 better captures the AKP’s path.){kind=link}
Abstract
Scholars have argued that megaprojects’ turn away from issues of employment, and mass housing are among the core traits of neoliberalism. Turkey, though once seen as a paragon of neoliberalism, problematizes this generalization. Erdoğanist megaprojects have created jobs and residence for millions, and garner consent. ‘Embedded neoliberalism’, a concept frequently used to explain increasing state involvement under neoliberalism, sheds light on the governing AKP’s power, but is insufficient in explaining its core dynamics. Whereas the ‘embedded neoliberalism’ literature downplays the role of the government as a producer, the ‘state capitalism’ literature, as applied to Turkey, overrates the extent to which this country has moved away from neoliberalism. The concept ‘neoliberal statism’ (which puts the emphasis on the consent-generating and political aspects of the new economy) better captures the AKP’s path. Megaproject-driven growth and popular consent, however, are restricted by vulnerabilities that also afflict neoliberal statism as a broader growth strategy.
Introduction
What is the role of megaprojects in generating consent and contention? Megaprojects are usually taken as a prime example (Swyngedouw, 2009) of neoliberalism’s alleged tendency to depoliticize (Brown, 2015). Erdoğanist megaprojects constitute a puzzle for such generalizations. As importantly, Erdoğanism defies another expectation of the literature: neoliberal megaprojects’ disregard for mass employment and housing. In Turkey, megaprojects have an employment- and mass housing-creating orientation. However, the degree to which Turkey under Erdoğan can be labeled ‘neoliberal’ is itself a matter of contention.
To explore the dynamics of Erdoğanist megaprojects, I first engage the literature on megaprojects and neoliberalism. Until recently, scholarly consensus was that before the 1970s, megaprojects provided jobs and residence. Under neoliberalism, it is argued, they do not have such mass functions, even though they are central to managing neoliberal crises (Orueta and Fainstein, 2008). How do we, then, account for Erdoğanist Turkey’s jobs- and mass housing-oriented megaprojects? Is Erdoğanism just another case where Keynesian tools are stealthily deployed by a regime the fundamental aspects of which remain neoliberal? I discuss these questions by drawing on, and exposing the limits of, the scholarship on ‘embedded neoliberalism’ (Van Apeldoorn, 2002; cf. Crouch, 2009). I subsequently make recourse to the ‘state capitalism’ literature, but argue that Erdoğanism does not completely fit this concept either. The term ‘neoliberal statism’ is therefore offered as an alternative. The empirical analysis substantiates this concept by first analyzing pre-Erdoğanist Turkish neoliberalism and then outlining ‘neoliberal statist’ departures from its patterns. Megaprojects, I show, have been central to Turkey’s neoliberal statism. In concluding, I highlight the limits of a megaproject-based growth path, as well as of neoliberal statism.
Megaprojects and Neoliberalism
Megaprojects refer to massive constructions or renovations of roads, airports, ports, energy lines, and also to the building of large scale hospitals, shopping malls, or residential complexes.1 Postwar Western welfare states invested heavily in roads, highways, and other massive construction projects. Slum displacement, and other discretionary use of governmental authority, was core to them (Castells, 1978; Fainstein et al., 1986; Logan and Molotch, 2007). Even if not with the same intensity, peripheral countries sought to emulate these ‘huge’ projects, and slum/squatter demolition. In the West, the 1970s and 1980s witnessed less emphasis on massive projects, as a result of both mounting left-wing resistance and the orthodox neoliberal understanding of the government as a minimal actor (Altshuler and Luberoff, 2003). This Western shift had complex ramifications for the world economy’s periphery and semi-periphery, where massive highway and other construction was sustained, but with a growing (even if still grudging) mainstream acceptance of the ‘self-helping’ squatters and their capacities of adjustment to market economies.
This 1970s–1980s Western turn against massive projects was soon reversed: Megaprojects have been central to neoliberalism from the 1990s onwards. In the West, obsession with ‘size’ was back, but learning from the resistance of yesteryear, constructions flowered on abandoned or less densely populated land (Doucet, 2013)—now spurring, however, native and environmental resistance. The non-Western parallels of this process are mixed: in China, population displacement is still central to the making of these projects (Orueta and Fainstein, 2008); in the less authoritarian Turkey of the 2000s, removal was mostly ‘encouraged’ rather than forced (Bartu Candan and Kolluoğlu, 2008).
