Political Capitalisms

INTERNATIONAL MAX PLANCK RESEARCH SCHOOL on the Social and Political Constitution of the Economy Köln, Germany Roy Karadag Political Capitalisms Power, Elites and the Economy in Turkey and the Philippines Studies on the Social and Political Constitution of the Economy Roy Karadag Political Capitalisms Power, Elites and the Economy in Turkey and the Philippines © Roy Karadag, 2010 Published by IMPRS-SPCE International Max Planck Research School on the Social and Political Constitution of the Economy, Cologne http://imprs.mpifg.de ISBN: 978-3-946416-02-9 DOI: 10.17617/2.1231882 Studies on the Social and Political Constitution of the Economy are published online on http://imprs.mpifg.de. Go to Dissertation Series. Studies on the Social and Political Constitution of the Economy Abstract What distinguishes Western from non-Western types of economic order on the macro level is the highly politicized nature of capitalism in the latter cases. Be- cause the capitalism in these cases originated in colonial and imperial contexts and in struggles for new national identities, no institutional separation of the political from the economic sphere took place. Such a separation was essential for the institutionalization of Western “rational” capitalism. Despite economic and political modernization, the transition toward a rational mode of capitalism did not happen in these late-developing countries. Political capitalism in these areas is reproduced through personal trust relations, corruption and clientelism included, that continually undermine the capacities of institutional trust and en- force a general environment of politically induced uncertainty on economic ac- tors in particular. In spite of these common features, developing countries differ from one another on a fundamental level, with the most important defining cri- teria being Michael Mann’s notions of infrastructural and despotic power. While the Western paths to liberal capitalism have all come from high infrastructural power and low despotic power, the state formation processes in imperial settings have led to divergent results. In modern Turkey, the successful national liberation struggle after World War I set the stage for new national elites to take over the state apparatus and shape both national identities and the economic system (state capitalism). In the Philippines, the failure of the national liberation move- ment and the establishment of the new U.S. colonial regime created an oligarchic order. With reference to James Mahoney’s “reactive sequence” model, twentieth-century institutional changes are accounted for by including the social and political forces that counter the respective capitalist order. Within the Turkish state capitalist system, change dynamics began to unfold and to undermine the established economic order in the late 1940s, when multi-party politics was in- troduced. The Philippine case shows that low degrees of state power easily re- produce themselves while at the same time they remain open to the patrimonial- izing dynamics that paved the way for Marcos’ authoritarian regime and patrimonial capitalism. Political and economic transformations since the 1980s have resulted in oligarchic orders that each have a different potential for change. Oligarchy has experienced waves of delegitimization in both Turkey and the Phil- ippines, but only in Turkey have the electoral results for counterelites led to sub- stantive institutional changes, as under the current moderate Islamist govern- ment. Such political dynamics have not had an effect in the Philippine political landscape, where there is no potential for increased infrastructural power. About the author Roy Karadag was a doctoral researcher at the IMPRS-SPCE from 2006 to 2010. Studies on the Social and Political Constitution of the Economy Political Capitalisms Power, Elites and the Economy in Turkey and the Philippines Inauguraldissertation zur Erlangung des Doktorgrades der Wirtschafts- und Sozialwissenschaftlichen Fakultät zu Köln vorgelegt von Roy Karadag, M.A. aus Skövde (Schweden) Referent: Prof. Dr. Jens Beckert Korreferent: Prof. Dr. Frank Schulz-Nieswandt Korreferent: Prof. Dr. Peter Pawelka Tag der Promotion: 23. Juli 2010 Contents 1. Introduction 1 2. The Political Embeddedness of Capitalism in Late Developing Countries 26 3. Turkey: from state to oligarchic capitalism, and beyond 63 4. Oligarchic regime and oligarchic capitalism in the Philippines 148 5. Conclusion 222 References “The primary objective of every „bourgeois‟ is to become an „aristocrat‟” (Immanuel Wallerstein, 1991: 146) 1. Introduction This is a study of political domination. More concretely, this is a study of the predominant features and dynamics of domination of late developing countries in the context of post- colonial capitalist social relations. Doing this, we claim that there exist several fundamental differences between early industrializing countries of the West and later industrializing countries across the rest of the world. While the former experienced particular processes of state formation and the extension of capitalist social relations that culminated in the emergence of capitalist liberal democracies, the latter underwent divergent political and economic trajectories that led to structurally different political and economic orders. Based on a comparative-historical analysis of Turkey and the Philippines, we further claim that the political and economic transformations of the last thirty years did not lead to the global diffusion of capitalist democracies. Hence, this study addresses social scientific debates on the relationship between capitalist economies and their political context, claiming to contribute to this debate from the perspectives of economic and historical sociology. We are convinced that only through a historically-grounded analysis of the divergent linkages between politics and the economy can we understand what kind of changes have indeed occurred since the latest wave of democratization and neo-liberalization. The Third Wave reconsidered More than twenty years have passed now since neoliberalism has unfolded its transformative pressures around the world. Twenty years in which countries across the globe underwent political or economic changes, or both at the same time. However, the early promises we ascribed to these processes were not fulfilled. At this point of time, we cannot conclude that western forms of capitalism and democratic rule have been established around the world. On the contrary, the „West‟ still seems to present an exceptional island of freedom and prosperity that the „Rest‟ did not follow. In both the political and the economic spheres of late developing and transition countries, features of illiberalism, oligarchy and closure have dominated the field. We may even go so far as to conclude that under the current conditions of neoliberal globalization, liberal democracy and capitalism are on the retreat and that the 21st century may instead become an era of persistent illiberalism and authoritarianism. 1 This conclusion comes somewhat surprising. In the 1980s, societies around the world got rid of authoritarianism. Freedom was on the rise, and the global democratization wave seemed unstoppable. After having started in Southern Europe in the 1970s, it spilled over to Latin America and Southeast Asia, only to return with more vigor to overcome its main enemy, the communist regimes of Central and Eastern Europe and the Soviet Union. Liberty has come at last, and enthusiastic observers like Francis Fukuyama regarded that revolutionary process as the “End of History” (1989). Not of history as the simple sequencing of time, of course, but of history understood as a struggle of political ideas and worldviews. With the victory of liberal democracy and western capitalism over communism, this struggle seemed to have come to an end. However, as the last two decades have convincingly shown, freedom may be on the retreat again. The “Third Wave of Democratization” (Huntington 1991) was followed, if not by a wave of de-democratization, then at least by (stagnation and) a wave of disenchantment as to the promises of neoliberal globalization. Indeed, in the aftermath of 1989, more countries have become more democratic than before, more countries (i.e. more people) have been able to (or allowed to) claim civil rights and political liberties in a non-authoritarian framework. Across the globe, rulers cannot afford to deny the public the right to choose freely whom to delegate the duty to govern. Competition has entered the field in so many countries that political processes have become more transparent and accountable. Furthermore, military juntas that have always perceived themselves as rightfully standing above society, as defenders of the public and national good, have been forced to return to the barracks without causing havoc any longer. In addition, on the economic side, more countries were successful in profiting from the global rise in trade and investment activities. Smart policies could attract FDI to develop economies beyond producers/suppliers of a single commodity. These are now more connected to the Western world, be it through political, economic or cultural linkages. The worldview of individualism has at last penetrated societies hitherto protected by the forces of tradition and religion. Never before in the history of mankind has there been a similarly high level of international exchange and peaceful communication. The world can be – and actually is most of the time –

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