Nations do not fail because of geography, culture or ignorance. Instead, they fail because elites make political choices to preserve power. The economic history of the Ottoman Empire and the Republic of Turkey tests a key hypothesis regarding prosperity. Inclusive institutions act as a prerequisite for sustained success. Conversely, extractive institutions may generate short-term growth, but they ultimately cause stagnation and decay.

Capitalism did not fail to emerge in the Ottoman Empire by accident. The state specifically designed its apparatus to block the creative destruction necessary for capitalist transformation. The founding of the Turkish Republic represented a radical shift in political symbolism. However, the new government maintained the core bureaucratic ruling tradition of the Ottoman past.

The modern Turkish economy struggles within a narrow corridor between state despotism and societal instability, a result of this inherited legacy. This struggle exists because the country inherited an extractive institutional architecture. Political elites regulate economic life to create rents for themselves and their clients. They do not foster a level playing field for innovation.

Economic institutions shape the incentives of key actors. They influence the organization of production and investments in technology and capital. The Ottoman Empire utilized extractive institutions. These systems concentrated wealth and power within a narrow elite surrounding the Sultan and the central bureaucracy.

The transition to the Republic replaced the fez with the Hat and the Sultan with the President. Yet, the state maintained a relationship of domination over economic agents. The Father State viewed merchants and industrialists as subordinates rather than independent engines of growth. The political center managed, taxed and seized the assets of these groups to serve its own interests.

The Ottoman state’s systematic suppression of capitalism

Capitalism requires more than markets or trade. It demands secure private property, impartial enforcement of contracts and openness to technological innovation. This innovation disrupts the established economic order. The Ottoman Empire failed to develop capitalism. Its political institutions opposed these prerequisites. The Ottoman elite understood a key truth: economic change brings political instability. They relied on the stability of the traditional order to maintain power. Therefore, they viewed creative destruction as a threat. It represented a risk of obsolescence rather than a promise of wealth.

Secure property rights serve as the cornerstone of inclusive economic institutions. The Ottoman Empire recognized private property (mülk). However, the state’s absolute authority limited this right. The Sultan owned all land and wealth in the empire. The practice of confiscation (müsadere ) threatened every successful official and merchant. The state frequently seized the assets of wealthy viziers or notables upon their death or loss of favor. This insecurity altered how the elite used their money. They did not reinvest profits into factories or long-term productive assets. Instead, wealthy Ottomans diverted their capital into pious foundations (waqfs) or liquid assets. They could easily hide or transport these items. These foundations provided essential social services. Yet, it also acted as a capital sink. It locked vast resources into noncommercial uses to protect them from the state.

Capital accumulation acts as the engine of capitalism. This process requires intergenerational continuity. Families must pass wealth to their children to build momentum over decades. The Ottoman state actively blocked this process. The Sultan prevented the rise of a hereditary aristocracy. He also stopped the growth of a dynastic merchant class. The political theory of the empire defined high-ranking officials as servants (kuls) of the Sultan. This status carried a lethal economic implication. The Sultan legally owned the lives and property of his servants. Therefore, their private wealth legally belonged to the monarch.

The execution of Grand Vizier Çandarlı Halil Pasha in 1453 established a brutal precedent. The Çandarlı family served as a powerful political dynasty. They rivaled the House of Osman in influence. Sultan Mehmed II executed Halil Pasha immediately after the conquest of Constantinople. The Treasury absorbed his gold and estates. This act destroyed the independent power of the Turkish aristocracy. The pattern persisted for centuries. Sultan Suleiman the Magnificent executed his Grand Vizier, Pargalı Ibrahim Pasha, in 1536. Ibrahim possessed immense wealth. The state immediately seized his assets. The Sultan left Ibrahim’s family with nothing. This ensured that political power remained the exclusive domain of the Royal household.

The central bureaucracy relied on these seizures as a standard source of revenue. They did not view confiscationmerely as punishment for corruption. They viewed it as the state reclaiming its own property. The head of the palace guard (Bostancıbaşı) frequently imprisoned wealthy officials to extract their hidden assets before their execution. This practice prevented the formation of old money. Wealth returned to the state treasury (hazine) rather than remaining in society.

The state ruthlessly suppressed even late attempts at local capital formation. Local notables (ayans) gained power in the 18th century. They began to accumulate land and wealth. They challenged the center. However, Sultan Mahmud II launched a violent centralization campaign in the early 19th century. He systematically destroyed the Ayans. He executed influential figures like Tepedelenli Ali Pasha. He confiscated their estates. This reasserted the state’s absolute monopoly on wealth.