I take neoliberalism to be a marketizing and trade liberalizing growth strategy that restores or expands capitalist class power. Neoliberalism does not mean ‘less state’, but rather the state’s transformation of society along market-oriented lines. Many scholars handle megaprojects as a core part of neoliberalism. Neoliberal megaprojects are geared toward attracting professionals and tourists (more than job creation and service to local communities). It is said that they depoliticize construction and other urban decisions; and they augment the state’s regulatory role of capital accumulation, but do not involve the state as a developer (Jessop, 2002; MacLeod, 2011; Olds, 1995; Swyngedouw, 2009)
What do scholars mean by depoliticization? Orueta and Fainstein (2008) state that ‘since relatively few people are directly injured [by neoliberal megaprojects], it is difficult to mobilize opposition’ (p. 761). Orueta and Fainstein’s and other scholars’ arguments regarding depoliticization have been further developed and updated in an article by Tarazona Vento (2017) who argues that megaprojects are central to
While still rampant in the literature, such arguments do not reflect the reality in Turkey, where the growth strategy is highly politicized, and megaprojects frequently spur ideological struggles.
Contrary to these generalizations, Turkey has been witnessing (1) increasingly productive state involvement in megaprojects. Moreover, (2) this involvement tends to be explicitly ideological and political. (3) It also seeks to boost employment and/or housing. These three elements problematize entrenched arguments in the broader literature on neoliberalism. Not just the increasing, but qualitatively mutating economic role of the Turkish state requires a re-evaluation of the theoretical linkages established between megaprojects on one hand, and employment, housing, and politics on the other.
Embedded Neoliberalism
Existing analyses of neoliberalism only partially explain the shift in the government’s role in the economy. Starting with the 1990s, governments and international institutions sought to resolve neoliberal crisis with a strategy which scholars have labeled ‘embedded neoliberalism’.2 From the get-go, two of neoliberalism’s core problems were low demand and unpredictable busts. (Classical liberalism had suffered from the same problems, and classical Keynesianism sought to prevent these through high wages and government spending.) Even in the 1980s, Reagan, for instance, exercised under-the-radar Keynesianism through military spending. In the 1990s–2000s, abetting housing credit (and more broadly, household debt) became a more global trend (Crouch, 2009).
The megaprojects of the 1990s–2000s constitute one giant step in the further expansion of such ‘unacknowledged policy’ tools, to apply Crouch’s debt- and spending-based terminology to the realm of production. Specialists of Western neoliberalism emphasize the government’s enabling of private megaprojects. Government spending might increase to help private business, but the government does not tend to act as a developer itself (Brenner, 2004; Brenner and Theodore, 2004). Scholarship on non-Western cases occasionally documents more government involvement, but at the end of the day this involvement only reinforces neoliberalism (Grubbauer and Čamprag, 2018; Rizzo, 2020). Across all cases, ‘embedded neoliberalism’, as Van Apeldoorn (2002) defines it, emerges as an economic regime where governmental regulation and social inclusion serve the expansion of the market.
The received wisdom, then, can be reconstructed and summarized as follows: Neoliberal megaprojects exemplify embedded neoliberalism. Neoliberalism had always involved roundabout ways of maintaining aggregate demand and spending: Military in the 1980s; real estate in the 1990s; and household and consumer credit in the 2000s. Neoliberal megaprojects serve the same purpose, and further remove governmental regulation from the realm of political contestation. Even when regimes use a set of nonliberal tools, including statist interventions (Brenner et al., 2010; Jessop, 2002), they reproduce neoliberalism. In sum, embedded neoliberalism deepens neoliberalization.
Beyond Neoliberalism?
The aftermath of the 2007–2008 crisis, however, constituted a challenge to the aforementioned analyses of neoliberalism: Banks were nationalized; quantitative easing signaled heavier governmental intervention; the Trump and Brexit campaigns sounded anti-neoliberal. Still, at the same time, defining features of neoliberalism (such as deregulation, privatization, and austerity) persisted with full force in the West (Cahill and Saad-Filho, 2017). Regimes left especially financialization intact, a core component of neoliberalism (Fine and Saad-Filho, 2017).
Does the persistence of financialization imply that frameworks that overemphasize the deepening of neoliberalism are still justified? It is usually correct that neoliberal financialization suppresses employment (Jaffee, 2020). Yet, one core component of the Turkish economy—the construction boom—produced employment until the downturn in 2018 (while remaining reliant on global finance). The complexity of the Turkish case calls for a rethinking of generalizations that automatically link financialization and the suppression of employment. As against the tendency to extend arguments regarding neoliberal resilience to the post-2008 world, we need to ask, at what point does the state’s reproduction of neoliberalism become an aggressive takeover of the reins of the market and therefore an erosion of neoliberalism?
To think further about this question through an analysis of Turkey, we need to re-evaluate the way this country has been classified in the neoliberal megaprojects literature. In their seminal introduction to a special issue on megaprojects, Orueta and Fainstein (2008) pointed out that Western.
