Turkish Economy

Prof. Dr Sencer Ecer

Week 3
Ottoman History Writing and Changing
Attitudes Towards the Notion of “Decline”
• Quataert (2003): «Europeans were underselling in Middle Eastern markets not
because of their manufacturing efficiency but because they were dumping goods.
Supported by the profits of the Atlantic economy, they sent cloth as ballast to
Ottoman ports and sold it below their own costs, using New World gold to buy
desired commodities for profitable resale back in Europe. Subsequently,
researchers questioned the decline of Ottoman manufacturing. They agreed with
Issawi that big factories were largely absent and they conceded that certain
handicraft industries exporting goods to Europe had faded away. They further
concurred that Ottoman imports of European manufactures had increased
impressively in the post-1750 era. But they disagreed about the conclusions to be
drawn from such observations and set about investigating the actual fate of the
Ottoman manufacturing sector. Ottoman manufacturing, it turns out, had not
declined.»
Ottoman Economic World View before the
19th century (Genc, 2003)
• Pragmatic, prolific
• Just like in other traditional societies, state goals cannot be classified
as «purely» economic
• However, there are some principles
• «The impact of the state on the economy is limited anyway»
Principles of Ottoman Economic Worldview:
Provisionism
• Address market failures and try to provide the competitive amount
• Low productivity
• Problems with state interference, unintended consequences
• Expensiveness of transportation

• Provisionism applies to all levels in the production chain

Provisionism
• Agriculture:
• Family enterprises with 60-150K m2 land
• Land owned by the state
• Not allowed: Division with inheritance, migration, keeping the land idle, allocation as a foundation
(vaqf)
• States control mostly applies to populations between 3-20K (kaza)
• Prodcution is kept in this area (diameter about 50km)
• Purchasers of agricultural product were organized as purchasing groups
(Lonca) which were regulated to stay at an average size
• Remaining products were allocated to the army and the palace and to
traders for Istanbul, then to traders for elsewhere in the empire (in exchange
for internal tariff). Exports are allowed only after all these.
Provisionism
• Exports were carefully regulated,
• what and how much to export
• High tariffs
• Imports were allowed, unregulated
• Capitulations emerged from out of this policy
Principles of Ottoman Economic Worldview:
Traditionism
• «no change» or «controlled change»
• Scarcity
• Any fluctuation, imbalance could turn into serious famine because of lack of
transportation
• Consumption controls: Somptary laws (men-i israfat) against luxury
goods
• Strict allocation of capital and labor to sectors
• Shifts were not welcome because they would be at the expense of other
sectors
• Tradesmen associations’ employee and store numbers were fixed
Traditionism
• Shariah law was the main source and reference as well as laws issued
by the sultan, local traditions and customs
• A principle: «not to be against the ancient»
• Ancient (kadim) was defined as «no one remembers what was before»
• Change as a process led to the third principle
Mechanisms of social change which can be found
in the literature (based on Wilterdink 2014)
• Mechanisms of social change which can be found in the literature (based on Wilterdink 2014)
• Learning: Evolutionary theories (Dosi, 1982; Nelson & Winter, 1982) in social sciences stress the cumulative nature
of human knowledge. Actors realize mistakes, apply new ideas and engage in processes of learning, which results in
tacit and codified new knowledge (Cowan, David, & Foray, 2000).
• Variation: Variation can range from 1) new (collective) ideas to 2) single innovation projects which introduce
novelty and hence variation. Ad 1) Collective ideas are the cause and consequence of social change. The spread of
beliefs, values, value systems, of fashions, of religions, of cultural symbols, of rules of behavior. Ad 2) Single
innovation projects are on the one hand incremental innovation projects that innovate along a given trajectory; on
the other hand, radical innovations that deviate from the trajectory and may lay the ground for a new trajectory.
• Selection: This incorporates processes of adoption, diffusion and imitation, but also processes of decline and death
of initiatives.
• Conflict: Group conflict has often been viewed as a basic mechanism for social change, these include revolutions,
but also minor conflicts. Social change in this view, is the result of the struggle between a predominant class and a
dominated class which strives for (radical) change. (conflict model of society by Ralf Dahrendorf)
• Competition: seen as a powerful mechanism of change as competition makes it more likely to introduce
innovations in order to have competitive advantages.
Mechanisms of social change which can be found
in the literature (based on Wilterdink 2014)
• Mechanisms of social change which can be found in the literature (based on Wilterdink 2014)
• Cooperation: Although competition as a driver dominates theories that put individualism, individual utility at the
fore, where social change is the results of individuals pursuing their self-interest, other strands of literature have
shown that cooperation (e.g. literature on innovation systems, game theory) or altruism (e.g. Ernst Fehr) also lay
the basis for human action.
• Tension and adaptation: In structural functionalism social change is seen as an adaption to some tension in the
social system. E.g. a gap between fast-changing technology and necessary associated institutional change of some
type (see W. Fielding Ogburn)
• Diffusion of (technological) innovations: Some social changes results from innovations adopted in society, may be
technological invention, scientific knowledge, but also new beliefs, ideas, values, religions, in short ideas. High
uncertainty, most innovations disappear, those that survive follow an S-curve of adoption (cf. Geroski, 2000).
• Planning and institutionalisation of change: Social change may result from goal-directed large scale planning, by
governments, bureaucracies, and other large scale organisations. The wider the scope, the more the competencies
needed, the more difficult to reach goals and the more likely that unforeseen events interfere. Planning implies
institutionalisation of change, but institutionalisation does not imply planning (Wilterdink, 2014). Included here are
changes in the organisation of the state, interstate relations, laws and directives, programmes etc.
Fiscalism
• Max revenues, min expenditures
• Telecom regulations today
• Always remind that tax revenues will not decline
• Health Economics
• Cost minimization
• Same in different countries
• Croatia, Romania, Bulgaria
• Some changes in recent tax reforms
Fiscalism
• Objective reasons for fiscalism
• Low productivity
• Costly transportation
• Low quantities of marketed products
• Only this factor can be altered by the state
• Subjective reasons
• Planned allocations did not lead to a deepening of the market
• Deepening of market could lead to a class stratification, rival families could
emerge
• Price controls: normal profit margin 5-15%
• Interest: 15-25% observed in military class consumption and administration financing
Conclusions (Genc, 2003)
• The Ottoman economic outcomes typically reflect a combination of
the three principles at different levels