This institutional insecurity dictated the economic behavior of the elite. Pashas and governors knew their tenure was short. They engaged in predatory rent-seeking. They looted their provinces to amass cash quickly. They converted this cash into portable jewelry, diamonds or bribes. They avoided fixed capital like land or factories. These assets were too visible. The empire remained an agrarian machine. No independent class possessed the capital to spark an industrial transformation.

The printing press

The Ottoman state’s prohibition of the printing press illustrates its hostility toward innovation. Gutenberg invented the movable type press in Europe in 1439. European cities adopted the technology immediately. By 1500, they had produced millions of volumes. The Ottoman Empire took the opposite path. Sultan Bayezid II issued a royal edict in 1485. He specifically forbade Muslims from printing in Arabic script. Sultan Selim I confirmed this ban in 1515. He went further. He decreed the death penalty for anyone caught violating the order. This policy effectively quarantined the empire from the Information Age for nearly three centuries.

A powerful coalition drove this prohibition. The scribes (hattats) formed a massive economic guild. In Istanbul alone, the scribe guild numbered nearly 80,000 members at its peak. They viewed the press as a machine that would destroy their livelihood. They exerted immense pressure on the palace to ban the competition. The religious scholars (ulema) provided the ideological justification. Scholars argued that the Quran contained the literal word of God. They claimed that pressing holy words with a mechanical device constituted desecration. They also feared losing control. They worried that mass literacy would end their monopoly on interpreting religious texts.

The state finally permitted a printing press in 1727, but the effort failed to spark change. A Hungarian convert named Ibrahim Muteferrika petitioned the Sultan. However, the authorities crippled the enterprise from the start. The religious scholars still banned the printing of religious texts, which constituted the vast majority of reader demand. Muteferrika could only print secular books on maps or grammar. The output remained pathetic. His press published only 17 books in 15 years. Meanwhile, European presses printed distinct titles in the tens of thousands annually.

This political choice had long-term negative consequences for human capital formation. In 1800, literacy in England stood at approximately 60%. In the Ottoman Empire, it hovered between 2 and 3%. The ban prevented the accumulation of knowledge. It stopped the circulation of scientific manuals and technical guides. The Industrial Revolution required a workforce capable of reading instructions. The Ottoman state produced subjects capable only of obeying oral commands. The gap in knowledge production became a gap in economic power. The empire never recovered.

The missing bourgeoisie

A rising bourgeoisie drove the development of capitalism in the West. This class demanded inclusive institutions. However, the Ottoman state deliberately fragmented the commercial class along ethnoreligious lines. This prevented the emergence of a unified opposition. The Sultan delegated external trade, banking and manufacturing to non-Muslim minorities. Greeks, Armenians and Jews dominated the commercial life of the empire. By the late 19th century, non-Muslims controlled virtually all foreign trade in major ports such as Izmir, Thessaloniki and Istanbul.

The state utilized the nation (millet) system as a strategic “divide and rule” tactic. These minority merchants amassed immense wealth. However, they lacked political legitimacy within the Islamic empire. They operated as protected subjects (dhimmis). They could not challenge the Sultan’s authority. They depended entirely on the Palace for protection against local mobs or corrupt officials. The state often granted them privileges (berats). These documents granted them tax exemptions similar to those of European merchants. Yet, the Sultan could revoke these privileges at any moment. This created a wealthy class that lived in constant fear.

Meanwhile, the state steered the Muslim population toward specific sectors. Muslims dominated the military, the bureaucracy and agriculture. Cultural norms and state incentives discouraged the ruling Muslim class from engaging in market activities. This institutional design produced a fatal political-economic deadlock. The Muslims held the guns. The non-Muslims held the gold. Neither group could act alone to force institutional change.

This segregation prevented the formation of a unified national bourgeoisie. No cross-sectarian alliance emerged to demand property rights or constitutional limits. Consequently, no Glorious Revolution occurred in Istanbul. The economic elite (minorities) possessed no political voice. The political elite (Muslims) possessed no interest in changing the economic status quo. They viewed the merchants not as partners in growth, but as cash cows to milk. 

While England’s Glorious Revolution shackled royal power and secured property rights, no comparable institutional rupture occurred in Istanbul. Power remained centralized, property insecure and economic actors politically subordinate.

