The dual processes of the liberalization of trade and capital flow constitute globalization in its narrowly economic sense. On a broader perception, as Bourdieu remarks, this economic duality necessitated a programme for destroying collective structures which may impede the pure market logic. In order to sanctify the power of the markets in the name of economic efficiency, this “infernal machine” requires the elimination of administrative or political barriers which limit the owners of capital in their quest for maximization of individual profit, which, in turn has been upheld as the supreme indicator of rationality. Furthermore, Offe’s concept of “political capitalism”, which has no historical precedence in the West where market economy and democracy grew simultaneously, can be considered in this broader perception. Political capitalism where policies that are designed to liberalize the economy are also likely to produce frictions, inequalities, uncertainties and discontinuities, and are attempted in conditions of weak democratic legitimacy. The result is that democratic rights must be held back to allow for a healthy dose of original accumulation . These crucial explanations, which give clues for neoliberal restructuring of Turkey, open the way to examine negative effects of neoliberalism in Turkey.

Turkish adjustment path can be partitioned into two broad phases: 1981-1988 and 1989-1998. the main characteristic of the first phase is structural adjustment with export promotion albeit under a regulated foreign exchange system and controls on capital inflows over this period, both the exchange rate and direct export subsidies acted as main instruments for the promotion of exports and pursuit of macroeconomic stability. The period was also characterized by a severe suppression of wage incomes via hostile measures against organized labour. This classic mode of surplus creation reached its economic and political limits by 1988. Coupled with a new wave of populist pressures under approaching elections, organized labour succeeded in attaining significant increases in wages. It is quite critical that, despite a considerable increase in the real wages in1989, there was not a decline in the profits of capital. Conversely, by means of mark-up price policies, their profit was protected. The average rates of profits of private manufacturing sector rose to 39.6% between 1989-1993, and in 1994 it reached at a point of 47%. The main macroeconomic policy response to the increased wage costs and the culminating fiscal deficits was complete deregulation of financial markets.

With the advent of elimination of controls on foreign capital transactions and the declaration of convertibility of Turkish Lira in 1989, Turkey opened up its domestic asset markets to global financial competition. Through these periods, we firstly concentrate on fiscal gap, the macroeconomic disequilibria, which is the basic source for unequal income distribution and decline in welfare state politics. In the first phase, a substantial support for export manufacturing was granted which involved tax rebates, duty free import allowances and subsidized credit. Rising export earning and foreign dept accumulation entailed significant inner conflicts since foreign exchange was earned by the private sector and foreign debt servicing was carried by the public sector. Increased costs of debt financing constituted an important source of macroeconomic disequilibria. Within this period, a gap in the income distribution occured. Real wages in private manifacturing sector declined by 1.5%, in public sector by 5.9% per year between 1983-1987 whereas the income of capital owners increased by export promotions and tax rebates. The loss of tax revenues which were not taken from capitalists, became a further cost on the wage labourers and the state itself. By this way income distribution was shaped in favor of capital. This gap widened in the second phase. It is during the post-1988 era that a drastic deterioration of the fiscal balances took place in Turkey. Public sector borrowing requirement as a ratio of GDP averaged 4.5% during 1981-1988, but rose to 8.6 % for the 1989-1997 period. In 1970s and early 1980s, deficit financing through central bank advances was the predominant method. After a series of reforms, real interest rates rose to unprecedented levels. While borrowers struggled to adapt to exorbitant real rates on loans, financial institutions and rentiers adapted swiftly to the new conditions and the government found it much easier to finance its borrowing requirements domestically through issues of the government debt instruments. The stock of domestic debt was only about 6% of the GNP in 1989, just when the liberalization of the capital account was completed. It grew rapidly and reached 20% by 1997. Net domestic borrowings, as a ratio of the stock of the existing debt, hovered around 50% before the 1990s. This ratio increased to 105% in 1993, indicating that each year the state had to resort to new borrowings exceeding the stock of debt already accumulated. In 1996, this ratio reached to 163.5%. A rising trade deficit and a drastic deterioration of fiscal balances show the unstability of the post –1989 model. With the sudden drainage of short-term funds in the beginning of 1994, production capacity contracted, followed by continued fall in industrial output throughout the year. Together with this contraction, the post-1994 crisis management give rise to significant shifts in income distribution, and to an intensification of the ongoing process of transfer of the economic surplus from the industrial/real sectors and wage labour, in particular, towards the financial sectors. Post crisis management, starting from the end of 1993, was directly aimed at reducing wages in real terms. The index of the real wage rate in private manufacturing fell by an aggregate of 25% points between 1993-1997. In this vein, the fiscal debt management is said to constitute an income transfer mechanism, transferring income away from the wage-labour and peasantry, in favor of the domestic rentiers. It is known that under the pre-reform, import substitution industrialization period, the state was simultaneously a productive and a regulatory agent. After the reform, however, the state is no longer a productive or investing agent; but it continues to play a regulatory role in income redistribution in the manner described during the conduct of fiscal operations. The fiscal debt management directly involves transfer of real income and regulation of the secondary relations of income distribution. Boratav accepts state apparatus as the main explanatory factor in influencing the strategic policy decisions affecting income distribution.

