This article focuses on the political economy of Turkey in the 1990s to ill
ustrate 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. Toget
her with the ongoing processes of liberalizing commodity markets and integr
ating with global capital markets, financial liberalization was expected to
achieve fiscal and monetary stability, stimulate business confidence to in
vest 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 worsenin
g income distribution, the discrediting of politics and its isolation from
society. The authors examine several key dynamics which are helping to legi
timate the neoliberal agenda of the 1990s. These include the distribution o
f state largesse to manipulate electoral capitalism; the rise of an informa
l sector in the 'Anatolian Tigers'; promotion of the seductive attractions
of the market; and an antipolitical reform populism adopted by political ac
tors to exploit popular disillusionment with the political system.