Fuat Ercan

Reference:
Ercan, F. (2002) “The Contradictory Continuity of the Turkish Capital Accumulation Process: A Critical Perspective on the Internationalization of the Turkish Economy”, in The Ravages of Neo- liberalism: Economy, Society and Gender in Turkey, Nova Publications, New York, ss.21-39

Fuat Ercan

I. INTRODUCTION

The Turkish economy has recently been experiencing a series of important structural changes. In order to understand the change, one has to explore how the moving forces of the accumulation of capital are shaped within the context of the historical and social dynamics of the country itself. To the extent that the rapid change that has come about recently indicates a stage reached by capital accumulation, we can speak of a certain continuity. On the other hand, inasmuch as the same stage implies, for a limited number of big capitalist corporations, the demise of the conditions of domestic accumulation, it signifies the advent of a new process. We may describe the change that came about in the 1980’s as a deliberate act of will on the part of the limited number of domestic corporations in question or as their submission to an inevitable necessity. The opening up of those big corporations that had reached a certain level may be considered to be the fruit of a strategic reorientation, i.e. a deliberate act of will. Thus while the deliberate aspect was directly linked to domestic capital accumulation, the necessity aspect was related to the dynamics of capital accumulation on the world scale, which determined to a large extent the evolution of the inward-oriented capital accumulation regime inside Turkey itself. In this chapter, we are going to try to analyse the process of the integration of capital accumulation in Turkey with world capitalism.
As a result of the stage reached by the process of capital accumulation in Turkey, a limited number of capitalist groups with a certain weight in the overall domestic circuit of capital have intensified and increased their capacity to control the total circuit of capital. In order to overcome or bring under control the aggravated crisis they faced in the late 1970s, these groups, generally organized in the form of holding companies, adopted strategies (the strategy of outward-oriented capital accumulation) and hegemonic projects consonant with these strategies. These new strategies and the consequent control capacity of capital resulted in the transformation of all social relations existing up until then in the country.
The outward-oriented capital accumulation strategy implemented contains serious difficulties within itself. The most important is the fact that capitalist groups relatively dominant within the domestic economy henceforth enter into relations with world capitals which they cannot control directly and for which they are not exactly prepared. To the extent that it is quite difficult and costly to gain a significant foothold within the power hierarchy peculiar to capital accumulation on the world scale, capital groups that opt for internationalization find themselves not as rule makers but as units that have to abide by the established rules.
This process has led to an intensification of the contradictions between the short-term interests of those individual capitalist groups that have attained a certain level of success in the process of internationalization and the interests of the country’s economy at large. This kind of differentiation has made necessary a redefinition of relations between domestic capitals and between these and the state. The 1980s were the years when capital accumulation came to be shaped exclusively on the basis of the capitalist logic, but also brought out contradictions inherent in capital accumulation in clearer manner. As a result, these contradictions led to an intensification of conflicts and hence of competition between different individual capitals. Active participation in the international process of capital accumulation aims, at bottom, at the appropriation of a greater amount of surplus-value. This has made it necessary for individual capitals carrying on domestic activity to face international dynamics. The principal result was the need to increase their capital in order to cope with the international environment.

On the other hand, it should be remembered that the depressive long wave of capitalism that started in the early 1970s resulted in a shift in the existing power hierarchy between capitals and countries. It is obvious that turning to internationalization in such a period, when the worldwide valorization of capital has become so much more difficult and competition so much more intense, implies the acceptance of existing relations of power and hegemonic positions. The crisis that arose from the mid-1970s on in the conditions of revalorization of capital accumulation in advanced capitalist countries has made internationalization an important strategy for the individual capitals of these countries. In order to understand the process, we must remember that the conditions for the revalorization of capital accumulation on a world scale are realized on the basis of different relations for money-, commercial and productive capitals. The search for new alternatives by the dynamics of capital accumulation in order to maximize surplus-value on a world scale has resulted in the restructuring of the existing division of labor on a world scale. The impact of this new division of labor on individaul countries has been different, depending on the capital structure of each country.
Although it is true that the process of the realization of the conditions of capital accumulation on a world scale has an impact on the macro-economic performance of the country as a whole, it would be wrong to make the same generalization about those capitalist groups which are in the process of integration with international capital. When the differentiation of functions within capital, a rising trend of the 1980s, is taken into consideration, the process of articulation has resulted in some groups losing in power, while certain other groups have managed to benefit from the opportunities provided by world capitalism.
To explore the process of integration of capital accumulation in Turkey with world capitalism within the context of the dynamics depicted above will be the aim of this chapter. Inasmuch as strategies for capital accumulation comprise relations of production, of the division of the product and of power, relations of power and domination also have to be brought into the analysis. New relations of power and control thus lead to the simultaneous implementation of various capital accumulation strategies in one and the same country.
This chapter will take up the internationalization of capital accumulation in Turkey on the basis of two main stages.The first stage consists of the period when capitalist relations were constructed domestically on the basis of an inward-oriented capital accumulation. Having reached a certain level within the country, capital accumulation then tends to articulate with the total circuit of capital functioning on the world scale, which forms the second stage.