This ‘either/or’ logic of inquiry (megaprojects involve controversy or rise to power) needs to be questioned, since it leads to the neglect of hybrid cases. Turkey shares with core countries (1) histories of contention over megaprojects and (2) democracy (even if limited). Turkish megaprojects have instigated both growth and contention. The neglect of this interconnected hybridity led Orueta and Fainstein (2008: 764) to misdiagnose Turkey’s megaprojects, which they said were bound to remain small (they didn’t) and were unlikely to produce serious resistance.
Megaprojects in fact produced Turkish history’s largest urban rebellion, and one of the most substantial revolts of the global 2011–2013 wave: The Gezi rebellion, which started as protests against megaproject construction and the concomitant destruction of forests and urban parks, drew around 3.5 million people to the streets, even if some of the later joiners were motivated by other factors (Erensü and Karaman, 2017). (See below for further discussion of Gezi, and Tuğal, 2016 for how these other factors interacted with ecological concerns.) Gezi was not only a rebellion against neoliberalism, but one vector of the Turkish social formation’s more complex shift away from neoliberalism.
In sum, the increasing centrality of employment, mass housing, the producer state, ideology, and political contestation in Turkish megaprojects signals that we need to rethink some of the generalizations in the neoliberalism literature that have unlinked these issues from megaproject construction. The ‘state capitalism’ literature, despite its limits, offers some help in thinking through this problem. Nevertheless, Turkey’s complexity calls for an alternative concept.
State Capitalism, Megaprojects, and Neoliberal Statism
The term state capitalism, once a mainstay of the Marxist theory of early 20th century capitalism (Sperber, 2019) and later of officially socialist regimes (Resnick and Wolff, 1993), has now become a core concept in the mainstream academia. Mainstream analysts usually deploy it to ring alarm bells regarding departures from the market capitalism they uphold (Bremmer, 2009), or they relegate the use of the term to non-Western cases while neglecting the latter’s interdependency with liberal capitalism. The concept, therefore, raises suspicions among critical scholars today (Alami and Dixon, 2020). However, to the extent that it is used self-reflexively, it can still inform us regarding variations within word capitalism (Alami et al., 2022). I take state capitalism to be a growth strategy that (1) primarily relies on state-owned and state-controlled companies, and on ‘national champions’ handpicked by the state to compete with foreign companies and (2) regulates trade, taxes, sovereign wealth funds, and the supply of money to serve these companies (Gertz and Evers, 2020; Haberly, 2011; Haley and Haley, 2013; Lin and Milhaupt, 2013; Nölke et al., 2020). State capitalist policies and growth paths had mostly been marginalized (if not abandoned) by the neoliberal turn of the late 1970s. In the 21st century, they have been coming back on the scene, under the leadership of China.3
Öniş (2019) has proposed the term ‘state capitalism’ for the late AKP, and other scholars have further analyzed the implications of this framework, with some caveats regarding its applicability (Kutlay, 2020; Yagci, 2021 also see Öniş and Kutlay, 2021, for further qualifications). There is some truth to this characterization, but the concept is not completely fitting for the Turkish case, and blurs the extent to which the country remains within the confines of global neoliberalism. State capitalism is a more straightforward label for today’s China than Turkey, since the state does not own a significant chunk of enterprises in the latter. Another conceptual alternative, neoliberal developmentalism (Adaman et al., 2019) does not perfectly capture the Turkish case either, since Erdoğanist growth is overinvested in low-tech sectors, as distinct from the paradigmatic cases of developmentalism (cf. Scheiring, 2021: 269 regarding Hungary). I propose that ‘neoliberal statism’ is a more appropriate term for Turkey.
In what I call neoliberal statism, the government controls the leading enterprises and megaprojects, though does not necessarily own them. To the degree the Turkish AKP further commodifies nature and urban landscapes (and remains reliant on global finance), it is still neoliberal. But this word has to be strongly qualified when combined with ‘statism’. Unlike ‘embedded neoliberalism’, the statism-neoliberalism combination indicates an erosion of neoliberalism, for marketization is now subordinated to politics and the state. In contrast to embedded neoliberalism, neoliberal statism foments mass employment, housing, and contestation, especially through megaprojects and infrastructure, which increasingly become the motors of state-driven growth.
My use of ‘neoliberal statism’ is different from other usages of this concept (Brown, 2015; Jessop, 2019). It emphasizes that statism undermines some aspects of neoliberalism, as well as highlighting that the combo has a politicizing effect (contra Brown, 2015). In his most recent work, Jessop (2019: 354–355) recognizes that neoliberal statism has a mass politicizing effect, but still does not notice how the combo erodes neoliberalism itself. By the same token, conceptualizing the new rush to megaprojects as a neoliberal statist one differentiates my stance from theorists of ‘authoritarian neoliberalism’, who also recognize the increasing coercive capacities and/or centralization of the state, and the role of the latter in megaprojects (Tansel, 2019). While concurring with these scholars regarding the necessarily illiberal nature of the recent transformation, I differentiate between authoritarian megaproject rushes that torpedo neoliberalism (e.g. Erdoğanism) and those that don’t. Trump’s failed attempts to revamp American infrastructure constitute an example of authoritarian megaproject rushes that straightforwardly stay within the boundaries of neoliberalism.
