This summary includes fundamental theses of the book “National Economic Model” by Dr. Haydar Baþ, a renowned Turkish thinker, theologian and economist, Professor of Baku State University.
PROF.DR.HAYDAR BAS–BTP GENEL BASKANI (videos) Uluslararasi Milli Ekonomi Modeli Kongresi ‘05 Kapanis Konusmasi /
- Summary – Baku, 2006
Arranged and compiled by:R.R. Kuliyev, Doctor of EconomicsD.A. Veliyev, Doctor Candidate of Economics The summary is compiled on the basis of the speech delivered by Haydar Baþ at the 1st International Congress (Istanbul, November 26-27, 2005), dedicated to presentation of the said book. Contents :
- Mechanisms of Exploitation 5- The Impact of Globalization on Economic Independence of the Republic of Turkey 7- Need for a New Development Model 11
SECTION II.
- Basic Provisions of the National Economic Model 14- Human Needs and Resources 14- The Human Factor 15- The Problem of Deflation 15- Demand and Supply 16- Money and its Basic Functions 19- Employment 22- The Welfare State in the National Economic Model 24- Financial (Taxation) Policy 25- Money Supply and Seigniorage 28- Interest and Derivative Money 33- Some Common Problems 41- Resources and Population Growth 45- The Exchange Rate Policy 46- Foreign Trade Policy 48- Colonialism in Action 49- Conclusion 51 SECTION I.Globalization and National Economic Independence
This model is not an alternative to the capitalist model, since there cannot be any alternative to the flawed model. Prof. Ata Selçuk
It is not a secret for everyone that natural process of globalization in today’s world is used by global forces to exploit national resources of underdeveloped and developing countries and enforce in all spheres those global forces’ control over these countries. In other words, by playing globalization the industrial powers wish to take hold of the entire world and subject the resources of underdeveloped and developing world to their interests.
Today the capitalist economic models apply the barbarous “rule of suppression of the weak by the strong”, and it is described as “natural selection”. Economic systems, which to some extent have turned into imperialistic exploitation, care just in theory about well-being of nations and development of countries.
We live the period of a new war when weapons do not talk. Its objective is to force countries to pursue a policy of diplomatic, social, economic, cultural and other concessions, so that countries could be brought under a yoke of powers, which grant loans with the purpose of establishing debt bondage.
We live in the world, where day after day economic independence becomes more and more vital condition for independence of states.
At the same time, nowadays when in terms of economics country borders became of no importance, the powers which own the global world try to invalidate the significance of such categories as “nation” and “state”, which are very important ideas for underdeveloped and developing countries. The 21st century is the time when the idea of National Sovereignty has undergone changes. The following is interpretation of this concept by John Naisbitt, one of the ideologists of globalization:
“We see that by splitting up into independent and small divisions big companies can operate more efficient. The same is true for countries. If we create a world with single common market, then the parts of this world should be small.”
Mechanisms of ExploitationA. Foreign Aid
The policy of rendering “foreign aid”, which emerged after the World War II, has found its place with aspirations of underdeveloped countries to develop.
However, underdeveloped countries having tied their development activities to external capital follow everything that is required for this foreign capital to come into country. The “abandonment of national rights” with the view to secure foreign aid and “acceptance of terms and conditions leading to sell-out of the country” relate to such phenomena.
The new world order after the World War II encourages underdeveloped countries to adopt “development” projects based on external debt. The pressure of debt burden leads to political and social claims on these countries on the ground of reforms in agriculture, production, finance and other fields within the framework of economic development programs.
While the state and population find themselves in debt bondage, all sorts of foreign companies, in addition to interest they receive on loans, make enormous profits by investing into those countries.However, the main method of profit making for huge capital holders in the global world remains “earning money by means of money”. Avoiding “high-risk and heavy labor cost production”, they prefer such method in particular, while employing alongside with loans speculative financial transactions.
At present, the quantity of money supply with free circulation throughout the world serves the purpose of earning money by means of money, and almost twenty times exceeds the volume of world trade. It is obvious that such quantity of money exerts destructive influence on the economy of underdeveloped countries and creates favorable setting for development of speculative transactions.
B. Transnational CompaniesMultinational companies are another method of exploitation in the new world order. Today the joint ownership of 300 transnational companies amounts to 25% of production assets all over the world. Five hundred major companies control 65% of the world trade.
