As we have seen, the continued growth in production of aquatic organisms since the mid-1990s is due to aquaculture. Figure 3.1 shows the development of aquaculture production since 1970. The product mix of aquaculture is quite different, however, from capture fisheries. Fish, in the strict sense of the word, is barely one-half of the biomass produced by aquaculture (47 per cent in 2018). The largest category by weight is freshwater fish (40 per cent in 2018). Aquatic plants, mostly seaweed but also some microalgae, are the second largest category by weight: almost 30 per cent of the total production in 2018. Molluscs – that is, shellfish of various kinds (mussels, oysters, scallops, etc.) – rank as third, with 15 per cent in 2018. Then there are crustaceans, mainly shrimps, prawns, crawfish and crabs (8 per cent in 2018); diadromous fish, which include salmon (about 5 per cent in 2018); and marine fish (less than 3 per cent in 2018). In the capture fisheries (in a wide sense of the word), marine fish account for more than 70 per cent, freshwater fish for 11 per cent and aquatic plants for less than 1 per cent (numbers from 2018).

A rather different picture emerges if we look at value instead of quantity (Figure 3.2). Freshwater fish, crustaceans, molluscs and diadromous fish all have a higher value than aquatic plants, which have low value per unit weight; in 2018 they accounted for almost 30 per cent by weight but only 5 per cent by value, about the same as marine fish.

What are the species making up these broad categories? This is shown in Figure 3.3. Almost all cultivation of aquatic plants (not shown in the figure) takes place in four Asian countries: China, Indonesia, the Philippines and South Korea. Most of this is brown and red seaweed. Some is used for direct human consumption while the rest is a source of carrageenan, used by the food industry as thickener and stabilizer. Freshwater fish consist of carps, tilapias and miscellaneous fish; the last category includes catfish, which some developing countries (Vietnam, for example) export to Europe and the United States. Catfish are also cultivated in the southern states of the United States.

The FAO database for captures of marine species contains no fewer than 1,700 species (FAO 2020: 10). The Peruvian anchovy is the top one in terms of quantity; the captures were more than 7 million tonnes in 2018, even if this was just an average year for the anchovy (see Figure 2.6). Second comes the Alaska pollock, with catches of almost 4 million tonnes in 2018 (see Figure 2.2). At the other end there are many species with catches of less than a tonne. Most fish species consist of “stocks”, populations that are separated in space and with little or no interaction between them. This is the basic unit of analysis in fisheries science. Atlantic cod, for example, consists of several stocks with little or no interaction: Northeast Arctic cod, Baltic cod, Icelandic cod, North Sea cod, Northern cod of Newfoundland, and more. Some fisheries scientists think there may be subpopulations of these that could be identified as stocks in their own right.

An economic analysis of fisheries must start with some basic facts about the productivity of nature. The most basic premises are that no fish produce no fish and that fish populations would not grow without limit if left untouched by humans. Furthermore, we know that some fish stocks have been exploited for thousands of years and yet not become extinct. It makes sense, therefore, to assume that a surplus growth will be generated if stocks are reduced below the upper limit set by nature. This surplus growth can sustain fishing for ever without endangering the continued existence of the fish population; the fishery would take only whatever the population does not need to maintain itself.

Several factors may lie behind the phenomenon of surplus growth. Fishing changes the age composition of fish stocks towards younger, faster-growing cohorts. Fewer fish could mean less competition for a limited food supply (this phenomenon is likely to be stronger in confined lakes than in the openended ecosystems of the ocean). Older fish often eat younger individuals of the same species, so the survival of young cohorts could improve as older cohorts are depleted through fishing.

This book is directed primarily at business students who wish to learn about the economics of fisheries. It should be useful also for others who take an interest in the fishing industry, such as journalists, politicians and public administrators dealing with the fishing industry and fisheries management and all the issues that arise in that context. These issues can be complex. Fish often migrate over a wide area that extends over the jurisdiction of several sovereign states and into the high seas. The abundance of fish varies substantially over time, partly because of fishing, but even more so because of the variability of nature, for reasons often ill understood and unpredictable. This is a perfect set-up for frustrated expectations and conflicts between different industrial groups and sovereign states.