Orthodox crisis management of 1994-1995 as in 1980-81 represent the other side of the coin. The costs of adjustment are shifted almost totally on urban wage earners and the peasantry. In 1994, the 6% decline in GDP, plus, the primary surplus of the current account attaining 5% of GDP (i.e.11%) constituted the macroeconomic cost of crisis-management. It is interesting that both the decline in real wages of formal sector workers (27%) and in the real incomes per employed person from agriculture(16%) exceed the macroeconomic cost of adjustment by significant margins. This implies that certain groups within the bourgeoisie may, actually, have benefited from crisis conditions in absolute terms . As Buğra indicates, it would be highly misleading to consider banks among the victims of the 2001 crisis. In fact, it is their uniquily privileged position which has permitted them to act as unscrupulously as they have. This position was significantly consolidated in 1994, after the crisis. 18 banks, which have become inoperational through mismanagement and in many cases sheer fraud, between June 1997 and July 2001 were transferred to the Deposit Insurance Fund with their debts fully undertaken by the state. It is estimated that in 2000 and 2001, until the end of last May, about 19 billion US dollars worth of government securities used to consolidate the position of these banks taken over by the Fund .

Domestic borrowing policy of the government has another negative effect for the economy. As the payment of these interests rose to 16.4% of the national income from 7.3% just in the last six years, this led to a rentier climate, which meant that real sector decide to do production as a secondary activity, and prefered to lend money to the state with high interest rates. In the long term, this behaviour neglected technological improvement and led to the loss of competitive power in export markets.

At the end of this part we can give the indicators which show the income distribution in 2000. Shares of Super rich in the national income is 16.6%; high income group 16.1%; upper-middle 25.6%; lower-middle 32.5%; low income group 9.2%. As for their percentage in the population, super rich 1%; and in the same order, 5%, 16%, 48%, and 30%. As a result, if we use groups ranked by 1%, the difference between the income of first income group of 1% and 100th income group of 1% is about 236 times. Household incomes of the richest 1% is 12887 US dollars while the poorest 1% is 54 US dollars per month.