II. THE INWARD-ORIENTED CAPITAL ACCUMULATION STRATEGY

The development of capitalism and the process of integration with the world economy have, at the same time, made possible the development of the domestic accumulation of money- and commercial capital. The transformation of money- and commercial capital into productive capital gained a certain momentum after the military coup of 27 May 1960. The discourse of national development initiated around this time implied in effect the gathering together of all the different stages of capital accumulation inside the country. There is a host of reasons for the implementation of inward turned capital accumulation policies in the underdeveloped countries, from the point of view of both local and international capital. In the advanced capitalist countries, the intensive accumulation of capital and the deterioration of the conditions of the valorization of the overaccumulated capital by these countries were the fundamental cause of the internationalization of productive capitals. This internationalization of capital displays harmony with the inward-oriented accumulation strategies in underdeveloped countries (Bina and Yaghmanian, 1990).
Inward-oriented capital accumulation strategies are thus the story of the conversion of domestic merchant’s capital to an industrial bourgeoisie. This happened in Turkey in the 1950s: “merchant’s capital, in collusion with metropolitan capital striving to recapture the domestic market, entered the market as a producer this time around. But within the process, certain sections of merchant’s capital were transformed into industrial capital in direct or indirect collaboration (i.e. via joint ventures or license agreements) with foreign capital” (Gülalp, 1983, 34). In Turkey, the transformation of commercial capitalists into productive capitalists was consummated in quite a brief span of time. In order to understand the process, it would be wise to look at the increase in industrial production. In the two periods 1960-1970 and 1970-1976, whereas the increase in industrial production in 58 countries of the middle income group was 7.6 % and 7.2 % respectively, this rate reached 7.8% and 9.5 % for Turkey (TÜSİAD, 1979, 160).

The Crisis of Inward-Oriented Capital Accumulation

We define the first stage of inward-oriented capital accumulation as the easy stage. In this stage production and profits increase very rapidly. However, high growth and profits enter a stage of saturation prematurely (Hirschman, 1968, 13). In Turkey as well, the easy stage reached saturation very early on. In particular, the rapid attainment of a level of saturation for durable consumer goods, a main sphere of investment, made new investments necessary for productive capitals. For capital, the desire and the necessity of articulation with the world economy, albeit in unequal fashion, became clear. The point we wish to emphasize in this chapter is that the concern with articulation with the world economy is not a cause for capitalists but a consequence. The aim is not really so much to integrate with the world economy as the creation of more surplus-value and the repartition of the produced values through outward-oriented capital accumulation.
We can observe the contradictory continuity of capital accumulation in developing countries more clearly in Turkey in the 1970s. Although development on the basis of import substitution resulted in a reduction in imports necessary for the production of durable consumer goods, the oreintation toward the production of intermediate and industrial goods led to an increase in imports necessary for the production of these goods. Between 1950-1978, while imports relating to consumer goods declined from 20.6 % as a part of total imports to 2.9%, the import of raw materials rose from 33.4 % all the way to 62.4 % (TÜSİAD, 1979, 11). The meaning of this phenomenon from the point of view of the capitalists of a country that has arrived late at capitalism is that in the early stages of industrialization the industrialist still has the characteristics of merchant’s capital. The fact that the productive capitalist engages preponderantly in assembly production results in the surplus-value being produced at the margins of assembly production. But as capital accumulation proceeds, the capitalists wish to produce more surplus-value rather than commercial profits. For developing countries, the limiting factor here is the insufficiency of capital accumulation, which manifests itself in the form of a crisis of foreign exchange.This is why the crisis of inward-oriented capital accumulation manifests itself as a crisis of foreign exchange. The main reason for this is that the level of surplus-value produced is insufficient. On the other hand, the move to capital intensive goods by productive capitals with the purpose of overcoming this insufficiency will only aggravate the need for foreign currency. This will in turn increase the dependency of productive capital on international capital. In the case of Turkey, such a necessity displayed itself during the Third Five-Year Plan of 1973-77. There were two major orientations that proved decisive in this plan.These were, first, the orientation toward intermediate and investment goods and, secondly, the extension of activities earning foreign exchange for the economy (Eralp, 1981, 628).
The move to an outward-oriented accumulation strategy or articulation into the circuit of capital on the world scale made necessary important changes on the basis of a revision of the mechanism of inward-oriented capital accumulation, which had by then become rooted as a wholesale structure. Capitalist groups which had become stronger through the process and now desired to become internationalized moved to employ the state and the opportunities it made available in order to pass onto a new strategy of accumulation. The process was accelerated inasmuch as the desire for change manifested by big corporations toward an articulation with the conditions of capital accumulation functioning on a world scale coincided with the interests and demands of international capital.

