Mustafa Akyol has a most interesting article for Cato on the Turkish economic situation. Inflation is galloping, as Pierre Lemieux reported in his thoughtful post a few days ago. In short, “in 2012, 1 U.S. dollar equaled 1.8 Turkish liras. Today, after an accelerating downward spiral of the Turkish currency, 1 dollar equals 13.7 liras.”

Pierre explains that Erdogan is “defending his own intuitive economic theories … Erdogan believes that interest rates cause inflation. It is useful for a dictator to have some knowledge of economics or sufficient wisdom to hire or believe advisors and officials who do. Erdogan has been firing all those—including three central bank governors in less than years—and replaced them with blindly loyal and ignorant yes men”.

Akyol adds that Erdogan’s views are rooted in “Muslim economics”, which he explains as following:

This ideological construct, which appeared in the mid 20th century with unmistakably Marxist influences, is different from the 14‐centuries‐old economic experience of Islamic societies, which, especially in the beginning, reflected a vibrant and pioneering commercial capitalism. (Surely, interest was a problem also in this pre‐modern Islamic capitalism, as the Qur’an strongly condemned riba, or “usury.” But some jurists distinguished “excessively exploitative” moneylending from “reasonable” interest rates, allowing the “cash foundations” in the Ottoman Empire, which functioned as pre‐modern banks. More importantly, as historian Timur Kuran has noted, the concern with riba was never taken as the basis of a distinct economic system, until the rise of “Islamic economics,” which itself was a component of the modern‐day Islamist movement.)

Erdogan, a veteran of Turkey’s Islamist movement, seems to be committed to this ideological construct, which he apparently cannot distinguish from being a pious Muslim

Seeing things quite at a distance, my perception was that, at the beginning, Erdogan was quite successful in moving the Turkish economy out of an economic slump. But that was 2002: Erdogan has been serving *that* long either as prime minister or president (but always in firm command of the country). My sense is that typically any kind of leadership, even the most illuminated one, if prolonged basically forever tends to move towards cronyism. Akyol’s point is far more interesting and points to the ideological underpinning of Erdoganomics and the current setback.


P.S. Readers might also enjoy Akyol’s recent Liberty Matters feature, Liberty Was Islam’s First Call at the Online Library of Liberty.