The command economy

The Ottoman economic system functioned as a sophisticated Command Economy. It did not wait for capitalism. The state designed it to provision the army and preserve social order. Economic Historian Mehmet Genç defines three cardinal principles: Provisionism (İaşecilik), Fiscalism (Fiskalizm) and Traditionalism (Gelenekçilik). These principles constituted a coherent worldview. This worldview subordinated economic efficiency to political stability.

Provisionism dictated the economy’s primary function. The state aimed to ensure an abundant supply of goods for urban centers and the army. Istanbul required massive resources. The capital consumed the vast majority of the empire’s surplus. The administration feared shortages above all else. They knew famine triggered rebellion.

Therefore, the Ottoman state aggressively intervened in markets. It established a blockade economy. Bureaucrats strictly banned the export of strategic goods. These included Anatolian wheat, copper, leather and gunpowder. The state forced producers to transport these goods to state-controlled weighing stations (Kapan). Here, the state purchased them at below-market prices.

This logic completely contradicted European Mercantilism. European states like France and England sought to maximize exports to accumulate bullion. The Ottomans sought to maximize domestic abundance. The state viewed a merchant who exported grain to Venice as a traitor. He threatened the capital’s food security. The state utilized the Narh system to fix maximum prices. The market inspector (muhtesib) patrolled the markets daily. He punished shopkeepers who sold bread one akçe (Ottoman silver coin) above the fixed price. This system prioritized the consumer and city stability over the producer’s profit. Consequently, this policy depressed the profitability of agriculture. It starved the manufacturing sector of the capital needed for expansion.

Fiscalism represented the drive to maximize state revenues. The state needed cash to support a modernizing military. In the Classical Age, the Ottoman Empire relied on the Timar system. The state paid cavalrymen (Sipahis) with land grants rather than cash. However, warfare changed in the 16th century. The empire needed muskets and standing infantry (Janissaries). These soldiers demanded salaries in silver. The Timar system failed to provide liquid capital.

The Treasury turned to tax farming (Iltizam). The state sold the right to collect taxes for a region to the highest bidder. The tax farmer (mültezim) paid the state upfront. He then extracted as much as possible from the peasantry to recoup his investment. This system decoupled the tax collector from the land’s long-term productivity. The mültezim had no incentive to invest in irrigation. His interest focused purely on short-term extraction.

The state tried to fix this short-termism in the 18th century. It introduced the Malikane system (life-term tax farms). They attempted to align the tax farmer’s interests with the land’s productivity. However, this reform failed. It merely created powerful local notables. These figures acted as mini-despots. They also amassed private armies and further entrenched the extractive nature of the system. The state eventually moved to a revenue-sharing model (Esham), a precursor to domestic borrowing. Yet, the goal remained extraction, not development.

Traditionalism acted as the ideological cement of the system. The Ottoman elite viewed the ideal social order as a static equilibrium. They called this Order of the World (Nizam-ı Alem). “Every man remained in his place.” The peasantry (Reaya) produced. The merchants traded. The artisans crafted. The military-bureaucratic class ruled. The elite viewed any deviation from this order as corruption.

The state utilized the Guild (Lonca) system to strictly regulate production. The guilds controlled entry into the market through an operating license (Gedik). The operating license acted as a physical and legal barrier. A master could not open a shop without this warrant. The state strictly limited the number of operating licenses. It determined exactly how many tailors or bakers could exist on a single street.

This system prioritized social equity among artisans over economic efficiency. It prevented competition. The guilds set strict standards for production methods. They forbade innovation. If a shoemaker invented a machine to produce shoes twice as fast, the guild shut him down. They argued that he stole bread from his fellow artisans. This acted as a powerful barrier to the emergence of factory production. The regulations explicitly forbade the mobilization of large amounts of labor. The state backed these rules. It prevented the introduction of labor-saving machinery.

The Ottoman economic system was thus a closed loop designed to feed the Circle of Justice, sustaining the Sultan’s power. It was remarkably successful at maintaining the empire for centuries, but it was structurally incapable of generating the self-sustaining growth characteristic of capitalism.

The Republic: institutional continuity in state-craft 

Official historiography portrays the establishment of the Republic of Turkey in 1923 as a total rupture. It claims a revolution replaced a theocratic empire with a modern, secular nation-state. However, an institutional analysis reveals a profound continuity in the bureaucratic ruling tradition. The founders of the Republic, including Mustafa Kemal Atatürk and İsmet İnönü, came directly from the Ottoman military-bureaucratic establishment. The state-centric ethos of the late Ottoman reforms shaped their worldview. Consequently, they built an economic system — Etatism — that modernized Ottoman instruments rather than rejecting them. The state remained the primary actor. It continued as the planner and the ultimate owner of the economic sphere.

