TC Anadolu Üniversitesi Yayını No: 1689, Açıköğretim Fakültesi Yayını No: 875, Haziran 2006: Eskişehir.

[8] According to Bastiaan Van Apeldoorn, European Round Table of Industrialists (ERT) “is neither a simple business lobby nor a corporatist interest association, but must rather be interpreted as having developed into an elite platform for an emergent European transnational capitalist class from when it can formulate a common strategy and - on the basis of that strategy – seek to shape European socioeconomic governance through its privileged access to European institutions” (Bastiaan Van Apeldoorn, “Transnational Class Agency and European Governance: The Case of the European Round Table of Industrialists”, pp. 157-158).

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