Laissez‐faire, the 1923 Izmir economic congress and early Turkish developmental policy in political perspective

Abstract

In 1933 at the height of the world economic depression, the new state of Turkey, a republic then barely ten years old, became the very first of what we now call 'Third World' nations to undertake a planned economy. A doctrinal foundation for state planning had been laid two years before with the official adoption of devletqilik or etatism (statism), which called for artificial stimulation of the economy through government intervention. Thereby the Turks were able to sustain a dramatic economic upturn until the eve of World War II. The inception of Turkey's first Industrial Five-Year Plan has since been viewed by Turkish economists and others' as having signalled an important change in policy, a radical departure from the liberal doctrines supposedly followed during the preceding decade. Yet this interpretation is based in part upon a faulty premise: that, during the first ten years of the Republic, the government in Ankara adhered to specifically laissez-faire economic policies that had been spelled out early in 1923 by a national economic congress held at Izmir (or Smyrna), during the interval between the two sessions of the Lausanne Peace Conference.2 Even at first glance, the circumstances of the Izmir Economic Congress made it quite unlikely that such a gathering could define policy to the satisfaction of any government. Nearly a thousand delegates had been selected to represent their respective occupational groups, and were so divided for purposes of discussion while at the congress. President Mustafa Kemal (Ataturk) departed immediately after giving the opening address and left the running of the congress entirely in the hands of General Kazim Karabekir,3 a notorious ultraconservative soon to become one of his most ardent political rivals. Under Karabekir's leadership the congress approved a document called the Economic Pact, that would never be heard of again. The plenary sessions of the congress were dominated by a mere handful of delegates, only one of whom would play a role of any significance in the subsequent formulation of Turkish economic developmental policy. Nevertheless, numerous authors have labelled the congress 'a landmark in Turkish history', which 'laid down the principles of Turkey's economic policy', and 'established the guidelines for state and private sector activity during the first years of the Republic' ,' prior to the official adoption of e'tatism in 1931. Where supported, such claims that the congress had major historical significance have been buttressed only by vague references to the Economic Pact. But, when evaluated on the basis of available primary source material instead of the generalizations of other secondary studies, the congress appears to have been far more important as a source of politically exploitable slogans than as a watershed of economic policy.