1

In modern liberal democracy, ‘individual domain’1 has always been praised as

opposed to arbitrariness of majority and governors or future governments. John Locke
asserted notion of individual domain consists of ‘the life, liberty and possession of man’2.
It is based on civil society and free transactions of free, equal and rational individuals
excluded from totality of social existence.3 Constitutionalism is to protect ‘individual
domain’ from any threat, from governments, towards functioning of market based
capitalist system. In neoliberal era, new- constitutionalism emerges to protect individual
domain for maintaining transactions, but in global context. New-constitutionalism
features in functioning of neoliberal development against arbitrariness of actors,
governors or future governments who can distort order.

As a strategy, economy and law have been insulated from politics and social
reality. This insulated discipline, with its peculiar logic apart from political purposes, is
showed as an end in itself, to be pursued for civil society and order. Hence, related to
new- constitutionalism, independence of central bank, as one of the conditions in
prescriptions for macroeconomic stability or structural adjustment programmes, is for
permanence of ‘disciplinary neoliberalism’4 and ‘globalizing elites’5 or ‘cosmopolitan
elites’6. On the one hand, it has being argued this development shakes sovereignty of
nation state since it limits its roles or actions. On the other, it has being considered this
development does not shake sovereignty of nation state since there is no difference
between politics and economy. Besides, independence of central bank is a means of
restructuring and reorganization of state to make room for maneuver to gain more in
global capitalism without any political accountability to citizens. In this manner, while
state legitimizes policies to stay in power, it adjusts itself to global trends.

1
Gill 63.
2
Gill. 63-64.
3
Picciotto. 167.
4
Gill. 1.
5
Gill. 65.
6
Cerny. 406.
 2

Independence of The Central Bank of Republic of Turkey (CBRT) has being a

central issue since 2001. It is indispensable for continuum of loans from IMF and for
attraction of Foreign Direct Investment. Moreover, this independence is necessary for
permanence of governments which are expected to pursue disciplinary neoliberalism at
the expense of society. That’s why; restructuring of Turkish state in form of
independence of CBRT is crucial for consent of potential voters in such a liberal
democracy system in which each and every individual is considered as ‘equal’ to repress
oppositions.

I would like to touch upon process of independence of CBRT. I will be respectful

to the fact, this independence, insulation of economy from politics and social reality, is
necessary for disciplinary neoliberalism. While working up on this issue, I mainly refer to
Gill’s article. In this respect, firstly, I will reflect legitimization of independence of
CBRT for internal affairs. Afterwards, I will allude to significance of Supranational
Organizations and Global Financial Markets. Mainly, I will utilize articles and news on
newspapers.

Independence of CBRT for internal affairs:

Hayek argues, modern democracy is ‘a form of government in which no

restriction is placed on governing body’.7 An elected government will do anything to buy
support of several interests by giving them special benefits.8 For an instance, they will
utilize all resources of government, society and individuals. 9 Hence, myth of social
justice is created by democratic machinery as moral justification for benefits granted to
particular interests.10 That’s why; he is opposed to social justice committed to social
distribution compensating inequality of wealth and condition under market-based
disciplines.11 However, there is a linkage between constitutional democracies,

7
Hayek. 233
8
Hayek. 233
9
Hayek. 246.
10
Hayek. 240.
11
Gill. 50.
 3

spontaneous coordination of market economy and entrepreneurship.12 So, ‘true general

agreement’ in a ‘Great Society’ will be maintained by submitting general rules in
particular decisions and by not letting majority to break of generally recognized rules of
conduct restraining individuals.13 Individual domain is protected by private property
rights secured by the Constitution and coercive capacity of the state. 14 In this way, legal
relations in civil society are externalized from relations of production and historical
development of capitalism15 and the nature of state16. Many traditional forms of political
action and programmes were disciplined and reified.17 President of TÜSİAD declares
new constitution should be prepared by focusing on ‘individuals’. 18 Also, Eğilmez19
denoted, as long as only state plans economic policy, market economy will not function
since market forces hardly emerge. Then, independence of CBRT is inevitable for market
forces to function in market economy in Turkey.20

