Governance or financialisation: the Turkish case

Abstract

This article critically evaluates the governance discourse that the Washington consensus has extended to the case of Turkey after the financial crisis there in 2001. In the United States and United Kingdom the debates on governance are ultimately about the rules of optimal managerial behaviour that will ensure the efficient use of capital. The political economy argument of financialisation, on the other hand, questions the achievability of the objectives set by the governance model and, instead, argues that the present day capitalism is characterised by a coupon pool system - where the capital markets are no longer simple vehicles of financial intermediation but instead regulate firm and household behaviour in a destabilising manner. This article argues that the financialisation framework can be successfully applied to the Turkish experience, a developing economy, where the financial intermediation process was corrupted and became the source of economic instability as a result of the International Monetar...