I was 4 years old in 1973. But I remember the oil crisis that began in October of the same year. At that period, tensions were high in the world and especially in this region. While the terrorist attack at the Munich Olympics led the world to a conflict between Arabs and Israelis, the Cyprus Peace Operation happened. In the meantime, terrorist winds were blowing all across Europe. While the Red Brigades in Italy and the Baader–Meinhof Group in Germany were wreaking havoc, Ireland was experiencing a painful event called the “Bloody Sunday”, where British Soldiers had further strengthened the hand of the IRA by killing innocent civilians. As the global economy went through two oil crises from 1973 to1980, a Military Coup took place in Turkey as a result of the increasing terror and anarchy in the country.
The United States has been directly involved in the Vietnam War vis-a-vis an indirect Chinese and Soviet involvement in 1973-1980 period, towards the end of which, the Soviet Union invaded Afghanistan. However, tensions have not been eased after the 1980s either. While Poland wanted to get out of the “iron curtain”, the USSR was determined to intervene in the country’s internal affairs. In short, the USA and the USSR did not directly engage in a military conflict, but they led a “cold war” using proxy elements. This conflict still exists today, and more people died in the process than those who were killed in the two world wars.
As for the economic aspect of the picture: In the aforementioned period, countries had high inflation and negative real interest policies in place. These widely accepted methods would finally change thanks to McKinnon (1973) and Shaw’s (1973) arguments against policies of financial repression. The McKinnon-Shaw group dispelled the established concerns by arguing that growth and development would accelerate if higher interest rates that equate the demand would have been implemented. Obviously, this proposition made in the name of financial liberalization has not been instantly accepted. However, the capitalist world would soon test and embrace this hypothesis. Thus, in the 1980s, countries of the world, including Turkey, started to adopt liberal economic policies. Economic growth accelerated and so did inflation.
“Who Invented Inflationary Growth?..”
Emerging economies, which continued to achieve rapid growth without considering inflation, soon fell into the trap of hyperinflation. In fact, developed economies too have similarly suffered from high inflation. This situation destabilized growth rates, while creating a major unemployment problem. Developed countries finally understood that they could overcome social deterioration and justice by combatting inflation and introducing social reforms. They tried to combine democracy, which is the rule of the people, with liberalism, which is the rule of law. However, this combination has been exploited by neo-conservatives, neo-liberals, and different political currents. The liberalism of interest rates and the liberalism itself did not fully produce the desired results, not to mention the side effects they caused. Developing countries, on the other hand, underestimated the necessity of the fight against inflation, using these side effects as a pretext for not making a move. They rather used all their power to achieve rapid growth. For this reason, in Turkey, for example, constructing new building has become more important than producing technology.
Today, we are going through a process where free market rules are abused, first because of the pandemic and then the Russo-Ukrainian conflict. The World is still facing an energy crisis, high inflation, and negative real interest rates. Politics and diplomacy are in constant crisis, and military conflicts can spread anywhere at any time. While the number of people governed by Liberal Democracy is declining in the world, there is a severe increase in the number of people living in electoral autocracies. The world is full of democracies that do not properly implement free market rules, democracies where the victor of the election is determined beforehand, democracies run by leaders who think they are “the law”.
It seems that the chances of two systems to cohabit have strongly decreased: closed autocracies and full democracies. Because both systems sit on extreme ends. Anything that thinkers like John Stuart MILL and Foucault criticized in the past is happening now. If the conditions are unchangeable, how correct is it to still view and criticize governments based on the rules of liberal economy? Is it helpful to discuss the existence of a free market where liberal democracy does not exist? Wouldn’t it be more logical to discuss the democratic approach that is currently deployed instead of discussing the economy? Perhaps one day a liberal trend like the McKinnon-Shaw hypothesis will come to our aid and free us from the blocked politics.
All of these questions are plaguing my mind.