How consent is sustained is crucial.21 New systems of political rights/ obligations

were based on work fare which reinforced citizenship of prospering upper middle and
wealthy classes.22 According to neoliberal intellectuals, economic problem is about
identification of sets of binding rules and procedures facilitating market exchange and
liberating spontaneous potential to individuals to develop in an ‘efficient social order’.23
In this way, economy is to be depoliticized. It is indicated ‘a regime that embodies
predictability in the money good exchange’ and long term investment available, in
relation to money and inflation, can secure individuals24 and the harmony of interest
between classes.25 Besides, inflation, which is regarded as tax and redistribution of
incomes, is produced by state by expansionary demand policies or transfer of resources

12
Buchanan. 254.
13
Hayek. 237.
14
Gill. 51.
15
Picciotto. 168.
16
Gill. 59.
17
Gill. 50.
18
Uysal.
19
Eğilmez. (2005).
20
Eğilmez. (2005).
21
Picciotto. 165.
22
Gill. 50.
23
Gill. 54.
24
Gill. 56.
25
Burnham. 16.
 4

and employment into public sector against unemployment.26 TÜSİAD declares economic
stability is crucial for employment.27 Then, reforms and policies on fiscal and monetary
discipline of autonomous economic institutions should be supported.28 Besides, former
Governor of CBRT, Serdengeçti, designated, since CBRT is independent and adopted
tight financial policies, the inflation fell down and people embraced CBRT. 29 In the case
of populist policies, a threat towards independence of CBRT, public should claim the
independence or this will lead to social agitation.30

Neoliberals demands fiscal discipline, reduction in subsidies, tax reform,

privatization, tax cuts, deregulation, monetary stability, free trade and capital movements
which ‘foster entrepreneurship, investment and long-run economic growth.31 Then, policy
choices should include non- individualistic sources of value expressed by economists. 32
In this respect, independence of central bank- constitutional limit to governments,33 and
inflation targeting monetary policy, as oppose to full employment’- is necessary for
independence and security of individuals.34 Central bank independence is a ‘necessary
check to self- interested politicians’ that imposes ‘austerity and stability on the
economy’.35 It commits itself to ‘low inflation and price stability by inscribing it in its
statute’.36 Selçuk37 argues 2001 crisis in Turkey was resulted from price instability caused
by high inflation. He supposes Ecevit government spent amply without sufficient
resources and barrowed many from CBRT.38 He concludes this is due to lack of CBRT
independence before 2001.39 Until 2001, CBRT is dependent on power and will of state. 40
On the contrary, AKP is praised since it did not disturb CBRT for pragmatist and populist

26
Gamble. 12.
27
TÜSİAD’dan net tavır.
28
TÜSİAD’dan net tavır.
29
‘Siyasiler MB’nin bağımsızlığını sindiremiyor.’
30
‘Siyasiler MB’nin bağımsızlığını sindiremiyor.’
31
Polillo& Guillén. 1768.
32
Buchanan. 258.
33
Gill. 57.
34
Gamble. 56-57.
35
Polillo& Guillén. 1768.
36
Polillo& Guillén. 1770.
37
Selçuk.
38
Selçuk.
39
Selçuk.
40
Selçuk.
 5

purposes.41 Eğilmez implies as long as state partakes in production, it cannot be a

controller and interferes with employment and prices. Then, state should not partake in
production in market economy.42 Besides, Monetary Policy Committee manifests rise in
taxes redouble inflation, pause the decrease in unemployment etc.43

Gill44 indicates power of capital is promoted by disciplinary neoliberalism and

new- constitutionalism through extension and deepening of market values and disciplines
in social life. They redefine relationship between political and economic for big corporate
capital etc. through co- optation, domestication, neutralization and depoliticization of
opposition.45 To legitimize it, protected individual domain is suggested as securing
individual freedom against power of state and pressures of tyranny of majority.46
Accordingly, economic and financial globalization is expected to undermine state’s
capacity to act and regulate.47 Meyer et al. argue that ‘the state may have less autonomy
than earlier but it clearly has more to do’.48 Then, global arena develops a ‘playground for
states where they compete for economic, military, diplomatic and political premacy and
survival’.49 As Evans specifies we experience ‘a transformation of state and a
development of new elements of state society synergy’.50 If we assume state as a
‘polymorphous crystallization’ of social power, independence of central bank should be
regarded as ‘recentering of social power in the hands of economic technocrats and
financial interests’.51 In this manner, domestic policies become important for global
economy.52 Then, Eğilmez indicated states do not plan economy policies or intervene to
market, but finances policies.53 As well, they are not active in production anymore;
however, they should become the supervisor.54

