Author's Note: Previous versions of this paper were commented upon by several readers. In particular, the author gratefully acknowledges helpful comments and suggestions by Metin Heper, Ayşe Trak, Eleazar Birnbaum, William Hale, and an anonymous referee, but of course the author alone is responsible for all opinions expressed.

¹ For a detailed elaboration of this theme, see Kemal, H. Karpat, “Turkish Democracy at Impasse: Ideology, Party Politics and the Third Military Intervention” International Journal of Turkish Studies, 2, 1 (Spring-Summer 1981).Google Scholar Another useful account is Mackenzie, Kenneth, Turkey under the Generals, Conflict Studies no. 126, London (01 1981).Google Scholar For a revealing statement of the rise and fall of the Turkish socialist movement since 1960, see Samim, Ahmet, “The Tragedy of the Turkish Lefṭ,” New Left Review, no. 26 (03–04 1981).Google Scholar On the emergence of Turkish terrorism, see Osman, Güvenir, “Turkiyede Terör ve Güvenlik Kuvvetlerinin Durumu’ in Türkiyede Terör, Istanbul. 1980 (papers presented at a seminar organized by the Newsmens' Association of Istanbul in the memory of the well-known newsman Abdi Ipekçi, assassinated in 1979).Google Scholar

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³ Ergin, Feridun. Atatürk Zamaninda Türk Ekonomisi (Istanbul, 1977);Google ScholarSerin, Necdet, Türkiyenin Sanayileṣ.mesi (Ankara, 1963);Google ScholarEdwin, J. Cohn, Turkish Economic, Social and Political Change (New York: Praeger, 1970).Google Scholar

⁴ World Bank, Turkey–Policies and Prospects for Growth (Washington, D.C., 03 1980).Google Scholar

⁵ Kili, Suna, Kemalism, (Istanbul: Robert College, School of Business Administration and Economics, 1969);Google ScholarHale, William, “Ideology and Development in Turkey, 1930–1945,” British Society for Middle Eastern Studies, 7, 2, (1980);Google ScholarKinross, Lord, Ataturk, the Rebirth of a Nation, (London: Weidenfeld and Nicolson, 1964).Google Scholar

⁶ İnönü personally elaborated and encouraged étatism, putting his imprint on such projects as the construction of state railroads and the design of protectionist industrialization policies. For supporting evidence, even from İnönü's foremost detractors such as Yakup Kadri Karaosmanoglu in a speech delivered in February 1965. see the quotation in Fahir, Giritlioğlu, Türk Siyasi Tarihinde Cumhuriyet Halk Partisinin Mevkii, 2 (Ankara, 1965), 436.Google Scholar See also Ṣevket, S. Aydemir, Ikinci Adam-İsmet İnönü (Istanbul, 1966).Google Scholar On İnönü's protectionist policies, see his “Fikramizin Devletçilik Vasfi,” Kadro, no. 22 (10 1933).Google Scholar quoted in Korel, Göymen, “The Nature and Practice of Turkish Etatism,” Ph. D. dissertation, University of Leeds. 1973, p. 288.Google Scholar

⁷ Hale, William, The Political and Economic Development of Modern Turkey (London: Croom Helm, 1981), p. 55.Google Scholar étatism has been a hotly debated subject in Turkish development strategy. An early critical appraisal of it is Max, Weston Thornburg, Spry, Graham, and Souls, George, Turkey, an Economic Appraisal, (New York: Twentieth Century Fund, 1949),Google Scholar where it is argued that “private enterprise was hardly given a fair trial” (p. 33) prior to 1933, when étatism was adopted as the official policy. A more sympathetic evaluation of étatism is to be found in Derin, Haldun, Türkiyede Devlerçilik (Istanbul, 1940)Google Scholar and Robinson, D. RichardThe First Turkish Republic, a Case Study in National Development (CambridgeMass.: Harvard University Press, 1963). pp. 233–230.CrossRefGoogle Scholar Recent studies on étatism include Boratav, Korkut, Türkiyede Devletçpilik (Istanbul, 1974)Google Scholar and Walsted, Bertil, State Manufacturing Enterprises in a Mixed Economy, the Turkish Case (Washington, D.C.: IBRD, 1977).Google Scholar

⁸ Many of the Congress documents are in Okçun, A. Gündüz, Turkiye Iktisat Kongresi 1923–Izmir (Ankara, 1968).Google Scholar For a recent analysis of the 1923 Congress, based on original sources, see Michael, M. Finefrock, “Laissez-Faire, the 1923 Izmir Economic Congress and Early Turkish Developmental Policy in Political Perspective,” Middle Eastern Studies, 17, 3 (07 1981), 374–392.Google Scholar

⁹ Kinross, , Atatürk. pp. 447–448.Google Scholar

¹⁰ See Finefrock, “Laissez-Faire.”

