Politics, society and financial liberalization: Turkey in the 1990s

Abstract

This article focuses on the political economy of Turkey in the 1990s toillustrate the importance of analysing economic variables that intersect withthe quality of political democracy. In 1989, the debt-ridden state moved tosystematically and completely deregulate Turkey's financial markets. Togetherwith the ongoing processes of liberalizing commodity markets and integratingwith global capital markets, financial liberalization was expected to achievefiscal and monetary stability, stimulate business confidence to invest in pro-ductive sectors, produce stable growth, encourage privatization and controlinflation. However, the new hegemony of the capital markets has gone hand-in-hand with deteriorating macroeconomic performance, a worsening incomedistribution, the discrediting of politics and its isolation from society. Theauthors examine several key dynamics which are helping to legitimate theneoliberal agenda of the 1990s. These include the distribution of state largesseto manipulate electoral capitalism; the rise of an informal sector in the`Anatolian Tigers'; promotion of the seductive attractions of the market;and an antipolitical reform populism adopted by political actors to exploitpopular disillusionment with the political system.