Neoliberal statism is ambiguously situated between embedded neoliberalism and state capitalism. A discussion of state capitalist megaprojects helps understand why Turkish megaprojects cannot be properly labeled as such. As can be seen in the case of the Belt and Road Initiative (henceforth BRI), infrastructure and megaprojects are central to state capitalism (Gertz and Evers, 2020; Wang and Liu, 2020). BRI is a multi-trillion investment plan that involves transportation, energy, and other infrastructural projects and mobilizes Chinese and non-Chinese companies in 125 countries. Especially Chinese companies with greater state equities, and therefore sensitive to ideological and political imperatives of the government, push this tent-megaproject further by investing throughout the globe even when profits are not guaranteed (Li et al., 2019; Wang and Liu, 2020).
Wang and Wu (2019) point out the following fundamental contrasts between neoliberal megaprojects and megaprojects under Chinese capitalism. Neoliberal megaprojects are based on public–private partnerships and they are dominated by private interests. State capitalist megaprojects, by contrast, are based on governmental and quasi-governmental state organizations and ‘they are dominated by project-oriented state corporations’. As importantly, neoliberal megaprojects depoliticize, whereas state capitalist megaprojects fulfill ‘the political objectives of the state’.
‘Neoliberal statist’ megaprojects include elements from both sides of this binary: they are still based on public–private partnerships rather than fully deploying the state as the sole or even primary entrepreneur. Yet, as the empirical sections will show, they boost the state’s productive role. Neoliberal statist megaprojects also repoliticize, but in a way that is distinct from state capitalist megaprojects. Under state capitalism, megaproject politicization has a clearly outward-facing agenda. BRI is expansionary. Moreover, neither state capitalist megaprojects in general, nor BRI in particular give rise to dramatic political contestation. The politicization brought about by neoliberal statism’s megaprojects, by contrast, are relatively more geared toward national hegemony. As importantly, they are endemically marked by political contestation.
Early Turkish Neoliberalism
Turkey abandoned decades of import substitution industrialization in 1980 and embarked on a neoliberal route. The change was initiated by the top-ranking planning bureaucrat (‘undersecretary’) Turgut Özal’s ‘January 24 package’, which would have been impossible to effectively implement in a country which had witnessed growing working-class organization and militancy from the mid-1960s to the late 1970s. A violent coup d’état, which put an end to all semblance of democracy for three years, cleared the way. The junta then gradually permitted market-friendly organizations and parties (Karataşlı, 2015; Tuğal, 2007).
Turgut Özal’s militarily undergirded civilian rule (1983–1991)—dubbed ‘heterodox neoliberalism—witnessed both privatization, election time social spending, and high inflation (Karataşlı, 2015; Öniş, 1991). A rising wave of blue-collar, and then civil servant action between 1989 and 1995 paralyzed this orientation. After Özal, hodgepodge coalition governments remained committed to IMF-imposed structural adjustment programs, but could not implement them effectively. One government fell after another, and national debt spiraled out of control (Keyder, 2004). A former World Bank top executive, Kemal Derviş, was ultimately appointed in 2001 as Minister of State for Economic Affairs to rein in the budget. The timing coincided with the World Bank’s turn to embedded neoliberalism. Derviş attempted to implement a privatization-oriented but market regulation-based package that would also involve discretionary social spending in favor of the informal working class. However, the coalition government (mired in an unending conflict with Islamist mobilization and perceived as undemocratic due to its approach to the Kurds) was soon voted out (Akça, 2014).
It was in this context that an offshoot of the established Islamist party (consecutively called MSP, MNP, RP, and FP) split from the Islamist mainstream to promise international institutions and local businesses a sturdier turn to the market. Led by Erdoğan, the party mobilized the trust Islamists had been building among the informal, working poor populations to win their support for a disciplined budget, intensified privatization, and trade deregulation (Akçay, 2021; Tuğal, 2009). The AKP implemented Derviş’s package, but now clothed in Islamic garb.
