Politics, Society and Financial Liberalization: Turkey in the 1990s

ABSTRACT

This article focuses on the political economy of Turkey in the 1990s to illustrate the importance of analysing economic variables that intersect with the quality of political democracy. In 1989, the debt‐ridden state moved to systematically and completely deregulate Turkey's financial markets. Together with the ongoing processes of liberalizing commodity markets and integrating with global capital markets, financial liberalization was expected to achieve fiscal and monetary stability, stimulate business confidence to invest in productive sectors, produce stable growth, encourage privatization and control inflation. However, the new hegemony of the capital markets has gone hand‐in‐hand with deteriorating macroeconomic performance, a worsening income distribution, the discrediting of politics and its isolation from society. The authors examine several key dynamics which are helping to legitimate the neoliberal agenda of the 1990s. These include the distribution of state largesse to 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 exploit popular disillusionment with the political system.