One of the critical turning points in the history of 20th-century world economics was the oil shocks of the 1970s. These shocks had a huge impact on the world economy. Firstly, the coexistence of cost-driven inflation and unemployment in Western economies occurred as a result of the macroeconomic conditions created by these shocks. Secondly, the debt crisis in developing countries, a derivative of these shocks, was another problem stemming from them. The solution to this problem, particularly evident in Latin American countries, was delayed until the 1980s. While the world was experiencing these events, the economic difficulties that contemporary politicians sometimes mention in order to criticize the political administrations of those days largely stemmed from these shocks.
The first of these shocks was the war between the Arabs and Israel in the Middle East during 1973-1974, and the subsequent formation of OPEC, a cartel of oil-exporting Arab countries, which imposed restrictions on world oil production. The second shock occurred in 1979-1980, again originating in the Middle East, as a result of the Iranian Islamic Revolution. Both of these shocks led to a shift in the established norms that dominated the post-World War II world. They altered our prevailing economic thinking and values, ushering in a new "paradigm" in economics.
The devastation caused by the World War left countries facing a severe supply shortage, a situation that significantly shaped our post-war economic understanding. Accordingly, the way to close this supply gap was to increase production in all areas, and to do this, it was thought necessary to increase the fixed capital stock that had been destroyed and/or damaged in the war. During this period, the dominant thought was that countries' priorities in the economy were industrialization and achieving the necessary capital accumulation at any cost. Industry was seen as the source of prosperity in economies, while capital accumulation was the most important source of growth. Within this framework, developing countries and those facing development problems were also advised to industrialize. To achieve this, they were advised to enter a rapid capital accumulation process. These countries, exceeding the limits of their already extremely scarce financial resources, entered a race to accumulate capital. Naturally, this understanding necessitated the active participation of the state in this process. It is useful to consider the statism and public ownership ideas, which were popular in our country during this period, in this context.
Of course, in an environment with a supply shortage, there was no problem finding demand for any good, regardless of the cost of production. However, from the late 1960s onwards, the post-war supply shortages in the world closed, and the sale of produced goods became a problem. Naturally, when demand became a constraint, the cost of production and the marketability of the goods gained importance. The aforementioned oil shocks accelerated this process, bringing an end to the old paradigm. Energy-saving practices in production and the shift towards alternative energy sources emerged as a result of these shocks.
The new paradigm began to rise worldwide from the 1980s onwards. This paradigm, which we call neoliberalism today, rejects statism and public ownership, and instead gives the market a dominant role in the management of the economy. As a result of this understanding, capital stock and production capacity were evaluated according to the criterion of international competitiveness, and capital stock that did not meet this criterion was liquidated. The state, as a producer, was not defined to have a role in capital accumulation. Its own capital stock was also privatized. This neoliberalism, which began its rise in the early 1980s, reached its peak with globalization in the 1990s. When examining the sources of economic growth, the idea that capital accumulation is no longer the sole source, as it once was, has become generally accepted. Alongside technology and innovation, institutional quality, good education, equitable distribution, and democracy have now become sources of successful economic performance.
All these new findings in economic research have led to the gradual weakening of the neoliberal paradigm. This is because it has become clear that these conditions, which constitute the conditions for growth and good macroeconomic performance, cannot be achieved through the disadvantages of the market mechanism. Therefore, in the 21st century, a new form of public ownership and statism has begun to rise, one that will lead the creation of these conditions and, when necessary, actively participate in these processes.
More than 45 years after previous shocks, the Middle East has given rise to a new crisis and economic shock. It seems we will need more time to fully assess the effects of this crisis. However, initial assessments are not very encouraging. The economic damage this crisis will cause to the global economy will necessitate a change in our economic perspective to find a way out of this situation. Therefore, I believe that the transformation that has already begun in economics will accelerate, and consequently, a "new statism" will rise, unlike in the past. The fact that an undesirable and immoral event like war has at least served as a catalyst for such a positive transformation would be our only consolation.
