Free Markets and Economic Performance: Experience of Turkiye in Recent Decades

There are basically two alternative models to organize economic activities and answer such fundamental questions as what, how, and for whom to produce: free market system based on individual decision making, and command system based on central planning. There has always been a friction and controversy between two types of mentalities in this regard: collectivist, statist, socialist mentality supported central planning, collectivist decision making, and government-controlled command economy. On the contrary, the individualist, capitalist, liberal mentality argued for free markets based on individual decision making where prices are determined by free interaction of market forces, i.e. supply and demand and the price mechanism. Even though the collapse of the socialist model showed the superiority of the free market system at a global level, many countries have difficulty to establish a truly free market system yet. In this context, this paper investigates Türkiye’s journey towards free market economy and performance of the Turkish economy in recent decades. The country has been struggling to switch from a centrally planned to a free market economy since the early 1980s. It was not a smooth process though: there have been ups and downs, U-turns, and fluctuations. Turkish experience shows that economic performance goes up when profree market policies are implemented whereas it goes down when statist, collectivist, anti-free market type of economic policies are adopted.