Our second concern is the decline of welfare-state policies. The Turkish bourgeoisie and international circles representing Washington Consensus have been advocating a long-term solution consistently:de-politization of the distributional process. This part of the well known structural adjustment program involved moving towards flexibility in labour market arrangements and dismantling of pro-farmer interventions in agricultural markets. Taken as a whole, these so called structural reforms aim at not only the elimination of populist deformations in the narrow sense of the term during the upward phase of the distributional cycle; but also of those institutional elements covering education, health and social security systems- totality of which is usually referred to as the welfare state . The increasing scope of commercialization and/or private provision of education and health have been the dominant features of the period. Public spending on education and health services as a ratio of GDP has shown a downward trend up till 1989. On the other hand, between 1976 and 1983 the share of the private sector within total investment in education and health rarely exceeded 10%. Hence the early 1980s represent a phase when the rate of human capital formation in Turkey had declined significantly. From 1994 onwords, entrepreneurs started to move into the sectors at a significant rate, and the private sector’s share in total education and health investment reached the 50% benchmark by 1996-97. These may be perceived as favorable developments. However, in terms of equity, it has certain adverse implications as well. An expensive modern and in certain respects, luxurious system of private health-care in part, supported by private health insurance schemes- is servicing the upper classes whereas the population covered by social insurance schemes is using the resources of an over-extended public health system. Public hospitals have started to commercialize their services as well by significantly extending the implementation of user’s fees. Thus one witnesses an increasing and striking polarization in terms of the quality and quantity of health services extended to different segments of the population. A similar pattern has been emerging in the area of education. An elite system of higher education has been emerging, essentially based on private universities and, to an increasing degree on private high schools. At state universities and high schools, de facto users’ fees have increased substantially; government scholarships no longer exist in practical terms; and credits extended to students are based on commercial interest rates. Apart from a few select ones, the majority of state universities are considered to be involved in mass production of degrees, albeit in areas with limited employment prospects. In short, a market-based provision of education and health is generating a dual system in human capital formation, contributing to further polarization between the children of upper and lower classes of Turkish society. Moreover, efforts to generate a primary surplus in the public budget has been a dominant feature of the new adverse cycle starting with the 1994 crisis resulting in the erosion of public spending in the social sectors.

Coming to social security, strong resistence on the part of the trade unions has, up till now, prevented the widespread implementation of privatization and commercialization of the component parts of the system. However, the sector faces very serious problems. One witnesses a dramatic collapse of the fiscal accounts of the Turkish social security system. The system is characterized by a high level of evasion, low levels of pensions and financial insolvency. As for 1997, the combined cash deficits of the system reach 2.4% of GNP and it is expected to reach 10% by 2050. Current actuarial balances of the system are in severe disequilibrium with 2.1 active registered employees per retired person. Evidently, current problems of the Turkish social security system is independent of the so called aging crisis faced by many OECD nations today; and instead, is directly related to the structural features, i.e. the scope of the marginalization/ informalization of the labour market.

A paradoxical development in the relationship between the state and the society is another point. While the impulse of the civil society to engage in public life to express its grievances has grown, the insulation of the state from popular pressures has grown even further. The weakness of Turkey’s public/political sphere goes hand in hand with the isolation of the political class from the society. the institutional restructuring of Turkish political life after 1980 is one of the disconnections between the state and society. Deregulation of Turkey’s labour market and the political marginalization of unions since the early 1980s in line with the dominant ortodoxy should be mentioned. Corporatist and party networks of representation that linked labour to the political sphere demolished in the said period to let the free-market principle apply in the determination of wages. This, in turn became a prescription of for high unemployment and for a brisk competition for a large, primarily non-union low-wage labour force, with minimal social regulation of wages and benefits. A labour force fearful of “at will” firing, that is excluded from political calculations and decisions undertaken at the level of public sphere. In this sense, globalization of business and finance was achieved at the expense of contraction of labour. The diminished potencial of the public/political space to influence public policy is one of the shrinkage of the realm of the political in a physical and qualitative sense. A weakened, narrowed and intimidated political sphere which can not subject governments to democratic control is the major danger to Turkish democracy. As government authority is subordinated to the interests of the dominant fraction of capital-which in turn necessitates that while business is mobilized, popular sectors are demobilized- key aspects of economic management are insulated from popular pressures and Turkish capitalism is not democratized.