Islamism’s neoliberal-conservative offshoot, the Erdoğan-led AKP, disciplined the budget, increased the autonomy of the Central Bank, and brought inflation down. Picturing the unions as a part of the old system and therefore in alliance with the secular establishment, it garnered the support of the pious, informal working class in dismantling most of the formal working classes’ hard-won gains and organization (Akça, 2014). While suppressing most struggles against neoliberalization, the AKP developed democratic credentials by limiting the power of the military, at least in appearance, especially vis-à-vis the Kurds. These successes earned the party enthusiastic business and foreign liberal support (Tuğal, 2016).
However, coming from an entrenched ideological legacy of opposition against the West, some cadres and leaders of the AKP remained suspicious of the IMF and kindred institutions. After the 2007–2008 global crisis, and even more so after the American Fed’s interest hike in 2013, the party gradually downgraded ties with the IMF, while sticking to many provisions of the Kemal Derviş program, that is, embedded neoliberalism. Yet, in the course of the 2010s, many aspects of this specific combination of neoliberalism and market regulation were also abandoned. The party was, through trial and error, and many fluctuations, opening sails to another kind of economy.
Erdoğanism
During the last decade, the AKP added a host of statist policies to its neoliberal repertoire. For instance, the government established the Turkish Wealth Fund in 2016. This fund controls public assets with a value of US$200 billion and finances megaprojects (Kutlay, 2020). Turkey’s sovereign wealth funds allowed the AKP to pump money into the economy in crisis situations (Akçay, 2021: 94–95). Enhancing the national government’s abilities to control the supply of money is even more important in the post-2007-2008 crisis scene, where global cash flows have been unpredictable, and meager, especially after 2013 (Akçay, 2021: 81).
A currency crisis in 2018 led to the further subordination of monetary policy to political goals. The Lira was depreciating quickly during the first months of that year. Meanwhile, the American Fed’s interest rate peaked in 2018, which meant a gradual slowing down of global capital flows. In these already dire circumstances, a diplomatic crisis between the United States and Turkey put a sudden halt to the inflow of American money to Turkey. The Lira spiraled out of control. Big business associations urged the AKP to take austerity measures. Instead, the government took the non-orthodox path of raising interest rates, but pumping money into the economy through public banks (as well as the sovereign wealth fund) and providing cheap credit (Altınörs and Akçay, 2022).
Even if these non-orthodox policies came into the limelight in the post-2018 era, earlier institutional moves had laid the groundwork for them. The party’s changing relations to the central bank was key to these moves. Central bank independence was one of the core tenets of AKP reforms in the early 2000s. This independence was arguably key to keeping inflation low (Öniş and Kutlay, 2021: 515), which according to economic orthodoxy is foundational to healthy growth. In the 2010s, the AKP terminated the autonomy of the central bank and applied (fluctuating) pressure to keep interest rates low (Altınörs and Akçay, 2022). Lower interest rates cater to mass consumption, credit-dependent small businesses, and investments in the housing and construction sectors, where the AKP’s business and labor bases are concentrated. Nevertheless, this does not mean the new turn in Erdoğanism gave a free pass to small businesses in all areas. Following the 2018 currency crisis, the government not only urged companies of all sizes to keep prices low artificially, but implemented strict price controls in stores. These measures were supplemented by municipalities’ provision of cheap basic goods, and all of these policies were framed as a national economic war against a potential ‘IMF yoke’ (Öniş and Kutlay, 2021: 516). Erdoğan, along with Erdoğanist academics and journalists, argued that their loyalty is to the nation and to the electorate, rather than the unelected elite (neoliberal ministers and bank presidents appointed by Erdoğan), and terminated the rule of experts such as Ali Babacan and Erdem Başçı in 2015 and 2016 (Kutlay, 2020; Yağcı, 2018). In other words, the AKP gradually shifted toward a growth regime at odds with embedded neoliberalism, as attested to by the increasing salience of sovereign wealth funds, discretionary intervention in monetary policy, price controls, and other policy tools that seek to curtail the influence of transnational institutions and decrease the impact of global money flows.
Another transformation along these lines was Erdoğanism’s shifting relations to labor. The AKP attacked organized labor of all sorts in its first two terms. It initiated a discourse around the need to organize Islamic labor, but did not practice this. However, in its third term, it changed track. Between 2013 and 2019, union organization increased by 38% for the nationalist union confederation; 71% for the socialist union confederation; and 311% for the Islamic union confederation. These unions now have, respectively, 975,000, 171,000, and 684,000 members (DİSK-AR, 2019). The government simultaneously took measures to ensure that this was not accompanied by any increase in the unions’ power to strike or bargain collectively. Much of this was a governmental response to the wildcat strikes in 2015. The government is now creating a docile but organized working class.