The cadres remained essentially the same. The “men of empire” became the “men of the republic.” They simply exchanged the Fez for the Hat. They retained the conviction that the state must lead society. They viewed the uneducated masses with the same paternalism as the Ottoman elite.

The transition from Empire to Republic relied on a demographic and economic engineering project. The Union and Progress leadership initiated the National Economy (Milli İktisat) during World War I. The Republicans continued this policy with vigor. This process did not rely on market competition. The state actively selected and created a bourgeoisie. The Turkish government utilized the abandoned properties (Emval-i Metruke) laws to redistribute vast wealth. Later, the state utilized protectionist measures and government contracts to nurture these favored businessmen.

The Republic officially adopted Etatism as a pillar of its ideology in the 1930s. The global Great Depression and the Soviet model influenced this decision. However, Etatism fundamentally represented a Republican rearticulation of Ottoman Provisionism and Fiscalism. The state established State Economic Enterprises (SEEs) to produce basic goods. Sümerbank (1933) monopolized textile production. Etibank (1935) controlled mining and natural resources.

The bureaucracy argued that the private sector lacked the capital to industrialize the country. They implemented the First Five-Year Industrial Plan in 1933. However, this state-led industrialization reinforced the despotic leviathan. The state controlled prices. It allocated credit through state banks. It directed all major investments. The private sector survived only in the shadow of the state. Private firms functioned primarily as contractors or suppliers to these giant state monopolies.

The bureaucracy in Ankara managed the economy like a military campaign. They viewed economic planning as a logistical operation rather than a market process. The “men of the pen” (bureaucrats) and “men of the sword” (military officers) remained in charge. They continued to dictate to the “men of the flock” (the producers). The names of the institutions changed, but their extractive nature remained.

Consequently, the Turkish bourgeoisie was born into a state of dependency. It did not emerge against the state to demand rights. It emerged from the state as a beneficiary of patronage. This clientelist origin story weakened the political power of the business class. They remained deferential to the bureaucratic center. They lacked the autonomy to push for truly inclusive institutions. The Wealth Tax (Varlık Vergisi) of 1942 demonstrated this brutally. The single-party government enacted this law on November 11, 1942. They used the pretext of taxing wartime profiteering. However, Prime Minister Şükrü Saracoğlu revealed the true intent in a closed parliamentary session. He declared the law a revolutionary act to eliminate the dominance of alien elements in the market. The state intended to give the Turkish market to Turkish merchants.

Local committees assessed the taxes arbitrarily. They did not base assessments on actual income or profit. Instead, they utilized a secret classification system. They divided citizens into four categories: M (Müslim), G (Gayrimüslim — Non-Muslim), D (Dönme — Converts) and E (Ecnebi — Foreigners). The committees taxed Muslims at approximately 5% of their wealth. Conversely, they taxed non-Muslims at rates often exceeding 150 to 200% of their total assets. The state demanded payment in cash within 15 days. This deadline made liquidation of assets impossible without massive losses.

Police arrested those who failed to pay. The state deported them to forced labor camps in Aşkale, Erzurum. There, elderly bankers and textile merchants broke stones in sub-zero temperatures to pay off their debt. At least 21 people died in these camps due to harsh conditions and a lack of medical care. This event served as a modern reenactment of the Ottoman practice of confiscation. It sent a chilling message to all economic actors. Private property exists only at the pleasure of the state. The rule of law remained subservient to the Reason of State (Hikmet-i Hükümet).

The tax successfully transferred vast amounts of capital. The state seized properties and sold them at public auction for fractions of their value. The rising Muslim commercial elite bought these assets at fire-sale prices. This completed the Turkification of Istanbul’s economy. However, the tax also cemented a deep institutional distrust. The rationality of the Turkish capitalist became one of short-termism. They adopted rent-seeking behaviors. They mirrored the habits of the Ottoman tax farmer. Investors asked a simple question: Why invest in a 50-year industrial project if the state can tax it away in a day? Consequently, the business class preferred government connections and liquid assets over fixed capital formation.