In Turkey there is probably no a single holding company without participation of a multinational company. At the same time, these multinational corporations provide their funds only for a small share of the foreign capital invested, and a considerable part of about 85%–90% is raised from other sources, including those available in capital-importing countries.
The following example is quite enough to show how international companies take advantage of the national and state resources in Turkey: in 1973 foreign companies operating in Turkey owed the country up to 81% of the investment capital, and they secured 96% of these debt by loans borrowed in Turkey itself.
C. Privatization
IMF recommends developing countries, such as Turkey, accept economic programs developed by this organization. However, the objective of these programs is not to stabilize our economy, but to help global capital groups put our country’s markets and resources under their control. This explains why IMF requires privatization of our most strategic and profitable businesses. In addition, “strong state” is a great obstacle to this process.
The demands of global capital from underdeveloped and developing countries in return to granting loans by the World Bank and IMF are not limited only to repayment of principal and interest. They also include execution of difficult “development” programs that lead to elimination of competitive production, including agriculture and cattle breeding, and therefore to miserable life of people in those countries.
These demands were also put forth for Turkey. Lately, farmers in Turkey have found themselves in extremely difficult situation due to the newly adopted laws on sugar, tobacco and other restrictive laws related to agricultural and other products.
Farmers, who have already fallen into the state when they are not able to seed due to elimination of subsidies in form of low-interest loans, fail to compete against imports from developed countries, the farmers of which use protection of their own states to the fullest. Sugar beet, tobacco, wheat, peaches, figs, apricots and other products, failing to find market even within Turkey, remain with the farmers. The same situation is in cattle breeding.
Within the global economic concept, privatization is an important channel for foreign capital to enter a country. In our country, profitable state enterprises are sold at a price, which is lower than their true value. Among those enterprises are the following: ERDEMIR, PETKIM, POAÞ, TÜPRAÞ, SUMERBANK, KÜMAÞ, ORUS, ET VE BALYK KURUMU, SEK, TOFAÞ, and TURKISH AIRLINES.
Furthermore, without any remorse it is declared that in the issue of privatization it is up to the World Bank to take decisions, but not the Turkish Government.
All this demonstrates as to what extent the interests of the Turkish nation are disrespected, and how by means of privatization implemented under external pressure, the funds of enterprises are wasted.For example, the company Petrol Ofisi Anonim Þirketi, POAÞ, was sold on March 3, 2000, for USD 260 million. Experts confirmed that to set up a similar company it is necessary to invest USD 8 billion! Those, who acquired POAÞ, paid consideration equal to only ¾ of the cash available on the balance sheet of the acquired company!
In 1998, Türkcell and Telsim received a right to operate mobile telephony for the period of 25 years. Both companies made agreements with the government, each costing USD 500 million. Right after signing these agreements, they collected from citizens the required capital, which they should have paid within 2 years.
Overall, privatization in Turkey led to lay-offs of thousands of workers and trained people.The Impact of Globalization on Economic Independence of the Republic of Turkey
A. Historic Background
Asian countries, such as Turkey, Russia, China, India, etc. have contributed immensely to development of humankind. In addition, today it is Asia, which is the last resort of the oppressed people all over the world, which is capable of setting them free from the capitalist yoke.The Republic of Turkey and Turkish nation, with their 5,000-year-old history in total, its period of 1,400-year-old Turko-Islamic civilization and 83-year-old history as a Republic, take up the forefront space at the intersection of Europe and Asia in terms of historic and strategic importance.From the moment of its origin the Turkish nation in the periods when it accomplished its historic mission, which elevated and glorified it, secured its people with justice and human rights, taught them technology and civilization to the fullest.
Our nation, which faced the hazard of destruction because of political, cultural and social activities that had been carried out with guileful methods over the centuries, as a result of the War of Independence, and owing to the spirit of our National Armed Forces headed by Mustafa Kemal Atatürk, found itself again, won its independence and became an example for people fighting for freedom.
In his opening address at the session of Majlis held on March 1, 1922, Atatürk said the following:
“We cannot think of anything else but only of securing our independence which is the highest priority national objective. Our financial power, which is, in our opinion, an important factor, should be sufficient for achieving this result.
Our country’s resources are sufficient to confidently implement the objectives of our national cause. Despite our poverty, our national power is still ruling our country as it has been until now, and this power will bring us to accomplishment of the stated objective without resorting to any external debt.”