III. THE REGIME OF OUTWARD-ORIENTED CAPITAL ACCUMULATION AND CHANGING RELATIONS OF FORCES

The decisive factor in the integration of Turkey with world capital and thereby the access that world capital has had to opportunities in Turkey was the military coup of 1980. The transformation necessary for the internationalization of Turkey was realized on the basis of a triple alliance. The major actors of the alliance were:
- large scale capital, which had reached a certain hegemonic position, the continuity of which was unsustainable on the basis of the available conditions,
- the state and the political structures, which experienced a crisis of political representation and lost ground to the social opposition movements,
- and the World Bank and the IMF, the actors of market oriented restructuring on the world scale.
While capitalist groups that had reached a certain level within the domestic circuit of capital engaged in an intense effort to legitimize the necessity of internationalization, the state set in motion the monopoly of violence it wielded in order to prevent the existing social opposition to the order. The World Bank and the IMF, for their part, proposed economic policies necessary for establishing the new regime of capital accumulation by using the opportunities (in particular borrowing) offered by the dependent character of capital.
This process shaped according to the logic of the strong state and the free market expressed the respective interests of the triple alliance, which overlapped to a certain extent. Thus, the military coup of September 12, 1980 and the new economic decisions that were implemented on January 24, 1980 represented diverse and interconnected manifestations of the one and the same effort to overcome the crisis of capital accumulation. The military coup reshaped the state so as to organize a state that was strong in its dealings with labor and the social opposition. The January 24 decisions, on the other hand, were instrumental in implementing the economic measures appropriate to the new requirements of big capital. The strategically decisive interest that capital had during this specific period was the eradication of the arrangements peculiar to the inward-oriented accumulation strategy. For their part, the World Bank and the IMF, the representatives of global capitalism, on the basis of their recipes designed for the gradual implementation of the requirements of the integration of the country’s market with the world market, acted to infuse more dynamic forms to the process. In the secure environment provided by the military regime, the Stand-By Agreement with the IMF covering the period 1980-1983 and the agreements with the World Bank on the Structural Adjustment Loans that spanned the period 1980-1984 were implemented easily without any opposition (Şenses, 1998).
The State and Classes in the Regime of Outward- Oriented Capital Accumulation
In Turkey, the tendency of capitalism toward internationalization starting with the 1980s made it necessary for hegemonic positions to change as well. In the 1980s, capitalist groups that brought together the different functions of capital within the form of holding companies started to define their own interests as the interests of society at large. But in the rise of this new hegemonic formation the state assumed a series of important tasks.
The internationalization of capital was realized on the basis of an ideological discourse directed to the establishment of law and order within the country. The military regime, in catering to the requirements of this ideological discourse, provided for the harmonious blending of the structural logic of capital and the ideological logic of the dominant capitalist classes. The process of bringing the working class in particular and the anti-capitalist opposition, spread as it was among wide layers of the population, under control through repression accelerated the implementation of the requirements of export-based growth, at the same time providing for the generation of foreign currency needed for a more intensive production of surplıs-value. The key variable of this model was for Turkey to participate in the international division of labor by specializing in the production of labor intensive goods in order to increase its exports. This choice is in fact a reflection of the inadequacy of the accumulation of capital in the country. Capitals faced with the requirements of global capitalism posed themselves the task of implementing a series of measures to increase their capital adequacy inasmuch as they confronted an inadequacy of capital accumulation. To the extent that short-term worries accumulated in the period of the competition of capitals, participation in the process of value creation on the world scale through the lower ranks of the hierarchy by specialising in labor intensive goods has been the decisive determinant of Turkish capital and furthermore of the Turkish economy.