CONCLUSION:

After two decades of neoliberalism, Turkey has entered the millenium with erratic rates of real growth and investment, a worsened income distribution and a paralyzed fiscal apparatus. Societal impacts of globalization has gone beyond quantifiable variables, i.e. changes in income distribution and rising inequalities in the social sectors and shrinking public sphere. As we are still in economic and political crisis, the major factors should be found in the mechanisms of accumulation and transfer of resources for capital. Thus, we should remember these four trends in the accumulation and redistribution of resources in Turkey’s national economy after 1980:

1) reduction and passivization of tax loads on the capital.

2) the functioning of domestic debt management in the form of a rent-transfer mechanism.

3) protection of the profits of the capital by means of mark-up price policies.

4) economic surplus extraction process through the flexibility of formal employment and labour power costs as a result of marginalization and deregulation of labour market .

It is crucial to underline the duality with regard to the informal economy’s role in the Turkish economy. On the one hand it prevents any further capital accumulation of the entrepreneurs and leads to the deterioration of the living standards of the working class. The declining significance of the labor unions, in a country with a tradition of low levels of unionization has brought a literally non-existent workers class representation. On the other hand its unique built-in flexibility for creating employment and production provides the protection for the masses from the volatility of the Turkish economy. Also through the social control on the workers it has provided, it is an important factor in the survival of the Turkish economy. Both former and latter could be true to some extent, but it is certain that informalization represents a subtle way of income redistribution. In sum, the dilemma of simultaneity in Turkey has led to a “disorganized capitalism”; in which the “infernal machine” of market acts as a mechanism of informalization that creates polarization of incomes . And the deregulation processes brought by the neoliberal policies of the post-1980 era shows the direction of this redistribution; the financial sector of the core and the rentier sector of the newly emerging Turkish financial capital.

In the coming years, alienation, social exclusion, political indifference, withdrawal into individualized survival strategies is likely to be the outcome for the majority of the population.

1. (Yeldan, 2001: 13; 1999:1,2)
   
2. quoted by Boratav et al,2000:35.
   
3. Sakallioglu and Yeldan, 1998:4.
   
4. Sakallioglu and Yeldan, 2000:10.
   
5. See Boratav, et.al. 200:32
   
6. age, p 33.
   
7. Bugra, 2001:133
   
8. Sönmez, 2001:182
   
9. Sönmez, 2001: 17.
   
10. Boratav,et.al, 2000:34
    
11. age, p 35.
    
12. Sakallioglu and Yeldan, 2000: 15,16.
    
13. Yeldan, 1999:21.
    
14. (Cizre-Sakallioglu/Yeldan,2000)
    

Ercüment Çelik ist Student des Global Studies Programms im Freiburger Albert Ludwigs Universität

Veröffentlichungen:

1. Boratav Korkut, Erinç Yeldan and Ahmet Köse (2000). “Globalization, Distribution and Social Policy: Turkey:1980-1998” CEPA and The New School for Social Research, Working Paper Series, No 20.New York.
   
2. Buğra, Ayşe (2001). Chronicle of a Crisis, in:Le Monde Diplomatique, December.
   
3. Cizre-Sakallıoğlu, Ümit and Yeldan Erinç (2000). “Politics, Society and Financial Liberation:Turkey in the 1990s”, Development and Change, 31,p.481-508.
   
4. Sönmez, Mustafa (2001).Gelir Uçurumu:Türkiye’de Gelirin Adaletsiz Dağılımı. İstanbul:OM.
   
5. Yeldan, Erinç (1999). “Küreselleşme Sürecinde Türkiye Ekonomisinde Üretim, Birikim ve Bölüşüm İlişkilerine Toplu Bir Bakış”. Petrol-İş Sendikası,1997-1998 Yıllığı.
   
6. Yeldan, Erinç (2001). Küreselleşme Sürecinde Türkiye Ekonomisi. İstanbul: İletişim Yay.