The only path to salvation is the Kemalist Economic Policy

Only a genius like Mustafa Kemal Atatürk could have rebuilt a country that had been razed in the dark steppes of Anatolia, a country that could not produce enough wheat for itself, imported sugar, and had no industry. Indeed, no Republican government established after him has ever achieved the rate of development and growth captured in the 1923-1938 period. Mustafa Kemal Atatürk and the Kemalist cadre, who founded the Republic of Turkey by successfully completing the National War of Independence in Anatolia against both imperialist states and internal reactionaries and collaborators, believed that true salvation could only be achieved through economic independence, and they treated the country's economic and financial independence as a matter of honor and integrity, doing what was necessary.

As early as January 1923, just 3 months after driving the imperialists out of our Anatolia, Mustafa Kemal Atatürk pointed to the goal by saying, "The State of Turkey will be an Economic State." He did this even before the peace treaty was signed and the Republic was proclaimed.

Even before the Republic of Turkey was established, in February 1923, he convened the Turkey Economic Congress in Izmir, the City of Liberation, to determine the economic policies to be followed and to ensure that economic development was shared with the participation of the entire society. At the congress, he drew the roadmap for the economic salvation of the new State of Turkey and said the following:

"No matter how great political and military victories may be, if they are not crowned with economic victories, the victories achieved will not be permanent and will fade in a short time. Therefore, in order to secure the beneficial results that our strongest and most brilliant victories can provide, it is essential to ensure and strengthen our economy and our economic sovereignty. To bring our new Turkey to the place it deserves, we must give importance to our economy without delay. Our time is entirely an era of economics."

He also stated: "The most important factor directly related to the life of a nation is that nation's economy. This truth, determined by history and experience, is seen in our national life and our national history. When Turkish History is examined, it will be immediately understood that the reasons for rise and fall are nothing other than economic problems."

To bring our new Turkey to the level of civilization it deserves, it is essential to give primary importance to the economy. Economy means everything. It means everything necessary to live and to be happy. It means agriculture, it means trade, it means services, it means everything. There is no civilized state that has not thought of its economy before its army and navy. Full independence means: independence and complete freedom in every field—politically, financially, economically, legally, militarily, and culturally. A lack of independence in any of these means a lack of full independence for the nation and the country in the true sense. The goal of our wars today is also full independence. And the fullness of independence will only be possible with financial independence.

At the end of the First World War, European countries were experiencing very severe economic crises. In the years when the war ended, prices in England increased by 242% and in France by 357%. Germany experienced hyperinflation. In 1923, 1 US Dollar could be bought with 500 billion German marks. National income accounts were calculated for the first time in Turkey in 1929. Yet, even today, we still cannot calculate national income accounts correctly. In 1931, the preparation of a development plan began for the first time in the world, and the first Industrial Development Plan was prepared for the years 1933-1937, and the 2nd Industrial Development Plan was prepared for the years 1938-1942 under the personal direction of Atatürk. To summarize briefly, the main goal of the 1st Industrial Development Plan, which was "to ensure that domestic consumer goods, which are found in Turkey but not produced for consumption and are imported from abroad, are not imported but produced within the country," was achieved, and for this purpose; Kayseri, Nazilli, Ereğli, Bakırköy textile factories, Malatya yarn and weaving factories, Iğdır yarn factories, Karabük iron and steel, Izmir paper, Bursa merino, Kütahya Ceramics, Paşabahçe glass and glassware, Keçiborlu sulfur, Gemlik artificial silk, Izmit superphosphate, alcohol, rose oil, cement industrial facilities, Turkey Sugar Factories, and the Turkish Grain Board, Sümerbank, Etibank were established during the 1st Industrial Development Period. Have those who have been in power for 20 years been able to build one of these facilities or factories? No. They only sell and destroy.