Thus the effort to gain a foothold within the global hegemony of capitalism led to the implementation of a series of mechanisms peculiar to the period of primitive accumulation and devoid of legitimacy. In particular, the decision-making power wielded by the state became the fundamental point of reference of those classes that wanted access to the opportunities opened up along with internationalization. As this led to a situation in which inter- and intra-class contradictions came to be mediated by the state, establishing a holistic hegemony became all the more difficult. And to the extent that this kind of holistic hegemony was impossible to establish wthin the raging internationalization hysteria, this was substituted by a series of hierarchical spinoff mechanisms designed to incorporate diverse sections of the population into the process.
The provision by the state, under the guise of the free market, of resources for the reinforcement of capital necessary for the new accumulation regime in effect took the form of the socialization of the costs of the transformation of capital and its participation in the process of capital accumulation at the international level. In other words, for the last two decades, Turkey has been experiencing the pangs of the process the transfer of resources by the state to capital in the process of internationalization.
The transfromation of the state in harmony with the passage to the new accumulation regime brought about a series of changes with respect to the mode of organization of the state as a whole. The transfer of resources owned by the state in its capacity of an economic actor under the designation “privatization” demonstrates that the regime of accumulation has changed. Today privatization has become an end in itself for governments. For instance, whereas privatization receipts for the period 1986-1996 remained at the level of 4.2 billion dollars, the figure for 1998 alone reached approximattely 1.2 billion dollars. Looking at the transfer of public resources to capital, we see that holding companies (for instance AEG, BASF, Koç Holding, Rumeli Holding etc.) have taken a share over 10 % from privatization.
At another level, the state has effected changes aimed to augment the mobility of commodities and money in the international sphere. The most important measure implemented after the January 24 decisions was the liberation of the interest rate, repressed under the inward-oriented capital accumulation regime. Money-capital has assumed a special importance for capitalist groups that want to increase their existing capital adequacy and for capitalists trying to survive under conditions of crisis. With the liberation of interest rates, relations between capital and the state and within capital itself have taken on quite a dynamic aspect. The liberation of interest rates and the increase of the real rate of return on interest have led to a fundamental shift in the productive-capital-oriented character of the economy. The increase in real interest rates has resulted in an intensification of conflicts both within global capitalism and within national capital. To the extent that this restructuring with respect to money-capital facilitated the access by capital organized under the form of holding companies to money-capital, this has resulted in the stepping up of conflists between capitalist groups within the country.
Another important form of intervention of the state relates to a series of arrangements concerning the foreign trade and foreign exchange regimes. On the basis of the January 24 decisions, an Export Promotion and İmplementation Department was established. It was decided that an Export Promotion Certificate was to be given to exporters. An Export Promotion Fund was set up to hand out export promotion credit. Whereas in 1980 tax rebate for exports amounted to a mere 0.12 % of GNP, this figure had reached 0.74 % by 1988. Likewise, while export credit as a share of total credit was 6.88 % in 1980, it had risen to 12.06 % by 1990 (Togan, 1992).
The most important change in the redistribution of resources created through the channel of the state has been public borrowing at the domestic market. One can gain an insight into the question by looking into public expenditure on interest payments. Whereas the ratio of interest payments to total investment spending in the public sphere was 158.5 % in 1980, this ratio reached 1010.4 % in the second half of 1998 (Yeldan, 2000, 286). When we look at the distribution of domestic debt by type of creditor, we see that banks owned by holding companies wield a key position. In 1987, 77.7 % of government bonds were bought by banks and 4 % by the private sector, the share of savers remaining at 0.2 %. The situation becomes even worse in 1999: while banks control 85.3 % of all public debt, the private sector wields 2.1 % (Hazine Müsteşarlığı, 2000, 68).