41
Selçuk.
42
Eğilmez. (2005).
43
Zamlar Merkez’i korkuttu.
44
Gill. 47.
45
Gill. 48.
46
Gill. 52.
47
Polillo& Guillén. 1764.
48
Polillo& Guillén. 1765.
49
Polillo& Guillén. 1765-66
50
Polillo& Guillén. 1765.
51
Polillo& Guillén. 1769.
52
Polillo& Guillén. 1766.
53
Eğilmez. (2005).
54
Eğilmez. (2005).
 6

Gamble assesses inflation, rather than unemployment, is perceived as a threat

resulting in ‘instabilities in the financial markets, the imbalances in trade, fiscal crisis of
state and weakening of political cohesion.55 Then, a new combination of monetarism,
economics liberalism and populist right emerged opposing to burden of taxation, abuse of
welfare, inefficiencies of public provision and public enterprises and any threat to public
order.56 In this regard, ‘the social market’ doctrine demands state to intervene less in
some areas and more in others.57 Construction of a private sphere, protected under
constitutional state is freed from public interference.58 Depoliticization involves
separation of political, economic and industrial activity and fragmentation of decision
making in various areas.59 Since 2006, it has being argued whether the Center of CBRT
should be moved from Ankara to Istanbul, finance capital of Turkey.60 It is considered
this development will benefit Turkey since politicians could not infringe macroeconomic
policies.61 This illustrates arguments on distinction between economy and politics. For
another instance, Eğilmez62 asserted CBRT carried out various tasks, such as reduction of
unemployment, support of rapid development, which are not among the initial duties of
CBRT; rather, it should deal with monetary policy.

Modern state is restructured with many agencies, such as military, bureaucracy

etc., to provide autonomy from the government.63 Since they are not subjected to
democratic election, they can be more trusted as opposed o politicians affected by short
term political pressures.64 In terms of independence of central bank, the monetary policy
has taken out of politicians’ hands.65 However, if imperfect market is implied as
imperfect state66, then, the state has to be strong to remain free the economy.67 In this
55
Gamble. 1.
56
Gamble. 3.
57
Gamble. 5.
58
Gamble. 6-7.
59
Burnham. 10.
60
Hükümet- Merkez Çelişti.
61
Eğilmez. (2006).
62
Eğilmez. (2001).
63
Gamble. 7.
64
Gamble. 7-8.
65
Gamble. 7.
66
Gamble. 13.
67
Gamble.15.
 7

manner, exclusionary technocratic decision making styles emerge68 [in terms of Cox’s
arguments]69. Major economic policy decisions was left into ‘the hands of a small number
of highly educated bureaucrats’, which has graduate degree in fields such as economics
or public administration from U. S. universities, as it was in Mexico and Argentina.70
This homogenous technocratic team has similar recruitment paths and training and is
insulated from intra and extra state pressures.71 Exemplary, Derviş, who was a technocrat
in WB, indicated he suggested independence of CBRT to Ecevit Government, but he was
disapproved.72 However, after the independence of CBRT, he was consecrated73. Also,
Durmuş Yılmaz, Governor of CBRT, was one of the bureaucrats in CBRT. 74 He got
undergraduate education in England.75 Some technocrats in CBRT manifested Yılmaz is
good technician in economics who does not interfere politics with economics.76 As being
a technocrat, one group accepted this fact will sustain continuum of CBRT policies, such
as price stability and combat against inflation.77 However, another group argued
insulation of economy from politics has not been maintained yet since AKP government
was accused of attaining people close to it and banishing people skilled in the job.78
While accepting the autonomy of the state from society, this group adduced AKP
assumes anything goes to seize the state.79

Since power is decentralized in liberal society through protection of private

80
property rights under constitution, private corporations gain authority over workers.
Public policy is subordinated to dominant elements in civil society, corporations and
investors, by quasi- constitutional international agreements as well as changes in
constitutional structures.81 Cox asserts ‘power has shifted away not from the state but

