Credibility and class in the evolution of public banks: the case of Turkey

Abstract

In Turkey, three large and decades-old public banks control about a third of the banking sector. These banks were functional to capitalist industrialization in the postwar era and have evolved spontaneously in ways supportive of neoliberalism. These same banks played a key role in stabilizing Turkey amidst the 2008–2009 global crisis. This gives rise to the seeming contradiction of public banks supporting otherwise neoliberal development strategies. The literature around banking and development has largely failed to capture this dynamic, being instead focused on the economics of public versus private banks. As such, the debate has difficulty capturing the multifaceted and conflicting functions of specific banking institutions. By contrast, we suggest that neither private nor public banks are innately superior – rather, it depends. We engage this problematic through the special issue’s debate on institutional function and credibility and the case study of Turkey. As Miyamura’s article in this volume has made an important contribution to the validation of the Credibility Thesis by zooming in on ‘labor’, so will this paper continue the endogenous analysis of the modes of production by focusing on ‘capital’, with its particular reference to state-owned banks in Turkey. From a historical materialist framework, therefore, we argue that Turkey’s public banks have evolved spontaneously, and often unintentionally so, in ways supportive of capitalist development. Turkey’s public banks thus prevail as credible because their institutionalized social content has changed in complex, class-based, and contradictory ways functional to capitalist reproduction. Such credibility is determined not by ownership form nor achieved by intentional, unmediated design, but has evolved historically within different phases of capitalism. Indeed, as financial capitalism intensifies in Turkey, the public banks have become increasingly important to neoliberal reproduction, hence also giving rise to the problem of alternatives.

Keywords:

• public banks
• credibility
• class
• Turkey
• neoliberalism
• financialization
• state-owned banks
• development

Acknowledgements

A portion of the fieldwork involved was made possible by the Municipal Services Project’s (www.municipalservicesproject.org) ‘Public banking for public infrastructure and social development’ research contract (2013).

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹Also known as the bankers' crisis, this crisis signalled the end of a profitability field day for many small financiers in Turkey who raised funds from local savers by promising abnormally high returns. The banker Kastelli was the most infamous of these Ponzi-type financiers, and hence gave the name to the 1982 crisis.

²In confidential interviews with Central Bank authorities, state bank managers and BRSA authorities in 2007 and 2013, the unique role of Ziraat Bank in rural communities, in farming regions and in nation-wide payment services was repeatedly emphasized. We were not granted interviews on this topic with AKP officials.

³An instructive contrast can be found in the actions of some private banks in Turkey that repossessed major tracts of land for speculative accumulation purposes, at times dispossessing entire villages (see the following news reports: Karabağlı 2012; Antalya Güncel 2011).

⁴For some examples of public banking, see Butzbach and von Mettenheim (2014). Intriguing specific examples include the Banco Popular in Costa Rica (see the Bank's website) and the Bank for Social Policy in Vietnam (Sikor 2012, 1092–93).

Additional information

Notes on contributors

Thomas Marois

Thomas Marois is a senior lecturer in the Department of Development Studies, SOAS, London, UK. Thomas works in the field of comparative political economy and development. His research focuses on a critique of and viable alternatives to neoliberal and finance-led strategies of development in emerging capitalisms. Thomas is the author of the book States, banks and crisis: emerging finance capitalism in Mexico and Turkey (2012) and co-editor of the book Polarizing development: alternatives to neoliberalism and the crisis (2015).

Ali Rıza Güngen

Ali Rıza Güngen teaches at the Department of Political Science, Ondokuz Mayıs University, Samsun. He received the Young Social Scientist award from the Turkish Social Sciences Association in 2013. He is the co-author of the 2014 book Financialization, debt crisis and collapse (in Turkish) and co-edited the special issue of Praksis journal on indebtedness in Turkey (2015). His research currently focuses on sovereign debt management, state restructuring and financial inclusion in Turkey. Email: [email protected]