Changes Observed in Class Relations in the Process of Internationalization

The tendency toward the internationalization of capital and its manifestation through a set of concrete changes have compelled class relations to change considerably. Inasmuch as international competition assumed growing importance for capital tending to become internationalized, the contradiction between the working class and capital was intensified. Against the background of the weakening of the organized struggle of the working class by the 1980 military coup, one also observes a considerable shift in the forms of labor employment. We can take this shift up under two headings. One aspect has been the promotion of measures designed to make workers in large scale production units work in a more intensive fashion. The second has to do with the multiplication and diversification of forms of production based on sub-contracting that make the use of cheap and marginalized labor possible. The ultimate aim of these changes observed in the regimes of production and labor has been the realization of “the highest and the most rapid production with the least input”, inherent in capitalism.
The findings of a study concentrating on large scale enterprises (comprising 48 enterprises that employ 13,342 workers) show that an increase in mechanization based on new technologies in order to produce relative surplus-value and the increase in sub-contracting to augment absolute surplus-value are practiced simultaneously (Erten, Ercan and Erendil, 1999).
Inasmush as the process of internationalization resulted in a rise in rates of interest by increasing the need for money-capital felt by individual capitals, the basic reference for export-based growth became cheap labor. As the cost of capital, i.e. the rate of interest, was high, use of cheap labor and a fuller use of existing production possibilities was the basic strategy of capital throughout this period. For instance, whereas capacity utilization was 59.2 % on the average between 1977-79, it rose to 76.68 % in 1988 and hovered around 79.12 % between the years 1995-98 (Yentürk and Onaran, forthcoming).
Another development that has had an impact on workers is the extension of sub-contracting relations. Parallel in particular to the growing salience of the real hegemony of capitalism, big capitalist groups started to make use to their own ends of small and medium enterprises on the basis of market relations. Firms employing between 1-9 workers, defined as micro-enterprises, form 95 % of the total number of private firms in the economy; we see that the workers working for these receive wages lower than the legal minimum and face terrible conditions of work. Micro- and small enterprises, which came to be reshaped in the process of integration with world capitalism, have been the source of the development of informal relations within the economy (Köse and Öncü, 1998). The process of informalization, leading to the diversification of the labor force into women’s and child labor, implies cheap and unorganized labor for capital.
Intra-Class Relations in the Outward-Oriented Capital Accumulation Regime

The process of integration with world capitalism has led to an intensification of contradictions within capital as well as between labor and capital. During this stage, as the weight of the public sector in the economy was being reduced, the power of the private sector, in other words of capital, increased. Bülent Eczacıbaşı, a prominent businessman, put it in the following way during an interview: “…but I think we face the following fact: The private sector has really attained a certain power in Turkey” (Eczacıbaşı, 1995, 5). At this stage, we have to differentiate between the general trends of development of the economy and the development trends of private capital. We see that, concomitant with the rise of inequalities, certain sectors of capital profit from developments to shore up their capital while at the same time general macro-economic conditions deteriorate. In this period when capitalism has stepped up its activities on the world scale, it would be misleading to analyze the domestic economy on the basis of highly aggregated data. There are two reasons for this. The first is that in the process of the development of capitalism, the division of functions within capital become more crystallized. Partially connected to this, the ever increasing intensification of the contradiction between the private interest of individual capitalists and the general interest of the economy within the process of internationalization is the other important factor.
At a first level, when we compare the period of inward-oriented capital accumulation and period of export-oriented capital accumulation, we see that in general the profitability of the non-agricultural private sector has increased (Onaran and Stockhammer, 2001). On the basis of this study, we see that profits of the private sector have increased in the post-1980 period, the period of the internationalization of the Turkish economy (Table 1).