Great leader Mustafa Kemal Atatürk personally oversaw the 2nd Industrial Plan, covering the years 1938-1942, one year before his death, while he was ill and under treatment, staying awake until the mornings and taking the Prime Minister and other officials with him. While on his sickbed, he summoned Prime Minister Celal Bayar to Dolmabahçe Palace and ordered the completion of the unfinished investments in the first plan, and commanded that the 20 factories targeted in the first plan and the 100 factories targeted in the second plan must be brought to life, and that railways be expanded. The 20 factories planned in the first plan were established within five years. The factories and investment areas planned in the second plan can be briefly summarized as follows: mining, electricity production, household goods industry, soil and food industries, chemical industry...

In fact, without waiting for the industrial development plan, Mustafa Kemal Atatürk established the Is Bank and the Industrial and Mining Bank in 1924, and in 1929, he regulated and implemented customs tariffs. He ensured the establishment and operation of Securities and Exchange Markets, which we still cannot regulate according to international norms today. On June 30, 1930, he established the Central Bank of the Republic of Turkey and enacted the Law for the Protection of the Value of Turkish Currency. In 1931, quotas were placed on imports. In 1933, Sümerbank was established, and laws for the protection of deposits, and lending and credit operations were regulated.

Between 1933 and 1937, a development plan was implemented for the first time in the world in Turkey under the leadership of Mustafa Kemal Atatürk. With the first five-year industrial development plan, the state's entry into economic activities and state entrepreneurship began. Thanks to the economic policy followed by Mustafa Kemal Atatürk, important steps were taken in the name of industrialization by staying out of the 1929 economic crisis. The practice of "planned industrialization under state leadership" in underdeveloped and developing countries was realized for the first time in Atatürk's Turkey. With this planning, the main goal in Turkey was to produce the necessary basic industrial goods through public enterprises, and when the plan was prepared, no external resources were foreseen, and the plan was carried out with domestic resources.

The main goal in Atatürk's fiscal policy was: a balanced budget and a budget surplus. When the estimated and finalized amounts for budget expenditures and revenues for the 1923-1929 period are examined, although it was estimated that the 1923-29 budgets would have a deficit, the 1926-28 budgets would be balanced, and the 1925, 27, and 29 budgets would have a surplus, except for 1925, final revenues and final expenditures were higher than the estimated rates both in absolute terms and as a ratio to GNP throughout the period. The budgets of the new Republic of Turkey generally had a surplus in the early years. Because: waste and corruption were not allowed, and the principle of savings was not compromised. Although the tithe (aşar) tax, which was collected through tax farmers and oppressed the people and hindered the increase of agricultural production, constituted 20% of total budget revenues, it was abolished by Atatürk with a fiscal revolution. The reason for the deficit in 1925 was the abolition of the tithe tax. In its place, in 1926, with Law No. 735, a general consumption tax (transaction tax), which is the equivalent of today's VAT, was introduced. This tax is the first modern tax of the republican administration. It is collected by affixing stamps. Mustafa Kemal Atatürk explains the basic principle of the republic's economic policy with these words:

"First of all, importance will be given to agriculture and the farmer. The peasant will be our master in this new era. For this, the tithe tax, which squeezes the peasant like a vise, will be abolished. Modern agricultural methods will be applied, the necessary support credit will be provided to the peasant through the Agricultural Bank (Ziraat Bankası), and handicrafts and industry will be encouraged."

The main goal of monetary policy is to establish a balance between state expenditures and resources. For this reason, an inflationary situation was never experienced. He always thought of the happiness and welfare of his people. He never allowed spending more than income. He was strictly against the Central Bank of the Republic of Turkey increasing emission, that is, printing money, and made his investments with the country's own national resources. Indeed, for 15 years, the central bank limited the emission volume to 10 million TL. He saw the central bank printing money as the most important cause of inflation. And he never resorted to this diseased financing method.

While one British pound was on average 605 kuruş in 1921, it was at the level of 616 kuruş in 1938. The great leader Mustafa Kemal Atatürk, who wanted the national currency to pass into the hands of the Turks, distributed the shares of the Central Bank of the Republic of Turkey, which he founded in 1930, to Turkish Banks and the state's civil servants. While the central bank had 6127 kilos of gold in 1931, it increased to 26190 kilos in 1938. He always kept the state budget balanced, gave a surplus if necessary, and never allowed price stability to be disrupted.

