THE resignation of Minister Albayrak played havoc with financial markets for almost a day although the lira gained value a bit. However, this had nothing to do with the resignation per se, or so I think. It had more to do with global markets and the news that the new CBRT Governor could raise the policy rate. It may have something to do with the supply of FX but we don’t see that yet. Anyway, it wasn’t clear at first whether the resignation was genuine, or his account had been hacked. Also it wasn’t clear if the resignation would be accepted. Finally, whether he resigned or he was kindly asked to vacate the chair was (is) still unknown. Whether the resignation is a signal of a wider change in the cabinet or if it has anything to do with the U.S. elections is also unclear. So, three days into the week nothing is or was crystal-clear when I penned this column. A new minister has been appointed but that’s about it.

Under the cloudy sky, a huge domain of games and gaming opens up, and the media will definitely pursue this path for some time to come. We are accustomed to being extremely cautious because more often than not nothing is what it looks like. This isn’t what Marx wrote about science: that science wouldn’t be needed should observable phenomena be explained by observable phenomena alone. This admittedly carries a taint of 19th Century essentialism – that the essence of things had to be extracted from the empirical surface, but what I mean here is entirely different. It is about media, games, gaming, simulations and simulacra. Most of them are 21st Century novelties whose mathematical origins go back to the early 1970 developments of game theory. Since we are not in the business of explaining game theory, I only refer to Shubik and continue on.

GAMING AND SIMULATIONS

According to Martin Shubik (1971), all games are simulations; but not all simulations are games in the game-theoretic sense. Gaming is a larger category; it is about both. It may be amenable to game-theoretic analysis – meaning there are many strategically important players – or it can be set in motion only by a single prime mover of far greater simplicity – a simulation. In a sense a simulation is something like a control (engineering) problem – one master player only – but it can also be a dynamic game – with many strategic players. In a gaming exercise individuals may be ‘employed’ so they act either as themselves or they can be molded so they play preconceived simulated roles merely as if in a theatre. If there is genuine interaction between actors having comparable degrees of freedom and power, the situation calls for decision-making, i.e. game theory. Even though genuine actors are frequently analyzed as rational automata – clearly a fiction of some sort and involves simulation, they aren’t set in motion by a simulation run by a single center. If there is one authority and one alone, there is no game and no need for game theory. Therefore no strategic decision- making is involved in any decision. It is just a control problem or it is merely a simulation if we use Shubik’s terminology. Because Nash-automata aren’t simulated robots; they have equal power and similar information with respect to other players.

What we don’t know in this polity is to which degree people act rationally – and are decision-makers on their own – and to what extent they simulate because a simulator is already set in motion. This is why façades can be all that people have to build with, the real stuff o political construction being unknown. So, what has really happened? Is this an inflexion point? Is this a move to better cope with the Biden administration? Is this a precaution to prevent – undesired – early elections? Is this a recognition that political popularity is fading? Does this mean that macroeconomic policies of yesteryear have at long last been judged a failure by the political authority? The graphics displaying the shares of non-residents in the bond and equity markets and their net sales over the last 12 months reveal the nature of the failure. Unless one imposes capital controls and openly declares a policy of financial repression, one has to be willing to reverse the situation depicted therein.

GAMES AND SIMULACRA

I don’t sympathize with political imagery that doesn’t explain much and dislike ideological templates that don’t help explain anything. Also some myths have explanatory power but some generate more heat than light. If they don’t shed light they can only instill further uncertainties to an already blurred picture. Faces saving elusive attitudes are also pretty useless at the moment. They are all about creating simulacra, and can’t even help run simulations, let alone construe genuine political games. On the contrary, what we need are players who play rationally, revealing full information. Putin is one such player and he gained the upper hand recently in what seems to be a tactical victory in the Caucasus. Real play is needed, not diversion.

WHAT WOULD A REAL MONETARY GAME BE LIKE?

First, I would expect a steep rise in the policy rate, plain and simple. I would opt for 300 bps as a first step. Second I would also expect a complete reversal in many policies, domestic or international. Biden may force that kind of change anyway. If not, then we have a problem. Because the economic crisis is now deeply felt by at least three-quarters of the population, the incumbent party can’t operate as usual, i.e. can’t be in a state of denial and can’t call for early elections unless perceptions change. This is so because even AKP voters think the economic outlook is bad. For perceptions to change, however, something really important should happen: one would call it a game changer. So I predict that if nothing is done, the CHP, IYIP and the others – opposition tout court – will rise again. Whether the opposition will win the elections or not is altogether a different matter, but currently the incumbent party is out of steam both ideologically and politically: this much is apparent. The general perception is one of economic management failure. All parties concerned see that now – here and there.

ECONOMIC GAMES AND ELECTIONS

Because all ammunition has already been spent, there is no palliative move left that can delay the problem. Resorting to reserves is impossible because none exist. Cutting rates in an out-of-equilibrium belief universe so people buy homes etc. can’t be repeated either. Thus, things will have to change. They will change because unless facts change, perceptions of them can’t change anymore. This time around there has to be something real that needs be done and done swiftly. This is all theory. In practice the questions are: who will pay the political price for exchange rate depreciation? Who will be held responsible for the spent reserves, for the potentially spiraling inflation, for the incoming stagnation, for the unemployment that has hit the sky, for the soaring external deficit, and what not? This is a good deal of what is about elections: winners are either those who cleverly avoid being blamed in the case of a calamity or those who convincingly promise better days.

POLITICAL GAMES

A new game has started with simulacra employed constantly to hide the real game. The game is about which political divide the opposition will force – or fronts, parties, lines, ideologies and suchlike. Which political fault line will pay the price of the deep politico-economic, ideological and even cultural crisis in-the-making? It may still fall short of a full-fledged crisis if Ankara acts quickly but if nothing is done, with the current alignments, AKP may easily lose any upcoming election. Hence, the necessity to translate the (move the entire) political surface is urgent for the incumbent party more than it is for the opposition. It is also mandatory to recast the political mapping (function) that relates economic hardships to political scores because otherwise no incumbent can win.

We ought to observe something equally important that is in the making these days. There are factions in every party; all parties and ideological fronts display centrifugal forces more than ever in the last two decades. Will İYİP, SP, CHP, HDP or AKP and MHP lose steam first – MPs and support of the local elites – or the incumbent party? The opposition look at DEVA and Gelecek’s performance because that might cause AKP great headaches in the polls and in the organization, and AKP looks at or for similar developments within the opposition parties. This is very important because if a bloc shatters first, then there may be what political science calls snowball or bandwagon effects. Politics is also about guessing the winner, and within party factions understand that quite quickly.