Spring 2016 1 UNDERSTANDING URBAN CHANGE IN ISTANBUL: FROM THE CAPITAL CITY TO THE CITY OF CAPITAL Baris Guven 1 Introduction Istanbul served as the capital city of the Ottoman Empire for more than four centuries. In the 19 th century, the expansion of European capitalism led Istanbul, among other cities, to emerge as a port-city where the different routes of trade intersected and a small-scale industry was established. The foundation of Turkish Republic in 1923 was a turning point for the city as the new ruling elite aimed to eliminate the city’s centuries-long political/economic domination and posed the new capital city, Ankara, as the new site for the centralization of power. Until the 1929 Great Depression, still had to operate its economy under the conditions of Lozan Peace Treaty, Turkish economy followed liberal polices. Experiencing the shock of the Great Depression and failed to see a significant economic progress in liberal years, Turkey chose, perhaps being the first periphery economy in the world economy, a very different direction to take in the 1930s: statist industrialization. The factories to produce the basic goods (particularly three whites; flour, sugar and textile) were established around the country. The transition to the multi- party system after the Second World War under the emergent US hegemony marked the shift in the regulation of the economy. In the 1950s, Turkey articulated to the world economy as an exporter of the wheat as the Korean War led to the rise in prices. The privatization of the state enterprises was aimed right after the WWII but never materialized under the pressing conditions as the cities started to expand. Even though Turkey did not enter WWII it was one of those countries that took the Marshall aid in the form tractors, signifying the new role in the world division of labor to which it was assigned. Therefore starting from 1950, cities but especially Istanbul became the hosts for the new migrants who willingly or unwillingly had to leave their original locations. Right after the military coup in 1960, Turkey transformed itself into what is called developmental state. Until 1980, the year in which second military coup took place, the five-year development plans were implemented to lead and direct the industrialization. Even though the whole period brought significant benefits for the working class, a significant polarizing tendency in terms of the concentration of productive capacity and population worked itself out. Istanbul was sucking the population and industrial capacity. Within fifteen years, from 1965 to 1980, the city’s population doubled, rising from 2.3 million to 4.75 million people. Another tendency was at work as well. The polarization of the population in terms of provision of housing was significant. The immigrants joining the working class had to build their own houses occupying the state-owned land, the result being a widespread phenomenon of gecekondus (built overnights).