¹¹ Tekeli, Ilhan and Ilkin, Selim, 1929 Dünya Buhraninda Türkiyenin Iktisadi politika Arayiṣari, (Ankara: Ortadogu Teknik Universitesi, 1977). See in particular pp. 209–215, on the adoption of étatism at the RPP's Third Grand Congress held May 10–18, 1931. and pp. 216–223 for an overall assessment of the impact of the 1929–1931 Great Depression.Google Scholar

¹² İnönü himself was a contributor to Kadro, which was owned by Yakup Kadri Karaosmanoğlu and edited by Moscow-trained Sevket Aydemir.

¹³ Lewis, Bernard, The Emergence of Modern Turkey, (2nd ed.; London: Oxford University Press, 1968), p. 282.Google Scholar

¹⁴ Ibid., pp. 231–38.

¹⁵ Robinson, , op. cit., pp. 96–103;Google ScholarEliot, G. Mears, Modern Turkey, (New York:Macmillan, 1924), p. 354–383.Google Scholar

¹⁶ Grunwald, Kurt and Joachim, O. Ronall, Industrialization in the Middle East, (New York: Council for Middle Eastern Affairs, 1960), p. 333.Google Scholar

¹⁷ Walsted, , State Manufacturing Enterprises, p. 67.Google Scholar

¹⁸ In 1932, 1,473 establishments were operating under the provisions of the 1927 law; by 1939, only 1.144 were covered, despite the fact that this law granted new industries setup under it a twenty-five-year monopoly. These figures are from Tokin, I. H., Türkiyede Sanayi (Ankara: Istatistic Müdürlüğü, 1946), p. 34,Google Scholar quoted in Robinson, , First Turkish Republic, p. 106.Google Scholar For a discussion of the reasons for the failure of the 1927 law to promote private enterprise, see Thornburg, et al. , Turkey, pp. 34–35,Google Scholar and The Economy of Turkey, a Report of a Mission sponsored by the I.B.R.D (Baltimore: The Johns Hopkins University Press, 1951), pp. 6–7.Google Scholar

¹⁹ Thornburg, et al. , Turkey. pp. 26–27.Google Scholar

²⁰ Rostow, W.W., Stages of Economic Growth, a Non-Communist Manifesto, (Cambridge: University Press, 1963), 38.Google Scholar

²¹ Lewis, , Emergence of Modern Turkey, p. 286.Google Scholar

²² However, the SEE sector was given preference through monetary policy incentives and other means. Thus it could borrow from the Central Bank at an interest rate of 1 percent, whereas private investors had to rely on ploughed-back profits, sale of assets, or loans from commercial banks at 8.5–12 percent per annum (Hale, , Political and Economic Development of Modern Turkey, p. 58).Google Scholar

²³ Hershlag, Z. H., Turkey, the Challenge of Growth, (Leiden: Brill, 1968), p. 234.Google Scholar

²⁴ Originally the SEEs were expected to operate as profit-making (if not profit-maximizing) entities comparable to private business, enjoying a level of management autonomy. In fact, law no. 3460 provided for the possibility that SEEs could be reconstituted as joint-stock companies in which shares, either wholly or in part, could be transferred to the private sector. However, this provision was in fact a dead letter until the Menderes era in the 1950s. In practice, the SEEs were so prone to political interference, red tape, and in particular demands for political graft and patronage, that both the management and the technical staff were demoralized (Walsted, , op. cit., pp. 76–77);Google Scholar a typical comment was: “What is the use of an engineer working for a politician? If the answer matters, he tells you what it is. If it doesn't matter, he doesn't want to know it” (Thornburg, et al. , Turkey, p. 203).Google Scholar

²⁵ İnönü regarded self-sufficiency as a matter of national defense and justified on this ground the state investments in large, capital-intensive projects (e.g., railroads) as well as his popular catch- phrase “three whites and three blacks”—that is, self-sufficiency in flour, sugar, and cotton textiles and in coal, iron, and petroleum (Walsted, , State Manufaciuring Enterprises, p. 66).Google Scholar

²⁶ Stavrianos, L. S., Global Rift, the Third World Comes of Age (New York: Morrow, 1981), pp. 205–214;Google ScholarKöymen, O., “The Advent and Consequences of Free Trade in the Ottoman Empire,” études balkaniques, vol. 2 (1971).Google Scholar

²⁷ Kemal, H. Karpat., Turkey's Politics, the Transition to a Multi-Party System, (Princeton, N.J.:Princeton University Press, 1959);Google Scholar Hale, Political and Economic Development of Modern Turkey, chap. 5. Simpson, D. J., “Development as a Process: The Menderes Phase of Turkey,”Middle East Joūrnal. 19, 2 (Spring 1965).Google Scholar

