Latin America, Turkey and a new development paradigm

President Recep Tayyip Erdoğan's recent visit to Latin America, covering Colombia, Cuba and Mexico, is not an ordinary official trip. It unfolds the clues of a new development perspective for the developing countries that are mainly located in the south and east of the world.

We need to go back to the early 1980s in order to understand Mexico and the Mexican Peso Crisis. During the 1980s, the world financial system encountered a major crisis that gave its first signals in 1973, but the problem had been eliminated with makeshift accumulations, such as petrodollars, until then. What was adopted as a last resort was to abandon statist practices and to drive up falling profit rates by transferring public capital accumulations to private monopolies on the cheap. Within this framework, neoliberal policies were introduced by Margaret Thatcher in the U.K. and Ronald Reagan in the U.S. The process, which followed an intense wave of privatization, was named "Thatcherism" in the U.K., while it was called "Supply-side economics" in the U.S.

The same period experienced coups and fascist military processes in developing countries and regions such as Turkey and Latin America. One of the leading actors of this dark period was then U.S. Federal Reserve Chairman Paul Volcker. Countries, particularly developing ones, know Volcker for his policies that were mainly based on inflation targeting. These policies led to debt crises in the 1990s and, all developing countries, from Mexico to Turkey, were once again forced to confront a crisis that was triggered by the West. It should be noted that Volcker did not care about curbing inflation for the sake of the poor.

Volcker did not change his mind when he took up the presidency of the Federal Reserve. Just to increase the profits of monopolies, Volcker turned the control of money supply into the principal axis of monetary policy. The real interest rates changed for the positive for the first time in 1973 and Volcker managed to push up interest rates to 17 percent, as the falling profit rates could merely be compensated with the financialization that would accompany the interest. Thanks to Volcker's tight monetary policies and rising interest rates, as well as the tax rates that were rapidly dropped by Reagan in favor of monopolies, the monopolistic system in the U.S. was given "the water of life" and crisis's cracks were smoothed over.

So, what happened next? Production fell sharply, while unemployment reached unprecedented levels for 10 years since 1945, constituting the main dynamic of the current crisis. The dollar rose in value and the U.S. had huge public deficits in various fields, including current accounts, savings and investments. However, these were financed with the dollar that was provided by the U.S. war industry and demand for the U.S. treasury securities. The valuable dollar and higher interest rates meant southerners and easterners would suffer from more bloodshed. After all, Volcker failed to prevent inflation in the real sense and he planted the seeds of a deep systematic crisis. The roots of this crisis dates back to the mercantilist plunder and exploitation that was initiated by the Spanish in the early 16th century. The economies, underground and aboveground resources and human capitals of Latin American countries were delivered for Western exploitation. Simon Bolivar, Jose Marti, Pancho Villa, Emiliano Zapata and Fidel Castro were the insubordinate figures that rebelled against the cruel and greedy order that started with Spanish occupation and exploitation and continued with European and American neocolonialism.

At the Mexican Presidential Palace, there is an awesome mural of famous Mexican painter Diego Rivera, featuring all this exploitation and oppression. In this mural, Rivera also portrayed his wife, Frida Kahlo, who was as famous as him. He depicted Karl Marx at the top of picture with "Capital" in his hand. This picture was drawn after reformist Alvero Obregon was elected president in 1921, as Rivera could return to Mexico only after Obregon took presidency. He clearly depicted his worldview and ideology in a very open way. This picture also reflects the history of Latin America as well as plundering Spanish soldiers, brutally murdered locals, inquisitions, the gold that was loaded on ships, popular resistance, the political leaders of that resistance and the sun that rises over Latin America from a reverse direction. Figuratively speaking, the sun has always risen over Mexico from the reverse direction since Rivera depicted it in his splendid masterpiece. Any of the presidents who came to the 500-year-old Mexican presidential palace have not attempted to remove this mural regardless of which worldview they adopted, allowing it to survive up until now. Actually, Rivera was telling the truth. Even though all governments have strived to turn the tide in favor of their people, and rebellious figures such as Zapata and Villa sacrificed their lives for this cause, they could not go beyond making a painter picture Western exploitation on the wall of presidential palace.

Today, Mexico is a country that is growing rapidly because it is close to the U.S. and has an open market and natural resources. The North American Free Trade Agreement (NAFTA) and the free trade agreement signed with the EU are also an advantage for the country. However, it cannot resolve inequality in income distribution. It produces poverty as it grows, as it is being ruled by governments that accept neoliberal polices as the sole and absolute truth.

Mexican President Enrique Pena Nieto is seeking new ways of preventing poverty and inequality in income distribution that triggers poverty further. Nieto's Institutional Revolutionary Party (PRI), which ruled the country for 70 years, is a party that endeavors first to institutionalize statist policies and then neoliberal policies. (Contrary to popular belief, these two concepts are not incompatible, but they follow and nourish each other). At the moment, however, Nieto and his party, partly because of Zapatistas' rebellion, is seeking new trends to remove the inequality in income distribution and regional disparities and bring stable growth. The same situation goes for Colombia. This quest makes Erdoğan a focal point in both countries. In Turkey, Erdoğan managed to partly relieve Turkey from neoliberal policies by not making a deal with the IMF in 2008.

This new approach is based on sharing what is collectively produced. Firstly, the West seized the south's scarce mines, and then it carried out the Industrial Revolution with this accumulation, creating its unearned technological income. Until very recently, the world economy had been formed on this. However, with the new century, the East has begun utilizing its own resources, creating its technology and it took back the technological gains that it lost to the West. Now, what is valuable is not the scarce "things," but rather what is shared most. The more you share something, and the more you make it global, the more you win. This understanding creates a new middle stratum, a new capital strength and accumulation of knowledge in the poor countries of the past. The capital, which increased with blood in the past, is not as powerful as it had previously been. Now, the leaders of the world's poor countries know what needs to be done when they come to power.