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played very celarly his deep conviction that cultural beliefs embedded inexisting institutions direct the process of organizational innovation andadoption, as well as cultural and social evolution. He asked the delegatesof the Republican Party: "Is it possible to cali a group of people a 'Civilisednation' if they let themselves be led by the nose by a herd of Şeyhs,Dedes, Seyyids, Çelebis, Babas and Emirs; if they entrust their destinyand their lives to chiromancers, magicians, dice-throwers and amulet sellers?Ought one to conserve in the Turkish State, in the Turkish Republic,elements and institutions such as those vvhich had for centuries given thenation the appearance of being other than it really vvas? Would one nottherevvith have committed the greatest, most irreparable error to the causeof progress and reavvakening?" 18 . Svveeping avvay outmoded religious institutionsand lavvs vvas, hovvever, only a first step in the cultural renevvalof Turkish society. Atatürk's main achievement vvas to persuade Turks toaccept the nevv secular values.Atatürk's radical cultural reforms that follovved the abolition of thecaliphate and their impact on Turkish society have been extensively analysedand evaluated by many historians. It has often been emphasized,that in this cultural transformation "the replacement of old, Islamic conceptionsof identity, authority, and loyalty by nevv conceptions of Europeanorigin vvas of fundamental importance" 19 . The impact of Atatürk's culturalreforms on the adaptive efficiency of Turkish society and theTurkish economy, in particular, has not yet been the subject of similarlyintensive research. In fact, the eminent and long-lasting impact ofAtatürk's cultural reforms turns out, in retrospect, to be disruption of thepath dependence of the old societal and economic system and boosting ofthe adaptive efficiency of these systems thus enabling them to cope successfullyvvith the shocks and changes that characterized the decadesvvhich have since passed.The first episode of the economic history of the Turkish Republicvvhich displays a high degree of adaptive efficiency is the introductionand the performance of the economic regime of etatism. World War I andthe War of independence had left the country economically in chaos, andthe Treaty of Lausanne constrained economic policy in such a vvay thatthe nevv republic did not gain full autonomy until 1929. The years 1923through 1929 thus became a period of reconstruction, modernization andinstitutional change in vvhich the government of Atatürk prepared for amodern development policy vvith industrialization as its backbone. TheGreat Depression of 1929 seriously compounded the country's economicproblems. Since Turkey vvas an exporter of primary commodities, the globaldepression caused a sharp deterioration in its external terms of trade.18. Turkish Republic, Ministry of Education (ed.), A Speech Delivered by Mustafa KemalAtatürk 1927. İstanbul: Ministry of Education Printing Plant, 1963, p. 739.19. Bernard Lewis, op. cit., p. 479.766