Yet, none of this should be interpreted as an unshakeable boost in the developmental capacity of the Turkish economy, let alone the termination of neoliberal globalism’s grip. Turkey’s export-oriented industries are concentrated in low-tech sectors such as textile, chemicals, and glass; and most exporters remain dependent on imported goods. The overall growth strategy is even more dependent on other low-tech sectors such as mining, energy, and construction. The top AKP cadres have strong familial and personal connections with the small, medium, and big business families in these sectors (Buğra and Savaşkan, 2013). Although the ‘secularist’ wings of capital (that are technically more advanced) have also grown exponentially during the AKP era, the party is ideologically hostile to them, and has not cooperated with them to enhance technology-heavy competitiveness in global markets. As a result, the AKP regime has been unable to bolster technologically advanced export-oriented strategies (Güven, 2016: 1017). Nevertheless, in the past few years, the regime has sought to compensate for this weakness through aggressively expanding sovereign wealth funds, promoting technologically more ambitious war-making capitalists, and embedding both within the regime’s family circles (Madra and Yılmaz, 2019; Öniş, 2019; Tuğal, 2021).
Especially after the decrease in global money flows following the Fed’s 2013 decision, the AKP’s leaders started to put more verbal emphasis on economic nationalism and independence. They highlighted the construction, energy, and defense sectors as the motors of their nationalist quest (Madra and Yılmaz, 2019: 54). Turkey’s increasingly assertive stance in the Mediterranean and the Middle-East is also intertwined with this emphasis on growth in the energy sector. This assertiveness adds more fuel to the need to expand the defense industry (Madra and Yılmaz, 2019: 55). Businessmen in Erdoğan’s close personal and family circles are reaping the benefits of this expansion in a quite public way (Tuğal, 2021). Most prominent among these is Bayraktar, an arms manufacturer and Erdoğan’s son-in-law. Increasing synergy between Turkish foreign policy and Erdoğan-controlled capital has carried Turkish war technologies much beyond the country’s immediate neighboring regions. Bayraktar-made drones have been effectively used in Libya, Syria, Donbass/Ukraine, the Azarbaijan–Armania conflict, Ethiopia, and against the Kurdish insurgents in and around Turkey, with sometimes serious humanitarian consequences (Bearak et al., 2022). They have been sold to more than 10 countries. The United Kingdom is now listed among the countries willing to buy drones from Turkey (Middle East Monitor, 2021).
The Allure of Megaprojects
The previous section pointed out that many aspects of Erdoğanism in the 2010s draw attention to the limits of the label ‘neoliberalism’ as it is applied to Turkey. This section will focus on megaprojects and construction to further demonstrate that the state’s involvement in the economy was already diverging from established neoliberal patterns before the 2010s, even if the changes in the 2010s are more dramatic.
The AKP came to power in 2002 with a program that promised to combine targeted welfare with deepening market liberalization (Buğra and Keyder, 2006). However, starting with changes in the construction sector, Turkey gradually moved away from this promise. The government increasingly became an investor and producer. As a result, construction became a major driver of gross domestic product (GDP) growth (see Figure 1). As importantly, the main axes of hierarchy and domination, as well as infatuation with and resistance against them, came to be shaped by state-controlled (if not always state-owned) capital. The actions of the AKP leader Erdoğan (and the symbolism woven around his person) became increasingly central as the economy took this turn, which is why I label Turkey’s current dominant ideology ‘Erdoğanism’.
Consequently, Turkey has come to rank among the highest in the whole world in terms of the construction industry’s contribution to GDP. When compared with OECD (Organisation for Economic Co-operation and Development) countries in general, and to a few economies of similar size (e.g. the larger medium-weight Mexico and the smaller medium-weight Poland), Turkey’s construction spending has skyrocketed, while in the other cases construction’s contribution to the overall economy has either declined or fluctuated very little.4
What is as important for our purposes is the increasing share of public investment in this construction boom. The early years of AKP rule witnessed a steep climb in the ratio of both private and public construction in GDP. From 2002 to 2007, the ratio of private investment increased from 6% to more than 8%. However, in the 2 years following the global financial crash of 2007–2008, this ratio dropped slightly below 6%, and only partially recovered in the ensuing years. By contrast, the ratio of public construction in GDP steadily rose from 2.2% in 2004 to 3.3% in 2010. After a minor setback in 2011–2012, it peaked at 3.8% in 2013 (Karatepe, 2020). Despite the intensification of construction investment that cuts across the public–private divide, these contrasting trends attest to the increasing role of the state as investor in Turkey’s economy, especially in response to the global crisis of neoliberalism after 2007.