Having liquidated the system of capitulations that had turned the Ottoman Empire into virtually semi-colony of the West, Mustafa Kemal emphasized in particular “economic independence” as a necessary component of national independence. By organizing in 1923 the Economic Congress in Izmir, he tried to bring the nation’s economy back to life. At the Congress, it was decided not to give up on any account the principle of “national independence” and implement development plan in accordance with that principle, since there should be direct connection between national independence and economy capable of standing on its own feet.
During the life of the founder of our state, Atatürk, i.e. before 1938, the plans and many projects of development in various fields were implemented and substantial progress was achieved.At that period our country, where we applied in economic development our own national model, reached the level at which it could export airplanes to Belgium.
B. Current Situation: New Hazard.However, after Atatürk the country was exposed again to total political, cultural and economic pressure. Assisted by EU and IMF, the Western states began to implement the “new” SEVRES plan (the Capitulation Treaty of SEVRES, concluded between the Entente countries and Turkey in the beginning of the last century, stipulated the actual dispensation of Ottoman Empire territories), which they could not carry out during Mustafa Kemal’s ruling in Turkey.
Today, when the budget of the Turkish state is under control of international organizations, when our country’s resources and various capabilities are utilized under the grip of IMF and World Bank; when extortionate privatization and sell-out of the state-owned enterprises are put into effect; when international arbitration agreements, laws on behalf of EU do really prevail over the country; Turkey goes through the process of implementing the project of self-disintegration.
To summarize the situation we are in due to globalist manipulations, we can say the following:
1. In our country today the tax revenues are insufficient even to cover interest payments on our internal and external debt.
2. Our country is unable to escape from the vicious circle “high interest rate – foreign currency – debt”.
3. The companies in our country, which earn high profits, such as TELEKOM, PETKIM, TÜPRAÞ, have been privatized for much lower price as compared to their actual value.
4. The quantity of domestic money supply, circulating within the market, is not enough to support economic development. Those forces that oppose covering of the said economic deficit by means of the Central Bank channels, call for filling up the gap by issuing credit money, the so-called plastic cards and checks. Banks using such instruments open new sources of revenue for themselves by applying interest-based mechanism.
5. The state turns to the banks with treasury operations to decrease debt burden. In other words, failure by the state to execute its function with regard to the issue of money is the reason why resources are unjustifiably transferred to banks and global capital forces that make money by means of money.
6. Due to the fact that in Turkey the state does not secure money issue required by the market, the US Central Bank by printing money covers the said deficit in Turkey, and consequently the foreign currency supersedes national one.
The governments, which were in power for many years in our country, transferred the management of Turkish economy to IMF. The statement such as “we shall proceed on our way with IMF” often heard during the pre-election campaigns is one of the basic reasons for the Turkish people’s life full of hardships.
According to a study published on January 4, 1998 in the LOS ANGELES TIME, the situation in 54% of the countries, obtaining loans under terms and conditions of IMF, deteriorated. Economies of 36% of these countries were completely imbalanced.
In accordance with the results of the study done by the World Bank in 1998, Turkey ranks among the 25 countries out of 133 with the most unequal distribution of income.
The Turkish economy in 1999 lived through the biggest decline in all history of the Republic. In the same year, in order to enter into a new agreement to provide financial support to Turkey, IMF announced need to implement so-called reforms in legislature on banks, social security, international arbitration, privatization, etc.
Because of implementing these reforms, the Turkish people went through the process of inevitable impoverishment, while international companies collaborating with local holding companies gained huge profits. With the adoption of these laws, the state suffered damage, and major profitable businesses were sold.
IMF experts recommended increase in tax levies on population to pay off the country’s debt, and thus eliminate the problems facing transnational companies.
The Law on International Arbitration stipulates referring not to Turkish courts in case of disputes and disagreements, but to a “foreign arbitrator”, and opens door to domination of the capitalist order over the country. Having introduced the Law on International Arbitration into the Constitution, the 57th Turkish Government legitimated as well the procedure of retroactive effect of international arbitration.