To understand these issues is a formidable task for scholars and scientists wielding the powerful tools of science: data gathering and formal analysis by mathematics and statistics. This book attempts to communicate the major lessons learned in a way that is accessible to people without much formal training in these disciplines. Formal analysis is mainly by graphs, but equations and manipulations of them cannot be entirely avoided if something meaningful is to be said, and occasionally some simple calculus is used. This should not be beyond the grasp of students of business administration or social sciences. The issues are illustrated with examples from fisheries in various parts of the world: fish stocks that have crashed; conflicts over jurisdiction at sea; and management innovations, such as individual fish quotas.

Sometimes one is left with the impression that the excitement over fisheries issues is way out of proportion to the economic importance of the industry. As an example, the newspapers of early 2020 carried articles to the effect that access to fishing in the waters of the United Kingdom might be an obstacle to a post-Brexit trade agreement with the European Union, despite the fact that the economic contribution of the fish involved is almost negligible for both parties. The fisheries of the United Kingdom are indeed unlikely to be sufficiently important to make or break trading relations with the European Union, but it may nevertheless be noted that the contribution of fisheries to gross domestic product (GDP) underrates the importance of fisheries as an industry.

Academic fora are full of discussions about fishing as a lifestyle, tradition and culture – something to be cherished and preserved. What is left unstated, or perhaps even forgotten, is that people fish to make a living, not by eating all the fish they catch but by selling most of it to others who want it but are not in a position to catch it themselves. Any such transaction needs two parties: a willing seller and a willing buyer. In today's rich and specialized societies, the potential buyers of fish can satisfy their needs by buying fish of many different kinds and from many different sources, and perhaps not buying any fish at all but, rather, some other foodstuff they like better. Sellers of fish had better make sure they have a competitive product in terms of quality and price. If they do not, they will be unable to sell their product, and, if their culture and lifestyle are a hindrance, that will have to change.

We are all familiar with how technological progress has changed the way of life, the things we use and even our food beyond recognition. This has happened in fisheries no less than in other industries or occupations. A little over 100 years ago the most prominent British biologist at the time, Thomas Huxley, could maintain that fishing had no effect on the viability of fish populations (see Smith 1994). He was very soon to be proved wrong. Yet Huxley's thesis was entirely to the point for earlier times, before the English invented trawl fisheries and got imitated by others. Our present ability to overfish stocks so that they nearly vanish is attributable to technological progress. We touched upon this in Chapter 5, when we told the story about the Norwegian spring-spawning herring. Rapid technological progress made it possible to almost wipe out the entire fish population over just a few years.

The solution is not to reverse technological progress; that has never been a winning strategy anywhere. Rather, fish stocks must be carefully monitored and fishing activity limited to what the stocks can support.

Since the 200-mile exclusive economic zone became nearly universally established in the late 1970s, fisheries management by catch quotas has become increasingly widespread. The 200-mile zone was an important precondition, because a limit on total catches from a fish stock requires control over the boats fishing that stock. When most fisheries took place outside national limits, fish quotas would have required acceptance by all nations that engaged in the fishery. If those that participated in a fishery on the high seas had agreed on a total fish quota, this could have been challenged by newcomers, who could have entered the fishery by virtue of free fishing on the high seas. Successful management by those who at one point in time participated in a fishery would have made that type of challenge all the more likely. In this chapter we shall discuss fisheries management by catch quotas, its advantages and challenges and what the main alternatives are.