These data show that the strategy of domestic capital in the post-1980 period designed to increase capital accumulation has met with a certain success. In effect, the share of non-agricultural profit in GDP rose, from its level of 68.5 % on the average during the period 1965-79, to 71.8 % in the 1980-97 period.
We should also point out that even underlining the fact that capital has been successful in preserving its profitability in the face of all kinds of adversity in Turkey is, in itself, insufficient. In order to overcome this type of inadequacy, we have to proceed toward a type of analysis we may call the deconstruction of capital. In such an approach, the inner components of the Turkish bourgeoisie according to the differences they display and the functions they assume have to be brought into the analysis (Aaronovitch, 1981, 227). When we take up the inner structure of the concept capital,
- We can make a distinction within the total circuit of capital on the basis of the functions assumed by capital in the different stages. Accordingly, money-capital is needed to start production, which then is converted into productive capital, tied to the production process, to finally reach the stage of commercial capital, necessary for the circulation of the product obtained as a result of production.
I believe that this distinction is of great value for Turkey. The development of the process of capital accumulation in the form of holding companies, already mentioned, has formed the major difference in the relation between capitals. At the root of this difference is the decisive fact that these groups, having their origin in the period of inward-oriented capital accumulation and organizing under the form of the holding company, have gathered within the one and the same group the different functions of capital. Thus between those groups that harbor the different functions within the total circuit of capital and those that do not, there is an intensification of comtradictions. One of the fundamental factors that have gone to reinforce the holding companies during this period is that they wield banks that can control the circuit of money-capital in the economy. Inasmuch as it was important to raise the level of capital accumulation to a certain level and to integrate with international dynamics, interest income as a category of income redistribution has come to be quite important.
During this period when individual capitals, in connection with the tendencies of crisis and restructuring, had an increasing need for money-capital, the fact that money-capital (and in particular banks and the long-term capital markets) developed deepening relations with international money-capital and that owners of small scale capital tied up increasingly with large scale productive capital and money capital meant a tremendous increase of relations in velocity and volume within the economy. While banks appropriated profits to the level of 11.7 billion Turkish lira in 1992, this figure had risen to 760 million dollars in 1998. When talking about the profits of banks, one should not assume that these profits accrue to agents different from the owners of productive capital. Hence, the concept of a “rent economy” should be viewed rather critically, for it is the domestic sectors of productive capital that organize under the form of holding companies that appropriate banking profits as well. It may be in order to look, by way of example, at the distribution of the total assets owned by banks. Out of the 58 banks that are active, nine wield 76 % of total assets, whereas the remaining 49 own a mere 24 %. Another point with respect to which banks controlled by holding companies are determining in terms of total financial resources has to do with the funds drawn by banks from capital markets through the public offering of securities. On the other hand, as was already mentioned, banks control 85.3 % of the total public borrowing requirement. When we look at banks that control money-capital, we see that these are banks that are owned by holding companies, which also wield productive capital and commercial capital. Examples abound, but the most prominent are Akbank belonging to Sabancı Holding, Pamukbank and Yapı Kredi Bankası owned by Çukurova Holding and Koçbank wielded by Koç Holding.
Holding companies also have a disproportionate share of public offerings of securities. For instance, the top 60 companies by volume of offerings of securities own 60.6 % of total securities, while the top 20 wield a share of 42.1 %. For the year 1995, out of a total of 1,316 companies regulated under the Capital Market Act, 226 (17.2 %) were subsidiaries of holding companies. Within the offerings of securities of holding companies between the years 1982-1993, the greatest share belongs to Koç Holding with 2,610 billion Turkish lira, followed by the Şişe-Cam group and Çukurova Holding. In those 12 years the share of 27 holding companies within the total resources created in capital markets reaches 27.7 % (Eser, 1994, 44).
There is a very special meaning to wielding a bank and controlling banking capital for tapping the opportunities offered by the process of internationalization. Decree No. 32, promulgated in 1989, by removing restrictions on international capital movements, has increased the room for maneuver at the international level of those capitalist groups that own banking capital. Financial investments by banks with funds obtained on international markets as credit denominated in dollars, later converted into Turkish lira, have been the distinguishing character of the period in question. The stock of foreign debt, which was 9.5 billion dollars in 1990, had risen to 20.5 billion dollars by 1996 (DİE, 1998, 251). Although entry of international short term funds into the economy and high domestic interest rates are the defining characteristics of the period, we should nonetheless point out that this mechanism is in fact a manifestation of more structural elements. We should not forget that the decade of the 1980s, when Turkish capital confronted the desire or necessity of going international, are also years during which the world economy had entered a long-term depressive phase. This period of crisis of capitalism on a world scale reversed the profit-interest hierarchy inherent in capitalism. Inasmuch as the total turnover rate of capital assumed importance, for economies or groups that suffer from capital inadequacy, interest revenue, or in other words financial transactions, have become a decisive factor.
Although the relationship between productive investments and financial investments has been a contentious issue in the recent years, we have to point out that wielding financial means is one of the conditions of making productive investments. This point makes it necessary to treat in combined fashion many different phenomena that are quite contradictory. In connection with the size of the capital of the enterprise, the distinction between small and big capital, or more concretely, that between small and medium scale, on the one hand, and large scale entreprises, on the other, assumes importance. If we recall the data in Table 1 we see that the avearage annual rate of growth of the non-agricultural GDP decreases from 6.09 % during the inward-oriented capital accumulation period (1965-1979) to 5.33 % in the period of inmternationalization (1980-1997). We also see that there is a decline in non-agricultural private investments, the ratio of private investments to GDP dropping from 18.54 % to 17.7 %. It is my belief that this drop in private investments is not eaqually distributed to all capitalist groups. We have to underline the fact that a limited number of holding companies with special access to financial means have achieved significant development. This point has special significance for a type of analysis that sets up insuperable barriers between hot money and productive capital equipment. For studies show that in the Turkish manufacturing industry monopolization has reached an advanced degree and that in this age when internationalization has paced ahead this tendency toward monopolization has been preserved (Boratav, Yeldan and Köse, 2000).