Paternalism and the transcendental state

The Republican state successfully cultivated the image of the Father State. This figure acts as a benevolent but stern guardian. It provides for its children. This ancient concept implies a rigid social contract. The Sultan provides security and justice. In exchange, the subject offers absolute political obedience and taxation. The Republic secularized this concept but kept the hierarchy. The citizen does not hold rights against the state. The citizen receives privileges from the state.

The bureaucracy viewed itself as the sole possessor of reason. Political scientist Metin Heper defines this as a transcendental state tradition. The state stands superior to the sum of its citizens. It does not exist to serve the people. The people exist to preserve the state. The founders viewed civil society, religious orders and independent business interests with deep suspicion. They believed these groups promoted particular interests over the general will. Consequently, the Kemalist elite excluded the periphery — the peasantry and religious conservatives — from decision-making. The White Turks in Ankara dictated the cultural and economic life of the Black Turks in Anatolia.

This political dominance enabled economic extraction. The Center extracted resources from the agricultural periphery to fund the urban elite. The state manipulated the terms of trade. It kept agricultural prices low to feed the cities cheaply. Simultaneously, it kept industrial goods prices high to protect infant industries. The Anatolian peasant bore the cost of modernization.

The state used the tithe (aşar) tax abolition in 1925 as a propaganda tool. However, it replaced this revenue with indirect taxes and price controls that hit the poor hardest. The bureaucracy established monopolies (Tekel) on tobacco, salt and alcohol. This transferred wealth from the rural producers to the state treasury. The Republic perpetuated the extractive logic of the empire. The Father State demanded total loyalty. In return, it offered only subsistence.

The failure to enter the narrow corridor

Modern Turkey continues the Ottoman Empire’s tradition. It has failed to widen the Narrow Corridor to liberty. Economists Daron Acemoglu and James Robinson developed this framework. They posit that liberty acts as a fragile flower. It blooms only when a balance of power exists between the State and Society. The two forces must run a Red Queen race. They must constantly compete and check each other. If the state is too weak, the nation falls into the cage of norms. Here, tribalism and kinship ties restrict freedom. If the state is too strong, the nation faces the despotic leviathan. Here, an authoritarian government crushes dissent.

Turkey oscillates between these two poles. However, the pendulum historically swings toward the despotic leviathan. The Turkish Republic inherited a powerful state apparatus from the Ottomans. It did not inherit a strong civil society to check that power; consequently, the state shackles society. Society rarely shackles the state.

The military coup of September 12, 1980, provides the ultimate example of the despotic leviathan. General Kenan Evren and the National Security Council (MGK — Milli Güvenlik Kurulu) did not just seize power. They re-engineered the entire legal system to cripple civil society. They wrote the 1982 Constitution. This document remains the governing text of the country today. Its preamble does not prioritize human rights. It prioritizes the sublime interests of the Turkish State.

The constitution designed institutions to enforce tutelage (vesayet). The military established the Higher Education Council (YÖK) to strip universities of their autonomy. They created the MGK to allow generals to dictate policy to civilian cabinets. The state banned labor unions, political parties and associations. This destroyed the associational muscle of society. The leviathan decided that society had become too unruly. Therefore, it decided to silence society to save the state.

When the formal state recedes, liberty does not emerge. Instead, the cage of norms appears. This manifests in Turkey as the Deep State (Derin Devlet) or the power of local notables (Aghas) in the southeast. The 1996 Susurluk Scandal exposed this reality, a car crash revealed a Member of Parliament, a high-ranking police chief and a fugitive ultra-nationalist hitman traveling together.

This incident proved that the state often steps outside the law to maintain control. It utilizes mafia groups and tribal leaders to fight its enemies. Acemoglu calls this the paper leviathan. The state looks strong in the capital. However, it relies on lawlessness and local despots to rule the periphery. This reinforces the cage of norms. Citizens do not trust the police or the courts. They trust their uncle in the bureaucracy or their brother in the organization.

This dynamic creates a vicious cycle. The public fears the chaos of the absent leviathan. They remember the street violence of the 1970s. Therefore, they welcome the despotic leviathan to restore safety. This fear stems from the Sèvres Syndrome. This is the collective anxiety that external enemies and internal traitors constantly conspire to divide the country. The state exploits this fear. It justifies excessive power as necessary for survival. Consequently, Turkey struggles to build a shackled leviathan. In a shackled system, the state acts strongly enough to enforce laws but remains constrained enough to respect rights. Turkey possesses strength. It lacks constraints.

