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 – regarded in the above terms. We can argue that the phase of “embedded liberalism” (Ruggie 1982) has been succeeded by an era of 2 „embedded neoliberalism‟ in which the contradictions of global capitalism are veiled by the hegemonial ideology of individual freedom and prosperity which reminds us of the first “Age of Capital” in the 19th century.1 But objections to this worldview are abundant, as neoliberal globalization has not fulfilled the promises of freedom, progress and equality as many of us expected at the beginning of the 1990s. Yes, freedom has spread globally, but not as far and as deep as neoliberalism would have us believe. Although poverty has declined in absolute terms, it has dramatically risen in relative terms. Additionally, the geopolitical landscape is no longer dominated by the militarized context of the Cold War era, but it has by no means become more peaceful. Even without the threat of Islamist terrorism, the renewed rise of Russia and China poses a serious challenge to the western world powers that have started a global campaign against „terror‟ that cannot be won. In sum, neither in political nor in economic and social terms did the events of the last 20 years hold what neoliberalism promised. Why these pessimistic introductory words, and why in the context of this work? Because, since the 1970s, there has again emerged a consensus – similar to the post World War II consensus about modernization processes – that western democracy and capitalism serve as blueprints for the rest of the world. This consensus reflects the tight linkages between the social sciences and politics via the International Financial Institutions (IFIs) that have applied the one-sided neoclassical view of growth and prosperity as the only framework for economic and social policies since the beginning of the 1980s. This linkage has served politics more than the social sciences as the latter have provided the former with a technical solution, and thus a moral legitimation, for further pushing neoliberal reforms around the world. Given this sort of entanglement, economics was indeed “able to use the world as a laboratory” (Mitchell 2005: 197).2 This study will critically confront this entanglement and put the economy, and economics, into its place as one field of society and science, respectively. The underlying premise is that 1 Similar to the neoliberal euphoria that spread in recent decades, compare Hobsbawm‟s depiction of the bourgeois ideology in that era: “The bourgeois of the third quarter of the nineteenth century was overwhelmingly „liberal‟, not necessarily in a party sense […] as in an ideological sense. They believed in capitalism, in competitive private enterprise, technology, science and reason. They believed in progress, in a certain amount of representative government, a certain amount of civil rights and liberties, so long as these were compatible with the rule of law and with the kind of order which kept the power in their place. They believed in culture rather than religion, in extreme cases substituting the ritual attendance at opera, theatre or concert for that at church. They believed in the career open to enterprise and talent, and that their own lives proved its merits.” (1975: 245) 2 For the neoliberal reframing of the world, see also Harvey (2005). 3 there exist today several economic orders with different characteristics of how economic action is shaped. The research questions that will be addressed are, first, how non-western economic orders have been established and, second, what kinds of change dynamics have shaped and reproduced it since then. Only if we understand the underlying dynamics of endogenous institutional changes can we make valid arguments about changes based on neoliberal policies. The perspective applied in this context centers