We have to stress the fact that there is a close connection between the preservation of the tendency to monopolization and the control over money-capital. Although detailed information on holding companies in this area does not exist, we see that between the years 1990-1996, that is a period when the pace of export-based industrailization has decreased significantly, the profits of holding companies of a certain scale display an important increase. Table 2 shows the increase in the profits of holding companies. We have to stress that control over money-capital facilitates an increase in productive capital equipment. Conversely, it is a fact that small and medium enterprises experience a series of difficulties as a result of limited access to financial resources. For instance, small enterprises which form 98.8 % of all enterprises have access to a mere 3 or 4 % of total credit extended (Ercan, 2000).
At another level, we may classify capital according to the industries invested in. This kind of classification has special importance for an economy that is undergoing a process of internationalization. Turkey’s desire to integrate with the world economy during the period of deepening world crisis has lent a prominence to certain industries. An articulation to the world economy as the final link has led to a preponderance of labor intensive industries. The rise in exports in industries such as textiles, ready-made garments and consumer electronics has led to a concentration of investments in these industries as well. The integration of micro- and small enterprises, in particular, with world capital on the basis of sub-contracting relations is the fundamental direction of the development. However, this orientation has also been the decisive variable that determines the overall fragility of the economy in world markets. As Köse and Öncü point out in their study, “[i]n the post-1980 period, while Turkey has exports concentrated to the level of approximately 70 % in labor and resource intensive goods, it is almost totally import-dependent in diversified and science intensive goods. On the basis of this picture it may be said that in the post-1980 period Turkey has gradually reinforced its position of a country specialized in labor and resource intensive consumer and intermediate goods” (Köse and Öncü, 2000).
Another contradiction within capital itself with respect to investments is that investments have in time moved from tradeables to non-tradeables.This development is particularly salient in the 1990s. Whereas in 1988 the ratio of investments in non-tradeables to GNP rose from 7.71 % in 1988 to 14.09 % on the average between 1994-1998, the average ratio for tradeables fell from 6.78 % between 1977-1979 to 4.61 % between 1989-1993. This ratio is around 5.81 % between 1994-1998 (Yentürk and Onaran, forthcoming). These shifts gain on a special meaning in understanding the process of integration with the world economy. In particular, we can state that Decree No. 32 has very significant consequences here. Rather than having a series of direct consequences, this decree may be said to create a situation where Turkish capital is left unprotected face to international capitalism.
This has concomitantly led to the acceleration of the inflow of short term capital and to an increase of interest rates. The same mechanism has provided for a relative cheapening of imported goods, while at the same time having a negative impact on exports. This is what led domestic private investments to move from tradeables to non-tradeables. In a certain sense, the Turkish economy or Turkish capital has had to adapt to the the major tendency displayed by world capitalism on the basis of an inadequacy of capital accumulation. This adaptation has manifested itself as an orientation toward financial means in order to survive in an environment of crisis and stagnation. Thus the Turkish economy has had to react to the negative impact of the crisis in a short term manner. However, this reaction is but a negation of the capacity to create surplus-value, the very condition of the existence of capital itself. However much the option of adopting the short term interest-oriented dynamics of money-capital in place of the long term profit-oriented dynamics of productive capital may be an alternative for individual capitals, in general, this option implies stagnation and the permanence and intensity of the crisis of the economy of which these individual capitals make a part. We see this clearly in Table 1: Although during the period in question the profitability of capital increases, there are significant falls in investments, growth and consequently employment. But, as we have already pointed out, these are experienced at different levels depending on the adequacy of capital accumulation.