Even in cases when a fish stock is entirely within the economic zone of one country, setting a total quota can be a challenge; there are often distinctly different interest groups involved, much like different countries fishing the same stock. Satisfying everyone's demands would most probably mean that the total quota would be much too high, threatening depletion of the fish stocks. Cutting through such competing claims can be difficult enough for a single government, and doing so when different countries are involved more difficult still, as the legal enforcement apparatus of the nation state cannot be relied upon; no country has jurisdiction on another's territory. The issue is even less tractable for stocks that migrate into the high seas, for reasons discussed in the previous chapter; it is more challenging to cooperate when the number of participants is large, let alone indefinite, and enforcement is more difficult on the high seas, where no country has jurisdiction except flag states over their own boats. Nevertheless, control by fish quotas has become quite widespread, even for fish stocks that are shared between a number of countries, including those that straddle into the highs seas.

In this chapter, we shall discuss some basic facts about the fishing industry. How has fish production developed in recent times? What is its role in the supply of food in the world? How has the composition of its products changed? What is the structure of the fishing industry like? Are world fisheries in a crisis in the sense that the food sources of the oceans are being depleted? How large is international trade in fish products and what is the main direction of its flow? Are tariffs a substantial hindrance to this trade?

By “fishing industry”, we primarily mean capture of fish in lakes or the oceans and the production of edible or useable material from these captures. But “fish is a fish is a fish”, as it was once put in the title of an academic paper (Gordon, Salvanes & Atkins 1994). Fish and other aquatic organisms are also farmed, fenced in by pens floating in the water or in ponds or tanks on land. The capture-based fishing industry meets aquaculture in the marketplace; both compete with similar products for the food budgets of consumers who often are indifferent to, or even ignorant about, where the goods they purchase come from: capture fisheries or aquaculture. When discussing fish markets and products and their trends it is difficult or impossible, and perhaps even pointless, to distinguish where the fish come from. Our discussion of fish production and trade will include farmed products, but otherwise this book is mainly concerned with the capture-based industry. Fish capture and fish farming are two very different activities; fish capture is essentially hunting with advanced equipment, but nevertheless subject to the vagaries of nature: variations in the weather and the availability or abundance of fish stocks. There is often high risk and uncertainty associated with this activity. Fish farming has much in common with agriculture: the fish stocks are kept under control; broods of fish are put out, fed and slaughtered according to plan. Even so, fish farming has its own risks as a result of the variability of nature: rough weather may destroy fish pens and put the fish on the run; poisonous algae may develop, and parasites have a field day in fish pens, as always when animals are crowded together and fed indiscriminately.

To effectively manage fish stocks, cooperation between nations is obviously required when the stocks migrate between the economic zones of different countries. Such cooperation is likely to be most demanding when stocks also migrate into the high seas, both because the number of nations with a legitimate claim is not clearly defined and because jurisdiction on the high seas is in the hands of the state where the boat is registered. In this chapter, we shall look at the scope for international cooperation in the light of a branch of economics known as game theory. This deals with the interaction between players when the actions of one player have a perceptible influence on the outcome for another. This is highly relevant for fisheries issues, as the outcome for one country depends on what other countries fishing the same stock might do. The name “game theory” may appear frivolous, but the subject is deadly serious; the amount of fish that one country decides to take out of the sea may have great consequences for what other countries can take in the future. Therefore, the amount of fish that one particular country decides to take in any given period has to be decided on the basis of what others are likely to do and how they are likely to react to what that particular country decides to do.

The setting is often illustrated by the famous “prisoner's dilemma”. Two delinquents are suspected of armed robbery, but the police don't have any evidence. The two are put each in his own cell without the possibility of communication. They are made an offer. If one of them confesses and the other does not, he who confesses will be released, and the other one will be in jail for nine months. If both confess, they will be in jail for six months. If neither confesses, they will be in jail for a month because they were caught in a stolen car.

The outcome of the game can be illustrated by the following payoff matrix. The first entry in each cell is the outcome for player one, the second entry is the outcome for player two and the numbers are months in jail, negative since this is a negative payoff (after Gibbons 1992).