The public housing agency, TOKİ, is the kernel of the Erdoğanist economic trend. TOKİ was established in the 1980s as a financing and planning agency. It was meant to boost private housing production and open up the housing market to low income households by providing cheap credit. This orientation was more in line with ‘embedded neoliberalism’. After the current governing party AKP came to power in 2002 and Erdoğan became the Prime Minister in 2003, they immediately signaled the reorientation of TOKİ’s aims by announcing that the agency would build 500,000 housing units in the coming 10 years. In other words, it would become an engine of production instead of just enabling production by the private sector (Özdemir, 2011). Yet, TOKİ went beyond even that: in about 15 years, it built 160,000 homes only in Istanbul, and issued close to 3 million permits for new homes throughout the country (Gülhan, 2021).
Since 2002, TOKİ has built 1,058,480 housing units; 903.260 of these are social housing units.5 The significance of this number is better appreciated when contrasted to TOKİ’s previous record: Between 1984 and 2002, it had built only 43,145 houses (Ocaklı, 2018). Today, TOKİ builds not only housing, but also roads, sewer lines, water dams, and mosques through the revenues it generates from multiple sources (Karatepe, 2016: 53).
TOKİ’s official accounts (verbally) emphasize the heaviness of profit sharing in its budget and structure. This could have corroborated the existing literature’s assumptions regarding the centrality of (private-sector-serving) public–private partnerships in neoliberalism. However, the numbers (provided by TOKİ itself) tell a different story: its revenue from profit sharing is around 9% of its total revenues. Most of its revenues come from selling the units it produces (Doğru, 2021: 180–183).
The AKP’s use of TOKİ is one of its less transparent methods of creating or enriching regime-friendly businesses (Gürakar, 2016; Yagci, 2021). Along with a gradual centralization of many authorities that ultimately culminated in declaring TOKİ the single public agency in the housing sector (Türkün, 2011), the agency has been deliberately removed from the public procurement law to allow nontransparent relations between the government and capital (Gürakar, 2016: 95–97). Another factor that has enabled TOKİ and businesses that cooperate with it to build at unprecedented scales was the removal of regulations that apply to other businesses in the construction sector, a deregulation that occasionally produced dire environmental results (Çavuşoğlu and Strutz, 2014).
If AKP-connected businesses are the winners on the production end, who are the exact beneficiaries of TOKİ in terms of the employment and housing it generates? There is no straightforward answer to this question, but available indicators enable tentative inferences. The production of mass housing is by no means fair or egalitarian (Tansel, 2019: 329). Although there is insufficient research on the exact beneficiaries, recent analyses suggest that (along with big capital) the pro-regime poor (those that do not face displacement) also benefit from these developments, at the expense of not simply the displaced poor, but also middle and upper-middle classes (Demiralp, 2018: 101–107; Karatepe, 2016).
According to information provided by TOKİ, %18 of the housing units it produces are meant for the poor, and close to 46% for low- and middle-income families. When we add to these the units produced with other social purposes (such as disaster relief), more than %86 of TOKİ units have a social quality (TOKİ, 2019; also see Karatepe, 2020: 21). However, a researcher has used TOKİ’s own dataset to find out that only 8% of its housing units end up in the hands of poor people (Doğru, 2021: 164–165). Reliable numbers regarding TOKİ are hard to come by (Doğru, 2021; Gülhan, 2021) and these figures should therefore be taken with a grain of salt.
Nevertheless, in the aggregate, less privileged classes in fact benefited from TOKİ. The AKP implemented some regulations to prevent more privileged sectors from abusing the social units. For example, buyers of these units were required to certify that they do not already own any housing units. The owners of the social housing units are also barred from renting them (Sarıoğlu-Erdoğdu, 2014). Pro-government academics have presented mostly caveat-free celebrations of the housing gains of the poor (Uzun et al., 2010; Uzun and Simsek, 2015), and they have noted grievances only in passing (Palancioglu and Cete, 2014: 133). However, many of the poor and low-income residents have moved into TOKİ units only after losing their land to TOKİ or to other urban restructuring projects (Karatepe, 2020). Their social networks have been seriously disrupted as a result (Bartu Candan and Kolluoğlu, 2008). Life in TOKİ units has proved unwelcoming, even impoverishing, for many families, as a result of which many have moved out (Lovering and Türkmen, 2011). Despite all of these disturbances, there are solid indications that TOKİ’s mass housing has helped the generation of consent. So far, no individual-level representative study has been conducted regarding satisfaction with TOKİ. However, a municipal-level study demonstrates a strong relationship between mass housing and consent for the regime. Marschall et al (2016) have shown that—controlling for other factors such as religiosity and ethnicity—as the number of TOKİ housing units and expenditures increase in a municipal district, so does electoral support for the AKP.
Neither the Turkish Statistical Institute nor TOKİ itself provides numbers on the employment generated by TOKİ. Nevertheless, the cumulative numbers regarding construction employment in Turkey suggest that the construction sector, where TOKİ is indisputably the largest boss (Doğru, 2021), has been one of the mass employment-generating machines during the AKP’s rule. Erdoğanism has nearly doubled construction employment from 2005 to 2017 (see Figure 2). In short, despite ambiguities regarding the exact statistical composition of winners and losers, mass housing and construction-generated mass employment contribute to the material basis of consent for the Turkish regime.