²⁸ Heper, Metin, “The Recalcitrance of the Turkish Public Bureaucracy to ‘Bourgeois Politics,’” Middle East Joúrnal, 30, 4 (1976), esp. p. 495.Google Scholar

²⁹ Menderes used to argue that “the Budget is a plan,” and one of his ministers of finance used to justify the official distaste for planning by saying:“Let's get on with the job: the plan can follow on later” (Hale, , Political and Economic Development of Modern Turkey, p. 88).Google Scholar See also Malcolm, D. Rivkin, Area Development for National Growth, the Turkish Precedent (New York: Praeger, 1965), pp. 96–123.Google Scholar

³⁰ Süreyya, Aydemir, Menderes' in Drami (Istanbul: Remzi Kitabevi, 1969).Google Scholar

³¹ World Bank, Turkey–Policies and Prospects, p. 1.Google Scholar

³² See references in note 1.

³³ World Bank, Turkey–Policies and Prospects, p. 31.Google Scholar

³⁴ This reform package, hailed by the Demirel government of 1979–1980 as “a major change in the orientation of economic policy” (Milliyet, 06 21, 1980)Google Scholar included a substantial devaluation of the TL, deregulation of prices in the SEE and private sectors, and of the interest rates. In an Annex to the Stand-by Agreement with the IMF on June 2, 1980, the government undertook to abide by these measures for two years. For a brief discussion of these matters see Hale, , Political and Economic Development of Modern Turkey, pp. 257–258.Google Scholar

³⁵ Krueger, Anne, Foreign Trade Regimes and Economic Development: Turkey (New York: NBER, 1974). Reviewing the industrialization strategy under the first and second five year plans, Krueger has estimated that under a more labor-intensive and export–oriented alternative strategy,at identical levels of investment, the Turkish economy could have done substantially better, realizing a total of 300,000 additional jobs, lower imports, and higher output.Google Scholar

³⁶ As Okyar has argued, the SEEs were in fact operating under one set of economic rules, while the private sector was subject to different rules of the game (Okyar, Osman, “The Concept of Etatism,” Economic Journal, vol. 75 [03 1965]).CrossRefGoogle Scholar For a recent discussion of operational inefficiencies, including details of political interference, lack of direction and coordination at the top, overstaffing and inadequate staff incentives in SEEs see Walsted, , State Manufacturing Enterprises, pp. 190–192.Google Scholar

³⁷ Sources for these data are Teşkilati, T. C. Başbakanlik Devlet Planlama: Dördüncü Beş Yillik Kalkinma Plani, 1979–1983, table 91, p. 125, and para. 366, p. 126.Google Scholar

³⁸ Ibid., paras. 367–368, p. 126.

³⁹ Computed from World Bank, Turkey–Policies and Prospects, tables 5.4, p. 278, and 5.1, p. 275.Google Scholar

⁴⁰ There is a large literature on grant economics—a branch of economics which differs from traditional exchange transactions in markets in its emphasis on the role of income and wealth transfer independently of markets. See, for example, Kenneth, E. Boulding, The Economy of Love and Fear: A Preface to Grants Economics (Belmont, Calif.: Wadsworth, 1973);Google ScholarKenneth, E. Boulding, Pfaff, Martin, and Horvath, Janos, “Grants Economics: A Simple Introduction,” American Economist, 16, 1 (Spring 1972).Google Scholar

⁴¹ Hale, , Political and Economic Development of Modern Turkey, pp. 106–107, 238–239.Google Scholar

⁴² Henry, Stuart, Hidden Economy (London: Martin Robertson, 1978);Google ScholarWeisbrod, Burton, “The Forgotten Economic Sector: Private but Nonprofit,” Challenge (09–10 1978).Google Scholar

⁴³ Regarding corruption in the SEE sector during the period of hectic investment under the first plan (1963–1967), there was such a considerable graft in the awarding of huge contracts that it led to the creation of several watchdog agencies in the Ministry of Finance and the High Control Board (Walsted, , State Manufacturing Enterprises, p. 77).Google Scholar

⁴⁴ “The fact that import–quotas for many consumer goods are at zero or near to zero means that, in effect, he only real external competition in many industries comes from smugglers rather than legitimate importers’ (Hale, , Political and Economic Development of Modern Turkey, p. 202).Google Scholar

⁴⁵ For example, the monthly salary of a top (i.e., grade 15) civil servant in 1980 was about U.S.$200. whereas the typical rate was below U.S. $100, including a vast array of bonuses and allowances.