In Chapter 2 we discussed the variability of fish catches and fish stocks at some length. Catches from some stocks have risen rapidly and then fallen just as rapidly to almost nothing (the Peruvian anchovy, the California sardine, the Japanese sardine). But after some time, decades in some cases, these stocks have bounced back and sometimes even surpassed their previous peaks. In this chapter we shall take a closer look at variations in fish stocks, in particular some other stocks that have collapsed. There are few if any cases of collapses without subsequent recovery, however, even though it may take a long time, even decades.

The variability of fish stocks can play out on several timescales. The shortest timescale is the year-to-year variability in recruitment – that is, variations in the size of fish cohorts. In temperate or cold waters spawning is seasonal; fish gather in their spawning grounds at a certain time of the year and may migrate hundreds of kilometres to get there (an example is the Northeast Arctic cod migrating from the Barents Sea to the area around the Lofoten islands). Each fish spawns millions of eggs, but most get eaten by other fish before they mature or die for other reasons. Small variations in an enormously high egg mortality could explain the large variations in cohort size. Suppose a fish spawns 70,000 eggs and that the normal mortality is 99.99 per cent. Of the 70,000 eggs only seven would normally survive. With a mortality of “only” 99.98 per cent, fourteen would survive, and the recruitment from that fish would be doubled.

The variability in recruitment can also play out on longer timescales. First, there are the apparently irregular high peaks of recruitment; typically fish cohorts are below average size in terms of numbers, but every once in a while there is an exceptionally large recruitment, which sustains the fishery for many years to come. We shall see an example of this below, drawn from the Northeast Arctic cod stock. The causes of these variations are not well known. The availability of critical food at a critical time has been mentioned.

After the turbulence and volatility of the 1990s and the beginning of the 2000s, the period between 2002 and mid-2007 witnessed significantly high and relatively stable growth in the Turkish economy. The AKP's solution to the ongoing economic problems was entirely in line with the IMF-backed reform package devised by Kemal Derviş, the economy chief of the preceding coalition government. The AKP took the necessary measures to reinstate the faith of the country's long list of creditors by pledging allegiance to a programme approved by major international financial institutions. Several macroeconomic reforms introduced by Derviş as a response to the 2001 crisis were important in this respect. Public finances and the government's budget deficit were kept under control as a result of Derviş's reforms. The role of the Central Bank of the Republic of Turkey and the Banking Regulation and Supervisory Authority was increased and they were allowed to operate more independently of the government. Several revisions of banking laws strengthened the regulatory and supervisory framework to bring the practice of Turkish banks closer to international standards, in particular to European best practices. The capital requirement for Turkish banks was set at 12 per cent, which was even higher than the minimum requirement decided by Basel III, the international regulatory framework for banks,1 in order to minimize financial risks. At the end of 2001, the government injected $22 billion into the market through the Savings Deposit Insurance Fund to enhance the capital structure of state banks. Also, government securities held by private Turkish banks were exchanged for dollar-denominated bonds to help banks cover their negative foreign exchange positions.

Once in power, the AKP government stuck with these reforms and pursued policies that were directly in line with the 2001 reform agenda, which came to be known as “regulatory neoliberalism”. The AKP government adopted a strong reformist orientation, which fitted the requirements of the mainstream neoliberal reform agenda. A strong economic performance was helped by a favourable global liquidity environment that enabled Turkey to attract large inflows of short-term and long-term foreign capital in the first part of the 2000s. Turkey's growth in this period was ranked the third highest in the world, after China and India.

Independence to 1970s

In the 1920s, less than 25 per cent of Turkey's population lived in urban centres with more than 5,000 inhabitants. The industry inherited from the Ottoman Empire was extremely weak, almost non-existent. The proportion of those living in either rural or urban areas remained little changed until after the Second World War, but rapid urbanization has happened since then. The proportion of the population living in urban centres had increased to 44 per cent by 1980 and to 68 per cent by 2005. Rapid urbanization also meant large movements within the labour force. Agriculture's share of total employment figures declined from about 80 per cent in 1913 to 34 per cent in 2005, whereas industry's share rose from about 9 to 23 per cent during the same period, and that of services increased from 11 to 43 per cent. Before the late 1970s, Turkey was considered an agricultural powerhouse that could feed its own people without any agricultural imports, and even exported some agricultural surplus. Similarly, agriculture's share of GDP declined from about 55 per cent in 1913 and 54 per cent in 1950 to 11 per cent in 2005. Industry's share of GDP increased from about 13 per cent in 1913 to 26 per cent in 2005, and the share of services increased from 34 to 64 per cent during the same period.