68
Teichman. 32.
69
Polillo& Guillén. 1766.
70
Teichman. 32.
71
Teichman. 32.
72
Merkez bağımsız olsun dedim, ‘Deli misin?’ dediler.
73
Merkez bağımsız olsun dedim, ‘Deli misin?’ dediler.
74
Merkez’in yeni patron Yılmaz.
75
Merkez’in yeni patron Yılmaz.
76
Paranın yeni patronu Dursun Yılmaz oldu.
77
Tüzmen: Merkez Bankası da bize uymak zorundadır.
78
Sağlar.
79
Sağlar.
80
Gill. 60.
81
Gill. 60.
 8

within the state, i.e. from industry or labor ministries towards economy ministries and
central banks’82, which indicates ‘internationalization of state’.83 A new social order has
emerged: an order with social and spatial concentration of affluence and poverty.84
Nowadays, government reassesses moving CBRT to Istanbul, capital of finance and
private sector 85(maybe in order to privatize it).86 Some group of people is disinclined by
quota and special taxes not to migrate to Istanbul while some people have to migrate.87 I
think this explains the logic of neoliberalism.

Significance of Supranational and International Organizations for Independence of

CBRT:

We have experienced pressure from supranational or transnational organizations

that are determinative for politicians while deciding upon macroeconomic policies. I
believe these pressures are not just and democratic since social demands of Turkish
citizens are repressed; even ‘necessity’ is claimed for economic transition, development
and general welfare. Independence of CBRT is crucial to carry out the American led-
hegemonic system of liberalizing capitalism.88

Cerny asserts ‘domestically appointed bureaucrats’ are concerned about interests

of their main sectoral constituencies and ‘transnationally linked economic interests’.89
90
They are trapped in ‘transgovernmental networks around specific issue areas’. It occurs
in institutions, such as independent central banks, where they are ‘insulated from direct
political pressures or where a relevant/ relatively autonomous domestic policy network or
epistemic community exists to support transnationally innovative approaches.91
Buchanan, from Goldman Sachs& Co, specified Yılmaz should approve to financial

82
Polillo& Guillén. 1766.
83
Burnham. 13.
84
Gill.62.
85
C. Özkan.
86
Ertem.
87
C. Özkan.
88
Gill. 61
89
Cerny. 402.
90
Cerny. 402.
91
Cerny. 402.
 9

markets that he will be independent from government by not letting interest rates to fall
and deadening currency unit92.

Besides elected officeholders, bureaucrats and nonofficeholding actors, global

financial markets and international financial institutions attend in policy making.93
‘Deregulation, liberalization and the emergence of an embedded financial orthodoxy’ in
policy making is carried out by economic globalization resulting from growth of
international capital flows, cross- border price sensitivity, and technological innovation.94
Hence, macroeconomic policy, including ‘fiscal, interest rate setting, money supply
control, and other measures to fine- tune the domestic economy’, is adjusted to
95
international and transnational processes, investors, economic institutions etc. In terms
of intensity of trade transactions, states will be eager for formalized conformity within the
network.96 Entrance into EU is among goals of Turkey. That’s why; combat against
inflation and price stability are preferential goals of independent CBRT to be accepted 97
into a unified EU as opposed to arbitrary government policies.98

Since 1940s, IMF has been in favor of central bank independence.99 It assists
countries with their balance of payments problems.100 This is because high inflation and
mounting trade and fiscal deficits threat economic and financial globalization101, which
erode the value of capital or assets.102 A high degree of institutional convergence is
necessitated for global markets to operate successfully.103 To maintain their status and
secure legitimacy, states are pushed to adopt ‘practices or structures espoused by
organizations [such as IMF, WB, WTO or EU] on which they are dependent’.104 It is
called as ‘isomorphic organizational change’ which consists of ‘coercive, normative, and
92
Türkiye’nin yeni merkez bankası müdüründen sıkı mali politika sözü.
93
Cerny. 402.
94
Cerny. 402.
95
Cerny. 404.
96
Polillo& Guillén. 1777.
97
Gürsel.
98
Kozanoğlu.
99
Polillo& Guillén. 1767.
100
Polillo& Guillén. 1767.
101
Polillo& Guillén. 1768-69.
102
Gill. 56.
103
Polillo& Guillén. 1769.
104
Polillo& Guillén. 1772.
 10

mimetic mechanisms’.105 Kozanoğlu106 asserts CBRT is expected to maintain price

stability and low inflation as against to growth and employment by IMF and international
finance.