⁴⁶ Thus access to hospital and medical services, completion of legal documents, import/export, and commercial transactions often require bribes. As a result of such “informal user-cost charges,” access to essential services becomes a function of ability to pay, increasing the inequality of income and opportunity in the country. Charges of corruption against public officials often makes headlines in Turkish dailies. For examples in recent past, see Hürriyet, 06, 1981Google Scholar (regarding corruption in the distribution of iron and cement in Mardin) and Hürriyet, 03 1981 (regarding corruption in several municipalities in the eastern provinces).Google Scholar

⁴⁷ Devlet, Planlama Teşkilati, Gelir Dağilimi, 1973 (Ankara, 1976), p. 24.Google Scholar

⁴⁸ This is a tentative attempt. On the difficulties of defining Turkish economic groups, see Halik, çillov, “Orta Sinifin Memleketimizdeki Yen,” in Türkiyede Orta Sinif-Soysal ve Ekonomik Bünyemizdeki Yen Semineri (Istanbul. 1962).Google Scholar

⁴⁹ Heper, Metin, “Political Modernization as Reflected in Bureaucratic change: The Turkish Bureaucracy and a Historical Bureaucratic Empire Tradition,” International Journal of Middle Eastern Studies, vol. 7 (1976), pp. 507–521.CrossRefGoogle Scholar

⁵⁰ Mehmet, Economic Planning.

⁵¹ Thus. Art. 50 of the 1961 Constitution provides for free (i.e.. zero tuition) education up to and including university education. For a discussion of Turkish educational and manpower planning, see özay, Mehmet, “An Assessment of Manpower and Educational Planning in Turkey: Shifting from Long–Term Forecasting to Employment Policy,” International Journal of Manpower, vol. 2, no. 2, 1981, pp. 26–32.Google Scholar

⁵² On excess supply problems, see Mehmet, “Assessment of Manpower,“ and Dördüncü Beş Yillik Kalkinma Plani, 1979–1983, para. 73, p. 29.Google Scholar

⁵³ Anne, O. Krueger, “Rates of Return to Higher Education,” Journal of Human Resources (Fall 1972), p. 497.Google Scholar

⁵⁴ World Bank, Turkey–Policies and Prospects, p. 241 and n. 38.Google Scholar

⁵⁵ Ibid., pp. 66, 132.

⁵⁶ Krueger, Foreign Trade Regimes, esp. chap. 9; Walsted, State Manufacturing Enterprises, esp. Appendix C.

⁵⁷ Karpat, , Turkish Democracy at Impasse, esp. pp. 31–42.Google Scholar

⁵⁸ In explaining the social and political significance of the rural exodus, Karpat has stated: “No other factor contributed as much to social and political change and, indirectly, to political unrest in Turkey as the agglomeration of rural migrant settlements around all the major cities of Turkey”. The estimate in the text is from John, M. Monroe, “Migration in Turkey,” Economic Development and Cultural Change, 22, 4 (07 1974).Google Scholar

⁵⁹ As Karpat in Turkish Democracy at Impasse has put it: “Alienated youth in the gecekondu and elsewhere in the cities provided a large recruitment pool for every militant, radical, and terrorist group” (p. 19). Karpat cites the results of an empirical study by Doğu, Ergil, Türkiyede Terör ve Siddet, Yapisal ve Kültürel Kaynaklar, (Ankara, 1980), showing very similar educational characteristics among the leftist and rightist militants.Google Scholar

⁶⁰ This term is borrowed from Heper, Metin, “Recent Instability in Turkish Politics: End of Monocentrist Policy?” InternaUonal Journal of Turkish Studies, I, 1 (Winter 1979–1980).Google Scholar

⁶¹ Sidney, N. Fisher, The Middle East, a History (3rd ed.; New York: Alfred A. Knopf, 1979), p. 432.Google Scholar

⁶² On the economic characteristics of Turkish migrant-workers in Europe and their contribution to Turkey's balance of payments, see Ecevit, Zafer and Zachariah, K.C., “International Labor Migration,” Finance and Development (12 1978), pp. 32–37.Google Scholar

⁶³ Kinross, , Ataturk, pp. 447–448.Google Scholar

⁶⁴ Since January 1980 some important reforms along these lines have been initiated. There has been a major cut in state subsidies to the SEEs and a freeze placed on employment in the public and SEE sectors. More encouragement is now to be given to the private Sector, export promotion, and foreign investment. In December 1980 a major tax reform package was introduced and the military leaders promised further reforms. Whether these new initiatives will prove adequate or effective only time can tell. What appears to be missing to date in these initiatives is a commitment to employment creation and regional development strategy. By the summer of 1982, there were some encouraging improvements in the Turkish economy, especially in terms of export promotion and inflation controls. However, in the aftermath of the Kastelli affair and the resignation of the Minister of Finance, Turgut özal. there were reports of a possible restoration of a more étatist economic policy.