A decade of war beginning with the Balkan wars in 1912 had resulted in a dramatic 20 per cent decline in population and a more than 40 per cent decline in per capita income before the establishment of the Republic of Turkey in 1923. The gap between the high-income countries of Western Europe and the United States and the developing economies in the world widened considerably during the century before the First World War due to the rapid industrialization that took place in the countries in the former group. GDP per capita in the area within the present-day borders of Turkey was around $1,200 in 1913, less than 30 per cent of the level of GDP per capita in the high-income countries of Western Europe and the United States at that time.

If the 2013 Taksim Gezi protests were a turning point for the regime's relations with its urban population, what happened three years later on the night of 15/16 July almost became a breaking point for the survival of the regime. On that night, a section of the Turkish military, calling themselves the Peace at Home Council (Yurtta Sulh Konseyi), attempted to take power from the government of Recep Tayyip Erdoğan and the AKP via a coordinated operation in several major cities. Although all indications suggest that they came very close to their objective, they were ultimately defeated. Turkish fighter jets dropped bombs on their own parliament building, and the head of the joint chiefs of staff, Hulusi Akar, was kidnapped by his own security detail. For several hours, it looked as if the Turkish Republic was going to encounter the fourth shattering military coup in its 93-year history. While rockets slammed into the Grand National Assembly building in Ankara, plotters tried to detain the president as he holidayed in a resort on the Aegean. But he had left and the coup was thwarted by civilians and soldiers loyal to him. Erdoğan was evacuated to İstanbul, and the phone call from his plane urging people on to the street was the decisive moment in defeating the coup attempt (Lowen 2016). When the fateful night was over, when the coup-plotters were finally defeated, more than 250 people had been killed and 2,194 injured (Filkins 2016).

The Turkish government pointed the finger at the Turkish dissident, Fethullah Gulen for the failed coup attempt. Gulen, a cleric, businessman and cult leader who had lived in self-imposed exile in the United States since 1999, was, and continues to be, the leader of a pervasive and influential Islamist movement known as “Hizmet” (Service), which owns foundations, associations, media organizations, universities and schools in Turkey and many other countries. During the first decade of AKP rule, Gulen was a close ally of Erdoğan, and during the AKP's struggle to end the military's influence in Turkish politics, Gulen's movement played a major role as the strong arm of the government. Throughout this period, the AKP–Gulen alliance turned into their direct staffing of many public positions. The AKP and Gulenists shared an interest in finding a place for Islam in public life.

The most serious economic pressure came exactly two years after the failed coup from more than 3,700 kilometres away from Turkey – from the USA. The Turkish economy was thrust into a full-blown currency crisis when in August 2018 the US president, Donald Trump, raised tariffs on Turkey's steel and aluminium exports to the US, resulting in the country's most serious economic crisis since the AKP had come to power 16 years before. Even the 2008 global financial crisis and economic downturn had not caused this level of decline in Turkey's economy. The Turkish lira lost more than 40 per cent of its value in the first two weeks of August. The pretext for Trump's punishing attack on Turkey was the continued detention of the US Presbyterian missionary Andrew Brunson, who was arrested in October 2016 on charges of espionage and accused of involvement in the attempted coup of July that same year.