A dispute between the Mexican people and a US company in 1998 demonstrates why foreign companies try to stipulate opportunity to appeal to international arbitration bypassing the country’s legal system. Ethyl Co., a US company, carried out its operations in Mexico. It discharged chemical wastes into sources of drinking water. Upon request of the affected party, the case was submitted to the Mexican court. However, since the Mexican Government had adopted the Law on Validation of International Arbitration, the case was examined by international arbitrators, who upheld the rights of the company, but not the rights of people whose water was contaminated. International arbitrators made their decision on the ground that the local court processed the case deviating from the framework of the International Arbitration Agreement.
In 2000, IMF demanded that in order to gain access to a line of credit Turkey should fulfill provisions of the “Letter of Additional Intent”, which were more severe than provisions of SEVRES. The provisions accepted by the 57th Turkish Government included privatization of the following companies: Türk Telekom, Makine Kimya Endüstrisi, Tekel, major sugar refineries.
IMF also demanded adoption of the Law on Electric Power Market, the Law on Sugar, the Law on Joint-Stock Companies; termination of subsidies in agriculture, increase in taxes, limitation of support for wheat growers, decrease in grain reserves, increase in salaries of officials by more than 10% per annum. These provisions were implemented in full. It is clear that IMF is not only an international organization which sells money, but also forces upon Turkey and other countries a lot of political, social, and economic concessions in return to granting loans.
Instead of following the path, which will be set forth by us below, the Government considers IMF the only source of funds and ideas and does more damage to our country and our people than does good.
The picture described above reflects the reality of Turkey nowadays. Our country’s external and internal debt totals USD 400 billion. Our economy is under control of IMF. Our production has almost stopped. Agriculture and cattle breeding are in dire condition. Our natural resources have been sold out to foreigners. Such situation is really more ominous than that at the time of War of Independence.
The long-lasting troubles of our country are becoming chronic. Unemployment and poverty are rampant and rising. Education, health-care and justice systems cannot fulfill their functions anymore. Self-confidence of our people is deteriorating, and the enculturation activities destroy our national identity. Feelings of misery and timidity are at their top. Our country is virtually being crushed by political and economic policies of the global forces.
As a reflection of this, the 6th article of the Constitution saying that “sovereignty unconditionally belongs to the nation”, which must be protected by mechanisms and institutions running in Turkey, is surprisingly re-evaluated from a perspective that is different from that set by Atatürk.
Need for a New Development Model
Nations that lost the comprehension of “national state – nation” concept are defenseless against visible or hidden threats. Among those threats are international loans with austere covenants and provisions, political concessions disguised as international aid, and removal of all barriers to foreign investments. The desired outcome of these measures is demolition of independence. It is apparent that in the course of this process there will nobody who will consider the welfare of nation and society.
According to the capitalist concept, “to make a wheel rotate”, i.e. to give opportunity for certain groups to earn money, it is necessary to have a system which puts nations and countries in such miserable condition.
However, if you do not want to observe such picture, then you will have to put into effect some other system.
There are two indispensable conditions for a country to exist as an independent state: achieving economic independence and protecting the concept of “nation-national state”. Only under those conditions, it is possible to talk about interests of nation and its well-being. In a capitalist economic model, this is practically impossible. It is not possible for a group of capital holders, which established its dominance in the world, to let thrive ideas that run counter to its interests.Therefore, it is necessary to develop and implement our own model to secure the rights of the Turkish nation and all the people who are being exploited by the capitalist system. It is necessary to implement a “model which belongs to us and serves the interests of us”, a model, which shall help attain well-being, prosperity, and wealth and not serve globalist forces.
Thus, the National Economic Model emerged because of this necessity. This model is also to solve three key problems of the world economy, which have not been resolved so far throughout the history:
1. Achieving fair distribution of income;2. Achieving sustainable economic growth;3. Achieving the state of full employment, i.e. finding solution to the problem of unemployment.The National Economic Model emerged deriving from the said three problems. And essentially it finds solutions to those problems.
The model proposed by us is an answer to the question of one of my Russian friends: “We have suffered very much from socialism. The world is suffering from capitalism. So what is the economic model that shall save us and the rest of the world, rectify imbalance in distribution of income, secure sustainable economic growth and full employment?”
This question has been raised throughout the entire history of humankind. However, the answer to it has not been found so far.
In this connection, the National Economic Model is not an antithesis of other proven economic systems. With its original laws, it is a new vision of economy. In this regard, our theses are unique solution to securing wealth and real happiness not only for our country, but also for all nations of the world. It is necessary to elaborate on each section of these theses.TUNALIM...
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