According to Mustafa Kemal Atatürk: "Turkish banking should be under the management of Turks and in the ownership of Turks." He did not find it appropriate for the vast majority of Turks' deposits to be in the hands of foreign banks. It is very interesting that while 68% of deposits were in the hands of foreign banks and 32% in the hands of national banks in 1920, 81% of deposits were in national banks and 19% in foreign banks in 1937. Atatürk made investments without falling into inflation, encouraged his people to save, and initiated the "National Economy and Savings Move" and the Domestic Goods Week for this purpose.

One leg of Atatürk's economic policy is the balance of external payments. By preventing the value of the Turkish Lira from falling against foreign currencies, he always raised the reputation of the Turkish treasury in international markets. In accordance with fiscal and monetary policy, he always ensured the balance of external payments and closed the foreign trade balance with a surplus. In the 1937 period, our foreign trade balance always had a surplus. In a speech in 1933, Atatürk expressed that he saw a balanced budget as a guarantee for the survival of the state.

"I believe that our high council will attach special importance to taking every measure to protect and ensure budget technique. The fact that the Grand National Assembly of Turkey (TBMM), which knows the countless drawbacks of an open budget, is determined to ensure a balanced budget is a great guarantee for the financial and even general policy of the state."

He attached such great importance to a balanced budget that he also included the balanced budget principle in the CHP program.

While the national income per capita was 45 dollars in the 1923-38 period, it rose to 88 dollars in 1938. While one German mark was 44 kuruş in 1924, it was 46 kuruş in 1938.

Nations that do not attach importance to economic science and its rules always prepare their own ends. The most fundamental element of Atatürk's economic understanding, who was aware of this, is economic balance and stability. It is possible to group this policy into 4 main groups:

1. Anti-inflationary money-credit policy that protects the value of the Turkish Lira

2. Balanced budget policy based on real public resources

3. Foreign trade policy without devaluation

4. Planned development policy that ensures the effective use of national resources

As a result of the economic policy implemented by Atatürk, GNP grew by an average of over 10% in the 15-year period. With the successfully implemented anti-inflationary budget and monetary policy, stability was achieved in domestic prices and the value of money. In foreign trade, a surplus was constantly achieved.

In a speech, Atatürk said, "In any case, the state's regulatory role in economic affairs, as in political and intellectual matters, should be accepted and deemed appropriate as a principle." Mustafa Kemal Atatürk created the path to salvation with his own original thought and, in the light of science, implemented the world's first democratic development plan in Turkey in 1933. Atatürk's etatism model is a development model in the light of science. And it was born as a historical necessity. The famous economist Keynes, in his book "The General Theory of Employment, Interest and Money" published in 1936, argued that equality would be achieved through state intervention. However, the great leader Mustafa Kemal Atatürk shaped the state and economic model in his utopia at the Izmir Economic Congress even before the republic was proclaimed, and with the proclamation of the republic, he implemented the development and welfare economy model based on state intervention in the economy. Western economists and financiers only included this model of Atatürk in the literature in the 1950s under the name of the development model developed for underdeveloped countries. As a result of this view of Atatürk, while the increase in industrial production in the world was 19% in the 1929-1938 period, it was 96% in Turkey. The great leader Mustafa Kemal Atatürk achieved salvation by doing very great things in a short time. In order for the entire society to develop in the shortest possible time, he implemented stable economic policies, constantly observed internal and external economic balance, never allowed easy ways such as printing unbacked money, and did not allow inflationary policy by implementing a balanced budget policy. The great leader Mustafa Kemal Atatürk made the Republic of Turkey, which he created from nothing in 15 years, the most respected country in the world, and made it the 11th largest economy and state in the world.

PROF. DR. DURAN BÜLBÜL

05.10.2023