There was, however, a background to these economic problems; they were not simply the result of Trump's tariffs. Within a year after the 2013 Taksim Gezi protest movements, the Turkish economy had begun to display some serious problems. In 2014, many members of the country's economic and financial team leading key institutions were replaced with political loyalists with little or no experience. Government intervention in several major banks risked an impact on the entire financial sector. The government's haphazard audits and its pestering of local and foreign investors for political reasons also damaged the economy. These domestic factors relating to mismanagement contributed to the economic and financial headaches but were not the main reason for the crisis. As in many other turning points in Turkey's economic development process for the past two decades, and the development processes of other dependent economies, the main structural reason for this sudden setback could be found in the global context. There had been signs of dark clouds accumulating in the global system since 2012, when the growth of the world economy weakened considerably and contiuned to remain weak.

“If the Earth were a single state, İstanbul would be its capital.” – Napoleon Bonaparte is alleged to have said (Schultz 2015)

Over 600 years ago, the eminent Islamic scholar Ibn Khaldun who is considered as the true founding Father of modern sociology, celebrated the transformational nature of cities and their contribution to the advancement of civilization: “The level of a civilization can be estimated by the size and growth of its cities, an inevitable consequence of the development of human society” (Ibn Khaldun, Al-Muqaddimah 1377). By that measure, Turkey has done amazingly well. Today, Turkey is among the most urbanized countries in Europe. In comparison to European countries, the average size of its large urban zones is over 1.1 million inhabitants, nearly twice the EU average and greater than any other country in Europe. Among comparable countries, only South Korea managed a faster rate of urban growth in the years, 1950 to 2013. But more than any other city, it is İstanbul, home to 16 million people, that dominates the urban landscape, accounting for more than 20 per cent of Turkey's urban population (World Bank 2015: 9–10).

A series of nationwide protests in May and June 2013 signify one of the most significant moments in the AKP rule in Turkey. The protests began on 27 May 2013 as a small campaign against the government's redevelopment plans for Gezi Park in Taksim Square in central İstanbul. Since its beginnings in 2002, the AKP regime has been unique in Turkish history, in terms of its economic and political use of the construction sector. It chose construction as the locomotive of its high expectations, that is, to create an active process of development and a lively domestic market. The rapidly rising housing complexes, skyscrapers, giant malls, wide boulevards and the construction of fast motorways, airports, tunnels and metros meant job opportunities for a significant section of the population. In 2004, there were one million people working in the construction sector; this number had reached 2.2 million by 2014. Moreover, all of these projects were considered accomplishments that would be perceived by the electorate as clear signs of economic growth and hence the success of the regime (Sonmez 2015).

The global response

The coronavirus has plunged the global economy into a new phase of uncertainty and created extreme shock which made all its other problems look smaller. Since emerging in the Chinese city of Wuhan in late 2019, the virus has spread to almost all countries and territories in the world. To stem further spread, authorities around the world implemented measures to lockdown countries to varying degrees, which include closing borders, shutting schools and workplaces, and limiting large gatherings. Those restrictions, which the IMF called the “Great Lockdown”, brought much of global economic activity to a halt, impacting businesses and jobs.

To understand and explain the dramatic impact of the Covid-19 pandemic, one needs to look first at the economic structures of neoliberalism. The neoliberal phase of capitalism rests on fictitious capital, a vast expansion in debt creation, deregulation, outsourcing, and privatization of almost all public services such as energy, water, trains, health, education, roads and prisons. Neoliberalism treats healthcare as a private good for sale rather than a public good paid for with our taxes. This relocation of healthcare from the state to the free market has a detrimental effect both on access to healthcare services and the quality of what is affordable for many people. In many countries, the number of hospital beds were reduced, sections of essential healthcare were privatized and/or outsourced, and serious cuts were made in health budgets. Forty years of neoliberalism across the continents, especially in the so-called “advanced” western economies, have left the countries ill-prepared to deal with a public health crisis of this kind. Preventative medicine is a massive undertaking that requires heavy investment in research and development and only states can afford such undertakings, but neoliberal policies have meant that public investment in infrastructure, equipment, research and development of vaccines, medicines and skills has been significantly reduced, whereas private pharmaceutical companies have little or no interest in non-remunerative research on infectious diseases such as Covid-19.