Exploitation behind high GDP growth

Economist Gülay Dinçel evaluated the 11 percent growth rate of Turkish economy in the third quarter and critical responses to the TÜİK statistics from heterodox economists
Sunday, 17 December 2017 03:40

Economist and soL columnist Gülay Dinçel evaluated the 11 percent growth rate of Turkish economy in the third quarter and critical responses to the Turkish Statistics Institute (TÜİK) statistics from heterodox economists.

Dinçel pointed out that economists of the bourgeois opposition are doing the better job than political opposition. “The political failure of the bourgeois opposition is clear. This is true not only for Turkey but also many other countries. However, we must appraise one success for Turkey. The economists of the bourgeois opposition are working hard”.

Mainstream economists serve to the government by justifying the capitalist order. Putting the monetary policy at the centre of the economic debates and evaluating fiscal policies without paying attention to their class dimensions become possible thanks to mainstream economists.

The biggest damage of the Justice and Development Party (AKP) period for Turkish working class is spreading the perception that there is something called “normal capitalism” and cultivating a love of capital income, Dinçel argued. “We must give credit to the bourgeois opposition as well for showing governments’ mechanisms of rent and plunder as an extreme and normalizing the usual exploitation mechanisms”.

Bourgeois economists undoubtedly are doing their job. Every now and then ironically, they take the responsibility to defend the long-run interests of the capitalist class against the short-run interests of the government. While doing that, they are trying to reconstruct some kind of “objectivity” from their perspective, reminding the main mechanisms of capitalist order, common measurements and common language. They also play a role in exposing and bringing government into line. However, information and intelligence they produce are one of the most direct ways of producing on behalf of the capitalist class.

Dinçel reminded that proliferation of heterodox economics is not only about conditions in Turkey. Neoclassical economics’ failure with the 2008 crisis opened space for different approaches called as “heterodox” including institutional and post-Keynesian economics. “This is a separate topic, but we can say that this situation created an opacity to be cleared for Marxists” she added.

It is very important for Turkey to go beyond the boundaries set by heterodox approaches and keep questioning those approaches still referencing to the capitalist system. Otherwise, we would find ourselves in the middle of the ideal interest rate calculations in interest rate debates or comparing inflation for the workers and never existed production costs for the bourgeois.

In terms of the debates related to growth statistics published in the beginning of this week, the critical points emphasized by heterodox economists are mostly correct, Dinçel stated. According to the Turkish Statistical Institute (TÜİK)’s statistics, Turkey’s gross domestic product grew by 11.1 percent in the third quarter. The growth was triggered mainly by domestic demand as well as accelerated investment support by the government and strong contributions from exports.

However, heterodox economists were very critical of these statistics. Dinçel agrees with most of those criticisms. The new GDP calculations are controversial. There is a strong low-base effect (Turkish economy contracted 0.8% during the same period last year because of the July 15 coup attempt). The government increased its stimulus measures including the use of its Credit Guarantee Fund (KGF) and changes to tax regulation. Finally, there is also inflationary effects because of the rising price levels. We can also add recovery in the trade relationships with Russia, revival in tourism and increase in exports. This is a growth pattern depending on factors permanence of which are debatable. She adds, “we must appreciate the creativity of economy bureaucracy at this point though, if we take the measure of success as the ability to postpone the problems a few years by taking excessive risks and finding new tricks or hoping for the help of coincidences after those few years…”

Besides these criticisms raised, there are things haven’t been said. And those are the ones that leave these criticisms deficient according to Dinçel. Particularly, two major factors made the management of the economy relatively easier in the recent few years; an increase in informal labour and longer work hours even in the “regulated” sectors such as finance and automotive industry. In other words, the increase in GDP or rise in value added represents the expansion of the exploitation opportunities. Laborers in Turkey are working longer hours every year with less pay and under worse conditions.

KGF and other investment incentives did not only fund small and medium enterprises in difficulty, perhaps they helped big enterprises more. The third-degree suppliers of Renault and Arçelik and the second-degree contractors of Zara and Mango were given operational capital so that production can continue. The sunk credits of private banks were transferred to the public banks. The “wheels of the economy” were somehow turned and positive growth rates were achieved.

Big capital is unhappy about AKP government but it is clear that government is working not only to protect small businesses from bankruptcy but also to keep the “exploitation algorithm” that pleases big capital.

The automotive industry is an example, Dinçel argues. Automotive industry contributed to the GDP growth more than the construction if we include its backward and forward linkages. In 2017, production in automotive industry increased by 25 percent and plants are working close to full capacity. What about the increase in employment in the sector? What we know is that the employment didn’t increase at the same rate and overtime work became normal. What about the firms benefited from last years’ investment incentives? How many of the suppliers of the main industry or suppliers of the suppliers benefited from these credits? Who did these credits actually end up funding?

The big capital is able to expand not because they manage well despite the AKP government but precisely because ruling party provides them extraordinary opportunities to deepen exploitation. This is true even though AKP government is coming to an end and it became very hard to tolerate their damage…It is enough to look at the balance sheets of big corporations to see the real dynamics of growth. If the eyes are not blinded by the love of capital, it is not hard to connect the brightest results with the heaviest conditions of exploitation.