Argentina, Turkey, and 'paleo-neoliberal capitalism'

The historical parallels between Argentina, the three-time world football champion and current titleholder, and Turkey regarding military coups, crises, and inequalities are striking. The reason lies in their shared position within a specific framework of economic interventionism under capitalism. Both are semi-peripheral and considered credible by those who manage US paleo-capitalism. Whether this has always been the case is debatable, but let us take a look at the historical context.

Following the coups they experienced, both countries moved away from inward-looking, import-substitution growth models in the 1980s and adopted "neoliberal policies."

• Turkey: Turkey's political history is characterized by military coups (1960, 1971, 1980) and coalition governments. The 1980 military coup paved the way for the transition to neoliberal policies. The governments established after the coup were able to implement market reforms more easily by breaking the resistance of the opposition and trade unions. The January 24, 1980, decisions marked a turning point in the Turkish economy. Initiated under the leadership of Turgut Özal, these decisions accelerated the transition to a market economy. Through privatizations, the goal was export-oriented growth, the entry of foreign capital into the country, and the strengthening of free-market mechanisms; however, this process also brought with it problems such as high inflation, rising external debt, and income inequality. The country entered a balance of payments crisis in 1994, followed by both a banking crisis (the collapse of 22 banks) and a major public finance crisis in 2001. From the 2000s onwards, the stability of single-party governments accelerated infrastructure projects and financial liberalization processes, but it also led to a shift toward non-productive sectors (finance, shopping malls, and construction). The ground for rent-seeking and low real wages created by misguided monetary policies also stirred up domestic politics, bringing inflation-like economic problems back to the surface. This time, Turkey evolved into an environment of even greater inequality.

• Argentina: Argentina's political history is also filled with transitions between military regimes and civilian administrations. The 1976-1983 military junta period was when the first steps toward economic liberalization were taken. In the late 1980s and early 1990s, a comprehensive neoliberal transformation took place under the Carlos Menem government. Privatizations, reducing the state's role in the economy, and free trade policies formed the foundation of this era. Radical steps, such as pegging the Argentine Peso to the US Dollar to combat inflation, were taken. This situation turned Argentina's political history into a pendulum swinging between neoliberalism and statist approaches. Although these policies brought short-term stability, a major collapse occurred in 2001, just as in the 1995 currency crisis, due to financial crises and the unsustainability of external debt. The 2001 economic collapse led to a loss of public confidence in neoliberalism, and subsequent governments attempted more protectionist and statist policies. The harsh budget program and market-friendly policies of the far-right Milei, chosen with the aim of lowering high inflation, have made the situation of the working class quite difficult.

COMMON PROBLEMS OF TURKEY AND ARGENTINA

The neoliberal experience of both countries has revealed similar problems:

• Deindustrialization: Due to the impact of financialization, both economies have moved away from industrial production and turned toward a rentier economy (especially construction and finance).

• Financial Fragility: Dependence on foreign capital has created vulnerability to exchange rate shocks and global financial fluctuations.

• Rising Inequality: Neoliberal policies have deepened income inequality, widening the gap between the rich and the poor.

The neoliberal and political histories of Turkey and Argentina tell a story that runs in parallel. Both countries experienced neoliberal transformations triggered by economic crises, but the structural problems created by these transformations formed the basis of the economic instabilities that continue today.

While their pasts are similar, their futures may diverge depending largely on the steps taken. Based on a table prepared by Mahfi Eğilmez, we can say: As of the end of September 2025, Argentina, which is growing faster than Turkey, was able to quickly reduce inflation from 280 percent to 30 percent in two years by suppressing the exchange rate. This, of course, caused a significant loss of reserves. Turkey, on the other hand, is growing slightly slower while failing to reduce inflation quickly. Unemployment rates are similar but quite high compared to the core capitalist countries. The interest burden is high in both countries, but it is a much heavier cost factor in Turkey. Even though budget balances have deteriorated, both countries are on the path to recovery. The current account deficit looms as a threat in the background. So, what is our problem? Should we rejoice that both countries have "escaped" falling into a worse state and entering a crisis? After all, Argentina faced a small-scale currency crisis last week due to the rapid fall of the peso; one could say it dodged a bullet.

