The rentier Turkish Islamic movement and the economic crisis
In explaining Turkey’s current economic crisis, a major issue is the huge burden of corporate and personal of debt fuelled by years of cheap foreign credit that was spent in sectors like construction, rather than in boosting production that could now pay off those loans.
But, even with access to cheap credit, why has Turkey’s Islamist government failed to create a productive economic model in the 16 years it has been in power?
The answer lies in the rentier nature of the Islamic movement, including President Recep Tayyip Erdogan’s ruling Justice and Development Party (AKP), the Gülen movement and others. The rentier state is a term commonly used to describe countries with large revenues coming from oil and gas. The costs of production can be so low that the money generated is akin to unearned income, such as a rent.
The rentier state is a peculiar political model in which the government is able to dictate the political regime since it does not depend on taxes from citizens. In the rentier model, resources are distributed by the state according to the political loyalty of recipients, not according to their competence proved by competition. Rentier models thus fail to generate competitive, risk-taking, competent individuals.
Islamic groups in Turkey have always acted with a rentier mentality, relying on the distribution of various religious forms of payments that generate similar effects. The revenue from religious donations is like a rent that is generated without any real productive economic activity.
Based on such donations, Islamic groups came to control large economic resources, but the revenues were not the product of economic activities gained through innovation, risk-taking or within market competition.
The model created the second problem of the rentier mentality: Islamic movements distributed and spent revenues according to their in-group administrative mentality where group loyalty was always the priority.
Islamic groups were thus transformed into strictly hierarchical organisations intolerant of different views and failed to foster a competitive environment in which talent was promoted.
For example, none of the businessmen known to be close to the Gülen movement, which the government blames for the 2016 coup attempt, ever played any role in the group’s major decisions. The Gülen movement never opened its decision-making to businesspeople.
Like other Islamic groups, the Gülen movement’s core decision-makers are people without a profession or of people who lost their ability to perform their professions after not practicing it for years.
For example, Mustafa Özcan, a senior figure within the Gülen movement who was influential in its big financial companies such as Bank Asya and Kaynak Holding, is a former religious preacher and had no theoretical or practical economic experience.
The inner rentier mentality has always prevented the rise of a critical, risk-taking and even market-friendly individuals within Islamic groups. Capturing the state was the ultimate aim of Islamic groups and so they structured their in-group socialisation in line with this purpose.
However, the rentier nature of Turkish Islamic groups has generated only quantitative rather than qualitative success. Islamic actors construct the biggest buildings, they are able to mobilise thousands in political rallies and they dominate the bureaucracy.
But when it comes to qualitative success such as justice, intellectual production, the case is terribly bad. For instance, Turkey’s ruling party dominates the judiciary, but three consecutive AKP candidates to be judges at the European Court of Human Rights were rejected. The Islamists are not able to find one judge who reaches the standards of an international court.
The case is no different for the Gülen movement. The movement, once famous for building educational institutions and placing thousands of bureaucrats within state, has virtually no globally recognised experts known for their international expertise in science, the arts or indeed in any field.
Despite Turkey being ruled by Islamists for almost 20 years, secular Turks still dominate cultural and even intellectual life.
The rentier Islamic movement has no capacity to generate risk-taking, critical and innovative individuals to compete in the market. Islamic socialisation generates individuals who believe they should always rely on their group to survive rather than their individual talents.
But more importantly, key Islamic political actors and bureaucrats, including Erdoğan himself, are products of the rentier-based Islamic socialisation. So, they are the masters of generating rent.
What the Erdoğan led-AKP has done in the last 15 years is nothing but rentierism at a global and domestic level: Islamists gained huge revenues from global creditors and distributed it in a way that aided their political survival.
In the golden age of cheap global credit, the AKP realised an almost a utopian system: No university tuition fees, free textbooks, cheap oil, almost 25 percent of the population received various types of financial support, cheap medicine, almost free public health services and so forth.
But the age of cheap foreign credit is over and it is the time for the Islamists to present their genuine economic model in a competitive global environment.
Given that Islamists are not able to come up with a new economic model, Turkey faces two scenarios:
The Islamists may ask help from secular-minded people. However, we should remember how last week Erdoğan angrily overturned a deal with McKinsey, a U.S. financial advisory company. Islamists are no longer able to guarantee a minimum level of professional transparency for such deals.
The second scenario is to stay loyal to their code of rentierism, but this time through a state that is now finally under their control. Thus, rather then dealing with the risky and competitive aspects of market, Islamists may push for a more state-oriented economy.
The president’s warnings against stockpiling and price hikes in order to combat inflation were swiftly followed by scenes of Turkish police inspecting prices in supermarkets. That is proof the second option will be chosen.