Global financialization process and experience in Turkey

In this thesis, the trail of capital accumulation mechanism, which forms the basic characteristic of capitalism dating back as far as the XV and XVI centuries, is investigated. Depending on the source of capital accumulation, the period prior to the industrial revolution which began in Britain is called the "commercial capitalism", while the period after the industrial revolution is referred to as the "industrial capitalism". Industrial capitalism is based on the exploitation the "surplus value". The first stage of industrial capitalism is called the "competitive stage" and the period of centralization and concentration of capital is called the "monopoly capitalism" (imperialism). Living its "Golden Age" at the end of World War II due to the "Bretton Woods" System that was established under the U.S. political, military and economic hegemony, and as a result of growth in the international trade as well as an increase in the average growth rate and in the level of welfare, Capitalism has initiated a global financialization process which is guided by the neo-liberal ideology that is based on the protection of the interests of finance capital, and makes use of the technological advantages delivered by the globalization process. This initiation was done due to the decline of profit rates beginning mid-1960's and due to the need to come out of the stagflation environment resulted from the collapse of the "Bretton Woods" System in 1970's. The concept of "financialization", developed by heterodox social scientists, is defined in this thesis as "the process of shift of capital accumulation mechanism of capitalism from the industrial area to the financial area". A holistic view of the process of financialization has been developed and addressed in four dimensions. These are: the formation of infrastructure of financialization, macroeconomic operation process, microeconomic operation process, and the consequences of financialization. This thesis focuses on the political economy of development of financialization in the economy of Turkey and analyses the emerging change as a result of the process of financialization. In this context, four financialization indicators are developed by using, primary, the OECD and SPO (State Planning Organisation-Turkey) data sets. Then, the existence of a long term (1975-2010) relationship between these financialization indicators and the share of fixed investment in GDP, as obtained from the SPO data set, is investigated using Engle-Granger (1987) Co-Integration Test, Johansen - Juselius (1990) Co-Integration Test and the Vector Error Correction Model. It is found that there is a negative and significant relationship between the financialization indicators and share of fixed investment in GDP, supporting our basic hypothesis. The presence of a positive relationship between financialization indicators and the capital/labor income indices in the long term was also tested in this study. In this test, short and long term relationship between financialization indicators and the capital/labor income indices, as obtained from Istanbul Chamber of Industry data covering the period 1982-2010, was analyzed. In the analyses, time series analysis methods such as Engle-Granger (1987) Co-Integration Test, Johansen-Juselius (1990) Co-Integration Test and Vector Error Correction Model were used. On the basis of the analysis of Turkey's largest 1000 industrial enterprises, there is a relative increase in capital gains against the relative labor income on one hand, and on the other hand, capital gains are obtained mainly from speculative operations performed outside the main occupational areas of these enterprises. As a result in the period fallowing 1980's a financialization process with peculiarty particular to Turkey has been experienced. Keywords: Financialization, Capitalism, Heterodox Economics, Political Economy, Neo-Liberalism, Co-Integration Test.