‘Conditionality terms’ in IMF- borrower agreements emerge as ‘country

commitments to reach certain targets or to implement institutional reforms’.107 Besides, it
becomes more dependent on IMF loans and more likely to imitate formal structures/
practices to prove its ‘credibility’108 and attract more FDI.109 In this respect, Southeast
European Times110 declared new Governor of CBRT, Yılmaz, promised to conform to
commitments about tight finance policies in an economic program, with an amount of 10
million dollars, with IMF.

Significance of Global Financial Markets for Independence of CBRT:

Individual rights within civil society are much more apparent today due to
benefits of globalizing elites and global flow of capital. In this vein, organization of state
and independence of central bank is necessitated. On the one hand, it is proposed Foreign
Direct Investment (FDI) is necessary for economic growth and development. On the
other, macroeconomic policies benefiting FDI damage life standards and rights of people.

Policy process and domestic socioeconomic categories become less hierarchical

and bureaucratic and more market and network like.111 Web of governance is articulated
through a complex of public and private process rooted in markets and networks, such as
112
global finance. Besides, government officials initiate marketizing regulatory schemes
‘in order to benefit from greater international openness’.113 Also, they are pushed by
rapid growth of international capital mobility, cross border price sensitivity etc. engaged
105
Polillo& Guillén. 1772.
106
Kozanoğlu.
107
Polillo& Guillén. 1775.
108
Polillo& Guillén. 1778.
109
Polillo& Guillén. 1776.
110
Türkiye’nin yeni merkez bankası müdüründen sıkı mali politika sözü.
111
Cerny. 398.
112
Cerny. 398.
113
Cerny. 404.
 11

in by private sector actors for trade liberalization. 114 Central banks perceive their roles as
‘an attempt to lead/ respond to international market conditions, privileging such criteria
as market confidence and stabilization.115 In this respect, during the ambiguity
considering assignment of governor to CBRT in 2006, it was noted foreign investors
chafed since they believed stock- exchange market would not function properly, in
relation to falling interest rates, in the case of lack of independence of CBRT. 116 Then,
assignment of Yılmaz as governor put financial markets at ease.117 Bond, Group
Chairman of HSBC Holdings Plc, manifested Turkey moved upwards in relation to
independence of CBRT with rising economy.118 Since Turkey has the highest real interest
rates, more hot money is waited.119

They are guarantees for foreign investors.120 But, organized labor and welfare
state are sacrificed for growing structural and relational power of more mobile sectors of
international capital.121 FDI necessitates low inflation, high interest rates etc. in a tight
monetary policy not to lose value of its capital; otherwise, hot money will leave
country.122 Independent CBRT, insulated from politics, is supported in spite of Latin
America experiences.123 Additionally, Akgüç proposes while foreign capital finances
current account deficit, it heightens foreign liability.124

From whom the CBRT is independent?

We can say economy is not insulated from politics in Turkey. This is because
social reality cannot be fragmented. Individuals cannot be extracted from social context
and cannot be treated as a source of value in itself. Rather, society is a whole with its all
contents. We can assume independent CBRT is legitimization of neoliberal policies and
114
Cerny. 404.
115
Cerny. 406.
116
Dünyanın çivisi çıkıyor!..
117
Türkiye’nin yeni Merkez Bankası müdüründen sıkı mali politika sözü.
118
F. Özkan.
119
Sıcak para faizi sevdi.
120
Polillo& Guillén. 1769.
121
Cerny. 407.
122
Kozanoğlu.
123
Kozanoğlu.
124
Akgüç.
 12

interest groups. Besides, AKP still influences CBRT’s new economy policies to attract
more FDI as opposed to current account deficit financing, considering arguments on
move of CBRT to Istanbul as finance capital.125

While concluding, we should ask ‘from whom CBRT is independent?’ Cerny

touches upon ‘democratic deficits of global governance’ in the wake of
institutionalization of transnational decision-making processes.126 Besides, Kozanoğlu127
argues CBRT is independent from government, demands and choice of people since
liberal economy detaches economy from politics, social requirements, production,
employment, food demands, ‘social security’128 etc. and imposes it as unquestionable
discipline. Since we cannot interfere, they escape from accountability to government and
people indirectly129.

125
Ertem.
126
Cerny. 397.
127
Kozanoğlu.
128
Ertem.
129
Kozanoğlu.