Beyond Inflation in Turkey: A Civilizational Contradiction and the Economic Vicious Circle

Turkey has long struggled with severe inflation. This problem should not be viewed merely as a technical macroeconomic variable reflecting increases in the general price level.

Turkey's inflation experience has exhibited distinct historical turning points across different periods. Historical series compiled by the World Bank from IMF data show that annual consumer inflation generally remained in single digits during the 1960s. However, a marked acceleration emerged during the second half of the 1970s.

Inflation reached 115.6% in 1980. Throughout the 1990s, inflation largely remained within the 60–90% range and rose to triple digits in 1994, reaching 104.5%.

Following the stabilization programs implemented after 2001, inflation declined significantly, falling to 9.3% in 2004, 7.7% in 2005, 6.5% in 2009, and 6.4% in 2010. However, it subsequently resumed an upward trajectory. According to Turkish Statistical Institute data, annual consumer inflation reached 36.08% in 2021, 64.27% in 2022, 64.77% in 2023, and 44.38% at the end of 2024.

This historical pattern suggests that high inflation in Turkey is not a temporary phenomenon confined to particular periods. Rather, it appears to be a structural characteristic that has been repeatedly reproduced under different historical and institutional conditions.

The Historical and Structural Dynamics of Inflation

Turkey's historical experience reveals a striking simultaneity between periods of heightened political tension and episodes of high inflation. The late 1970s, the 1990s, the 2001 crisis, and the exchange-rate shocks of recent years all illustrate how periods of increasing political and institutional uncertainty have coincided with elevated inflation. Political tensions create conditions that intensify inflationary pressures through exchange-rate volatility, risk perceptions, expectations, and declining institutional predictability.

High and chronic inflation distorts income distribution, deepens social inequalities, and weakens the long-term functioning of economic life. Deterioration in income distribution is not only a consequence of inflation but also one of the powerful structural forces that reproduce it. In other words, a self-reinforcing vicious circle emerges.

Breaking this vicious circle requires economic policies to be approached holistically. However, a holistic approach to economic policy involves much more than merely coordinating monetary and fiscal policies.

The neoliberal perspective tends to interpret the economy primarily through technical indicators such as interest rates, exchange-rate movements, budget figures, current-account balances, and similar variables. This approach often relegates the institutional and social structures underlying economic outcomes to a secondary position. Statistical indicators do not represent economic life itself but rather its outcomes. Behind these indicators lie law, politics, power relations, historical processes, sociological structures, and consequently cultural factors.

Economic life is ultimately a result of how a society organizes itself. The idea that economic relations cannot be understood independently of social relations has long been discussed in the literature of political economy and economic sociology. In this context, the rule of law and the healthy functioning of the legal system constitute fundamental preconditions for sustainable economic life. The decisive influence of institutions on economic performance has been extensively examined in the institutional economics literature. Yet the key question is not merely whether law exists. The question is: what kind of law?

Similarly, the ability of politics to create a foundation for agreement and compromise is among the fundamental factors shaping economic life. In environments characterized by high political instability and weak cultures of consensus, it becomes increasingly difficult—and under some circumstances impossible—for economic actors to develop long-term strategies. Here again, the question remains unchanged: what kind of political order?

The education system is among the long-term determinants of economic development. The quality of human capital, the capacity for technological advancement, the ability to generate innovation, and the process of institutional transformation are all directly connected to education. Yet once more the same question arises: what kind of education?

A similar issue applies to constitutional structures. In societies with strong institutions, constitutions are not documents that continuously dominate political life and remain permanently at the center of public debate. In Turkey, however, constitutional discussions persistently occupy the political agenda. The real question is not whether a new constitution should be written. The question is what kind of constitution can emerge within a particular legal and political environment, guided by a particular philosophy, and drafted by people educated within a particular intellectual tradition. What kinds of constitutional arrangements are made possible by the historical legal, political, educational, social, and cultural structures that exist?

Civilizational Contradictions and the Problem of Institutional Coordination

For Turkey, religion cannot be excluded from the discussion. Turkey is among the societies where religion exerts a powerful influence on social and political life. However, this situation is by no means unique to Turkey. In many societies around the world, religion continues to play a significant role in shaping social and political life.

In this study, a civilizational contradiction is understood as a coordination problem arising from the continuous redefinition of a society's legal, political, educational, and cultural norms among competing civilizational orientations. The contradiction does not simply refer to cultural differences. Rather, it highlights disruptions in society's capacity to generate common institutional reference points.

While Islam shares certain similarities with Judaism, it also contains variables that differ significantly from the historical transformation processes experienced by Christianity. These differences have important implications for the nature of the relationship between law, politics, and social life.

For approximately two centuries, Turkey has experienced a historical process characterized by movement between different civilizational orientations. From the reforms initiated under Mahmud II to the Tanzimat period, from the First and Second Constitutional eras to the founding of the Republic, from the interventions of 1960, 1971, and 1980 to the rise of the AKP to power in 2002, and extending to contemporary developments aimed at restricting—or even functionally neutralizing—the political influence of the CHP, these events do not constitute isolated political episodes.