We can look at inter-capitalist conflicts in terms of participation at national and international levels. For Turkey, the fundamental determinant of internationalization, in particular internationalization that is directed to the objective of generating foreign exchange, is participation on the basis of exports, that is commercial capital and, in connection with this, productive capital. Exports rose from 3.3 % as a percentage of GDP during the inward-oriented capital accumulation period between the years 1965-1979 to 16 % between 1980-1997 (see Table 1). It should be emphasized that a significant part of this increase was realized on the basis of international sub-contracting relations and in labor intensive industries, as already mentioned. But between the years 1980-1997 exports underwent significant changes. While the rate of growth of exports was, on the average, 14 % between 1983-1988 annually, this fell to 5.1 % between 1989-1993 and 6.3 % between 1992-1997. Both the increasing difficulty the state faced in reproducing itself and the non-fulfillment of the requirements for an export-based industrialization resulted in a situation where exports became unsustainable. (Boratav, Yeldan and Köse, 2000).
The mode of integration of individual capitals with international capital displays certain differences. Holding companies that wield large scale capital have established alliances with international capital at all the different levels of productive, money- and commercial capital. The Economist, the British weekly, has depicted the nature of these alliances clearly: It points out that, as a result of the alliances Sabancı has engaged in, Turks may shop at CarrefourSA, stay overnight at the Hilton, smoke cigarettes manufactured by Philip MorrisSA and buy their computers at I-BİMSA. It is reported that Sabancı Holding has established alliances with 17 world class companies since 1985 and that in exchange for know-how in the industry these companies specialize in, Sabancı provides them with know-how about Turkey (The Economist, 1997).
To the extent that these alliances have increased the capacity of Sabancı Holding domestically, they have also contributed to the room for maneuver it wields in the international arena. Tha same could be said of Çukurova Holding or Koç Holding. The alliances they have established internationally may well be that of two unequal partners; nonetheless, these contribute to their access to opportunities on the world scale.
Conclusion: Changing Relations of Forces and New Contradictions
We know, in our attempt to define the stage reached by capital accumulation in Turkey, that the integration of the country with the world economy has led to a series of negative consequences and to successive crises. But we have to stress that this process has also resulted in an increase of the capacity of a small number of individual capitalist groups organized in the form of holding companies. This is a natural consequence of economic policies that have been implemented since the early 1980s.
When we look at capital, which has stepped up its international activities in our day, from the point of view of the concept control evoked in the introduction to this paper, we can say that today capital accumulation has grown into the stage of finance capital. At present, the decisive phenomenon with respect to relations of power is the change effected in the regimes of control over labor, the commodity and money as forms of manifestation of value and, furthermore, the fact that the capacity to own the mechanisms for the appropriation of these forms of value within the total circuit of capital lies with a limited number of sectors of capital. Thus, the concepts of productive capital, money-capital and commercial capital that appear in the total circuit of capital have become meaningless for certain individual capitals or capitalist groups. This change and the mechanisms that lead to this change are the natural consequences of the tendency of capital toward centralization and concentration over time. The phenomenon of the centralization and concentration of capital, which Karl Marx comes back to frequently in his Capital, is manifested in more diverse and contradictory form in our day, when capitalism has become a global reality. Today the historical contradictions of the process of unequal articulation of capital accumulation in Turkey to world capitalism have become clearer. The fundamental determinant of this contradiction is that the interests and strategies of certain individual large scale capitals and the interests of the country’s economy do not necessarily coincide.
All these changes have caused contradictions to arise in the existing relations of hegemony and control. In an age when capital accumulation processes take place on the world scale, the choices and strategies of capitals that have reached a certain level have begun to be determined by alliances on the world scale. The fact that political processes are still shaped at the national level has become both the continuity and the contradiction of the process. To sum up in the words of D. Bryn: “The substance of class relations (the process of capital accumulation) is international while its expression as social relations between classes takes a national form. It is the distinction between substance and form which generates within a nation state the contradictions of the internationalisation of accumulation” (Bryn,1987,255).

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