There is an alternative to the economic crisis

ÜMİT AKÇAY / ALİ RIZA GÜNGEN

25 Mayıs 2018 Cuma, 15:14
Abone Ol google-news

Turkey is verging on an economic crisis that will negatively affect wide circles of society. If the 24 June elections result in parliament and the president being from different parties, there is a high probability of the elections being repeated a while later. There are also local elections in March 2019. In other words, economic developments will continue to affect both our daily life and political developments. In this article, we consider what the options may be in the aftermath of a possible crisis apart from an IMF programme imposed by way of “sole alternative.”

 A. What should be done in the short term?

 1. Capital movements should be taxed. Liberalising short-term capital movements creates financial instability and makes the economy more dependent on capital flows. Capital movements should be taxed immediately through a mechanism that differentiates according to the length of portfolio investments and will channel the accruing tax income into investments.

 2. A comprehensive tax reform must be implemented. In Turkey, relatively little tax is taken from high earners. Income tax bands should be adjusted to increase tax on the top band and reduce wage-earners’ taxes.

 3. There must be an immediate end to the practice of Turkey’s bankrupt companies being rescued. Incentives given to small and medium-sized enterprises should be revised and ineffective incentives scrapped. Bankrupt small and medium-sized enterprises should only be rescued if they convene and restructure, adopt workers’ shareholding or come under worker supervision, and if they can continue their activities with a limited capital injection. Companies having a foreign exchange deficit should be forced to downsize and restructure their debts and capital expatriation should be taxed at high rates.

 4. Public procurement tenders should be reviewed and unlawful transfers cancelled. Especially those public procurement tenders held in the state of emergency period should be reviewed. If tendering irregularities or unlawful fund transfers are detected, tenders should be cancelled and the ensuing loss recovered from those who have caused loss to the public purse.

 B. What should be done in the medium term?

 1. Public-sector employment must be increased, manufacturing and investment programmes realised and all public services should be obtained free of charge.

 Quality employment should be created through public employment projects, and the necessary investment and recruitment undertaken for basic public services to be obtained free of charge in the medium term. Working hours should be brought into alignment with the OECD average in the medium term in all sectors of the economy. State banks’ large-scale loans must be examined and loans that were granted for the purpose of transferring funds under political pressure should be recalled.

 C. Basic Principles

 Even if the above measures appear “scary,” they are indispensable for a potential left-wing government. For, the other option will be to implement an IMF programme and rapidly be ousted from office. Looking at the situation of political parties in Europe, apart from the British Labour Party, which is bending to the left, all social democrats are seen to be losing votes. We have submitted an intellectual exercise as to what the basic priorities might be in a short-term alternative programme.

Below, we set out our thoughts as to what the basic supporting principles of a programme of this type would be.

 1. Nationalisation not statisation. The sole issue with privatisation is not removal from public ownership. Even if there is state ownership, models that exclude workers’ participation in management may produce similar results. So, worker participation and supervision by users of goods and services is essential.

 2. Democratisation of the economy. The economic policies applied after 1980 have excluded labour in political, institutional and economic terms. Debt forgiveness for the poor, encouraging unionisation, democratising trade union governance and increasing the share of labour in national income will bring with it the strengthening of labour

 3. Democratic planning. Planning was necessary yesterday and is essential today. Democratic planning is a precondition for surmounting the economic and ecological problems that capitalism produces with the means that technological development affords. Manufacturing units must be created that are organised from bottom to top but function on the principle of mutual solidarity in accordance with central plan priorities.

 4. Monetary and fiscal policy. Monetary policy should be stripped of such elements of market authoritarianism as Central Bank independence and inflation targeting. Fiscal policy should follow democratic planning priorities.

 There is an alternative!

 Turkey is not condemned to an IMF programme, or else to become a country that is cut off from the world for the sake of political ambition. What we have listed above are just a few of the potential alternatives. But the issue is not technical, but political. The basic precondition for implementing an alternative economic programme that defends the interests of wide-sections of society is the emergence of the politics and political will to realise this.

 Ekonomik krize alternatif var