Rather, they represent long-term historical struggles over the political, legal, cultural, and civilizational direction that Turkey should follow. Various studies have demonstrated that Turkey's modernization process has been shaped by enduring tensions between state and society and between center and periphery.

The literature also recognizes that modernization is not a linear process and that different societies may follow different historical paths. Within a comparative civilizational framework, the long-term sustainability of civilizations can be evaluated through dimensions such as generative capacity, cumulative continuity, institutionalization, transmission capacity, and adaptability. In Turkey's case, the problem may not be the absence of these qualities but the repeated disruption of coordination among them by constantly shifting historical processes.

Turkey's Institutional Zigzags

The foundations of Turkey's dysfunctional economic structure should not be sought solely in misguided interest-rate policies, budgetary choices, or exchange-rate management errors. These foundations lie within historical ruptures that possess a civilizational and cultural dimension.

For nearly two centuries, Turkey has followed a zigzagging path in law, politics, education, constitutional arrangements, and the broader cultural life shaped by all these elements. These zigzags continually reproduce themselves in economic life as well.

In some societies, political ruptures have not entirely destroyed civilizational continuity. In the case of China, political fragmentation or regime changes have often failed to completely interrupt cultural and institutional continuity. In Turkey, by contrast, political transformations have frequently led to the redefinition of legal, educational, and cultural orientations.

Much of economic debate revolves around interest rates, reserve levels, budget deficits, exchange-rate movements, and inflation figures. Yet a deeper and more decisive process unfolds simultaneously.

Judicial independence and the separation of powers remain subjects of constant debate. Institutional predictability is weak. The constitution remains a document under continuous reconsideration. The space for political competition is gradually narrowing. A culture of compromise has almost disappeared. The education system repeatedly changes direction.

Economic actors face uncertainty regarding the future of the system. This uncertainty stems not only from present economic conditions but also from expectations concerning future institutional arrangements. Economic actors are compelled to price the possibility that tomorrow's rules may not be the same as today's.

In Turkey, social groups inclined to move in fundamentally opposite directions have struggled to create a cultural unity capable of generating shared values. Every society experiences disagreements regarding law, politics, education, or cultural life. Such disagreements are normal.

In Turkey, however, the divergence occurs at a much deeper level.

Turkey can historically be described as possessing a synthesizing character. Its ability to bring together diverse cultural, political, and civilizational elements has created important advantages. Yet when a durable consensus around common institutional norms cannot be produced, the same characteristic may also generate institutional zigzags and coordination problems.

Many societies disagree over the chapter titles of the same book. In Turkey, the divergence occurs at a more fundamental level. Different social groups often fail to agree even on the subject matter of the same book. The issue, therefore, is not merely disagreement. The issue is the inability to produce a common intellectual ground.

Shifts in direction within law, politics, education, constitutional arrangements, and cultural life continuously generate disruptions within the economic structure as well.

Income-distribution distortions that emerge under conditions characterized by intense power struggles not only make it difficult to reduce inflation but also transform inequality itself into one of inflation's powerful structural causes. For this reason, the concept of low inflation must also be defined correctly.

What Is Low Inflation?

Low inflation does not mean single-digit inflation. Low inflation generally refers to price increases in the range of approximately 2–2.5%. By contrast, inflation rates rising to 3% or 4% are often levels at which policymakers in many advanced economies begin to consider intervention.

Turkey managed to reduce inflation to approximately 6–8% during the early 2010s. Yet inflation at these levels would have been regarded as sufficiently high to warrant urgent policy responses in many countries during the Covid-19 period. Although Turkey has occasionally reduced inflation, it has never truly achieved conditions consistent with low inflation.

Today, apart from Argentina, many developing countries live with inflation rates ranging between 4% and 7%. These countries may also experience serious political and social problems. Their education systems may suffer from significant weaknesses. Their legal systems may function imperfectly. Some may benefit from natural-resource advantages.

Societies experiencing civilizational contradictions may develop different economic problems. Nevertheless, because each country's historical, social, and political dynamics are unique, the causes and consequences of these problems require country-specific analysis.

Social Stability Before Price Stability

For Turkey, the fundamental question is not how inflation can be reduced. The question lies much deeper. Can Turkey become a low-inflation country while remaining trapped within the historical, cultural, political, and civilizational contradictions described above?

Turkey's inflation problem cannot be understood through the neoliberal tendency to reduce the economy to technical variables such as interest rates, exchange rates, budgets, and similar indicators. The issue exists at a much deeper level. The real question concerns the common legal, political, and cultural foundation upon which society will reorganize itself. This perspective is consistent with the view that economic performance is not solely the product of technical policy instruments but also of institutional and social order.

Lasting price stability is not an outcome that technical policy instruments alone can produce. Lasting price stability emerges as a consequence of social stability.