Extractive institutions and the construction trap

The persistence of extractive political institutions drives economic continuity in Turkey. Political power remains concentrated. Checks and balances hardly exist; the judiciary, free media and autonomous regulatory agencies lack the power to constrain the executive. The Iron Law of Oligarchy explains this dynamic. New leaders rarely dismantle the extractive machinery of the old regime. They simply commandeer it.

The construction sector in modern Turkey serves the same function as tax farming (Iltizam) did in the Ottoman Empire. It acts as the primary mechanism for distributing rents to political allies. The government utilizes its absolute control over zoning laws and public tenders. The Housing Development Administration (TOKİ) serves as the central coordinator. The administration changes land status from agricultural or forest land to high-value commercial zones. They commission mega-projects like the Third Airport, the Third Bridge and city hospitals.

This process creates massive wealth for a select group of construction conglomerates. The opposition and public often refer to these favored firms as the Gang of Five (Cengiz, Limak, Kalyon, Kolin and Makyol). The World Bank ranks these companies among the top recipients of public tenders globally. The government changed the Public Procurement Law (Law No. 4734) more than 190 times to facilitate this allocation. In return, these firms support the government politically and financially.

This represents a classic extractive institution. It generates low-quality growth. Credit bubbles and physical capital accumulation drive this expansion rather than productivity or technological innovation. Acemoglu points out the danger of this model. It boosts GDP statistics in the short term. However, it misallocates resources. Capital flows into concrete instead of high-tech manufacturing or education. These sectors drive long-term prosperity. The skyline of Istanbul transformed. Yet, the underlying institutional logic remains Ottoman. Wealth creation depends on proximity to the state, not market competence.

Turkey’s economy remains trapped in a persistent cycle of low-quality growth. It features chronic high inflation, stagnating productivity and widening income inequality. These outcomes result directly from severe institutional decay. The erosion of the Central Bank’s independence provides the most stark example of this collapse.

The cycle of decay

The Ottoman Sultans frequently engaged in coin debasement (tağşiş). They reduced the silver content of the Akçe to pay the Janissaries’ salaries during fiscal crises. Modern political leaders replicate this exact behavior. They exert immense pressure on the Central Bank to keep interest rates artificially low. The government fired three Central Bank governors in less than two years (2019-2021) to enforce this obedience. This policy ignores skyrocketing inflation. It triggers recurring currency crises and destroys the value of the Lira.

This monetary strategy serves a specific class interest. It functions as a state-orchestrated transfer of wealth. High inflation benefits debtors. The largest debtors in the country are the politically connected construction conglomerates. Inflation erodes the real value of their Lira-denominated debts. Conversely, it destroys the purchasing power of wage earners, pensioners and savers. The state effectively imposes a hidden inflation tax on the working class to subsidize the elite’s leverage. The refusal to adopt orthodox economic policies acts as a feature of the system, not a bug. The extractive regime relies on negative real interest rates to keep cheap credit flowing to its patronage network.

Economist Daron Acemoglu argues that Turkey faces the “Middle Income Trap.” The country successfully moved from low income to middle income by shifting labor from agriculture to basic industry. However, it cannot make the next leap to high income. The economy remains stuck exporting low-value textiles and assembly goods. It lacks the environment for high-tech innovation. Escaping this trap requires a shift to inclusive institutions. The nation needs impartial courts, intellectual freedom and secure property rights to foster creativity.

However, such a shift demands a heavy political price. The ruling elite must relinquish its discretionary control over the economy. They must accept that the law stands above the leader. They remain loath to take this step. Establishing independent institutions would dismantle the mechanism they use to reward loyalty. Therefore, the leadership chooses economic stagnation over the loss of political control.

The failure of capitalism in the Ottoman Empire and modern Turkey stems from institutional choices, not mystery. The Empire built a system of extractive institutions. It prioritized political stability over growth. The state feared creative destruction. It strangled capitalism by denying property rights, banning technology and suppressing the bourgeoisie.

The Republic inherited this bureaucratic ruling tradition. Westernization remained superficial. The deep grammar persisted: the state acts as master, the economy as servant. A continuous thread links the National Economy of the 1920s to the construction-fueled patronage of the 2000s.

The Narrow Corridor to liberty remains dangerously thin. Society has never truly shackled the leviathan. Elites use the state to extract resources with impunity. Consequently, the transition to an inclusive democracy remains an unfulfilled promise. Turkey’s history reveals a state too strong for its own good. It stifles the very dynamism it needs to thrive.

[Liam Roman edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.