Before moving on to a hypothetical analysis (scenario) for the future, let us emphasize the most painful aspect of the conservative "paleo-neoliberal capitalism" mentioned in the title: Inequality increases deep poverty, and the masses directly bear the brunt of the economic crisis. The value that paleo-capitalism attaches to non-economic elements also determines the entire economic framework. The prefix "paleo" already emphasizes this; it is a quite "primitive" process. There is a situation of ruthlessness, ignoring the resulting inequality, and conducting politics and perception based on this. Isn't Trump's economy already using the perception of the future through conservative values? They say, "Why talk about the economy? The grand spectacle is above all else. Let's sell weapons, import less, and leave the economy to an 'uncertain' future." Argentina and Turkey are already accepting poverty rates with their rapidly increasing Gini coefficients, aiming to defeat inflation through them. In this respect, there is not much difference between them: the collapse of the middle class, rising poverty, and inequality.

Future scenarios for both countries:

In the first scenario, Turkey learns from its neoliberal past and implements similar structural reforms, while the other (Argentina) continues the current cycle.

• Turkey: If Turkey focuses on policies aimed at increasing industrial production and value-added, reduces the harmful effects of financialization, and encourages productive investments, it could deviate from Argentina's path. Its geopolitical position, proximity to European markets, and relatively stronger industrial infrastructure could provide an advantage for this transformation. Furthermore, it could implement fiscal and income policies that prevent societal inequalities. By tempering the negative aspects of financialization with a planned development model, it could act with the awareness that the primary financing is domestic. This could lead Turkey to transition to a more stable and sustainable growth model.

• Argentina: If Argentina cannot escape the spiral of political instability, high inflation, and external debt, and continues to oscillate between populist and protectionist policies, it will not be able to solve its structural problems. In this scenario, Argentina would remain in a cycle of recurring economic crises, and the gap between it and countries like Turkey could widen.

In the second scenario, Argentina learns from the past and begins to overcome the problems created by neoliberalism. Thus, even if it cannot enter the top 10 countries in agriculture and livestock as it did at the beginning of the 20th century with its vast lands—the 8th largest in the world—it could easily enter the top 20. In this case, as its industry rises by keeping pace with agriculture, it could eliminate the negative effects brought by financialization.

In this scenario, Turkey, in the vortex of internal political instability, could increase its financial dependence on the "center," further raising its financial fragility. To reduce the budget deficit, it could trigger the current account deficit again, leading to rising demand for foreign currency and potential external debt crises. Far from reducing inflation, it could cause it to rise back to 50 percent.

In the third scenario, both countries continue to struggle with the problems created by neoliberalism and fail to show sufficient will for structural reforms.

• Shared Fate: If Turkey continues to deindustrialize, fails to solve its inflation problem, and maintains its dependence on non-productive sectors like construction, it may be inevitable that it follows a path similar to Argentina's. In this scenario, both countries would continue to grapple with problems such as currency crises, high inflation, and the loss of international investor confidence. While central banks and governments struggle with crisis management, long-term growth plans are cast aside.

In conclusion, the fates of Turkey and Argentina depend on their determination to overcome the problems created by neoliberalism. If both countries can ensure domestic political stability as a requirement of the rule of law, produce a planned development model, and courageously address structural problems, facing the cold face of "paleo-neoliberalism" might be possible. For this, they need to redirect resources from non-productive investments toward investments that increase value-added in agriculture and industry and provide opportunities for innovation. Countries like Argentina, which showed it actually has strong capacity by defeating France in the final of the last world championship, should seek ways to overcome these problems together with Turkey. Otherwise, the "Tango-Halay" dance may continue to turn into a story of chronic economic instability in both countries.