This chapter analyses macroeconomic policy, with a focus on monetary policy, relating it to the performance of the economy in Turkey in the Great Depression. The Depression was transmitted to Turkey primarily through a sharp decline in agricultural commodity prices. In response, the government adopted strongly protectionist measures starting in 1929 and pursued import-substituting industrialization. In contrast, Turkey’s macroeconomic policy was cautious. Fiscal policy adhered to the principle of balanced budgets. The policies of the new central bank, established in 1930, were similarly restrained: as a result, the monetary base increased very little before 1938. While this restraint resulted in some appreciation of the currency, Turkey’s economy did better than most others around the Eastern Mediterranean. The chapter argues this performance was primarily due to strong protectionism, which paid benefits in the short run, and recovery in the agricultural sector.

This chapter will depart from these interpretations of the Turkish Revolution through the theoretical and historical pointers discussed in previous chapters. It will argue that the original Kemalist experiment with modernity (1923–45) cannot be understood as a form of (state) capitalism, but rather as a historically specific Jacobinism.