Construction also sets the framework for Erdoğanism’s specific blend of domination, mass consent, and contention. The construction industry is one of the contributors to the extreme concentration of wealth (Bartu Candan and Kolluoğlu, 2008; Geniş, 2007; Karaman, 2013; Karatepe, 2020; Kuyucu and Ünsal, 2010). According to a recent World Bank report, five AKP-connected private companies are among the world’s top 10 sponsors of public infrastructure (Kumral, 2022). But the construction sector also creates jobs and housing for millions, and therefore popular support (Demiralp, 2018; Karatepe, 2020; Kumral, 2022), as noted above.
The reason for this support, though, is not only material: the glamor is as central. The regime is well aware of this: it officially calls the largest of its investments ‘Crazy Projects’. Erdoğan’s Crazy Projects include the third bridge and the third airport in Istanbul, but more spectacularly, the grandiose Istanbul Canal. The third bridge over the Bosporus, Istanbul’s third airport, and the highways which connect both to downtown Istanbul were built in the 2010s by destroying huge chunks of the forests to the north of the city. Ecologists warn that the 45-km Istanbul Canal that is scheduled to be created from scratch in the 2020s will cause even more irreparable damage than these completed megaprojects. Not surprisingly, traditional and social media are full of accusations that Erdoğan is competing with Moses.
Along with support, glamor, and humor, major political rifts too usually revolve around the construction industry (e.g. the Gezi protests; the 17–25 December investigations in 2013; and the following intra-regime split with the cleric Gülen, who allegedly masterminded these investigations). Consequently, counter-mobilization and repression are also mass-based. The Gezi events started out as protests against the demolition of one of Istanbul’s main urban parks to open up space for a giant shopping mall. The protestors also targeted Istanbul Canal, the third bridge, and the third airport due to their environmental destructiveness. The Gülenist-led 17–25 December investigations—an intra-regime move to appropriate and use popular anger against Erdoğan—sought to expose governmental corruption in these megaprojects. Once a core actor within Erdoğan’s regime, Gülen had been recently accused of serving Western interests, even of being an American spy. Consequently, government supporters perceived both the Gezi protests and the corruption investigations as Western ‘imperialist’ conspiracies against Erdoğan’s megaprojects. And these megaprojects, according to them, are the driving engines of Turkey’s rise to global prominence (also see Kumral, 2022: 20). They also framed their street protests against the failed Gülenist military coup of 2016 as a people’s uprising to protect megaprojects (Küçük and Türkmen, 2020; Tuğal, 2021). The argument that megaprojects are outside the realm of popular contention is commonplace in the neoliberalism literature. Erdoğanist megaprojects, however, have generated ample popular contention.
Megaprojects, by definition, cause multiple levels of social and natural displacement (Gellert and Lynch, 2003). Before the 1980s, major social protests frequently erupted alongside their construction globally. But neoliberal megaprojects were designed to disarm protest by diversifying the pool of winners and there was very little resistance to them throughout the globe (Lehrer and Laidley, 2008) up until recently.6 In Turkey too, the regime developed very complex ways of incorporating some of the displaced poor into the megaprojects, and dividing, marginalizing, and repressing the rest (Bartu Candan and Kolluoğlu, 2008; Kuyucu and Ünsal, 2010). Despite the poor quality of the housing, and arguably its reproduction of the conditions that cause poverty (Karatepe, 2020), the satisfaction with social housing came to be one of the glues between the regime and (some) poor people. The Gezi uprising was among the foremost events that broke these patterns, and every event after that further politicized megaprojects. However, it was the Erdoğanist regime itself that invited this polarization by associating each of the mentioned construction projects with the regime’s ideological characteristics and with the person, and familial connections, of Erdoğan.
From Erosion to Explicit Disavowal?
Turkish megaprojects serve openly political purposes such as mass employment and mass housing, as well as regime grandeur and consolidation of Erdoğan-connected businesses. This non-stealth, openly acknowledged politicization of megaprojects has spurred controversy and rebellion. Neither ‘embedded neoliberalism’, nor ‘state capitalism’ can capture the government’s convoluted involvement in the production of these megaprojects. ‘Neoliberal statism’ is a better conceptual fit for both the AKP’s general orientation and its construction craze.
Admittedly a counterintuitive concept, neoliberal statism reflects a cumbersome and unstable reality. Turkey’s ‘neoliberal statist’ economy is caught between embedded neoliberalism and state capitalism proper. Having exhausted the advantages of the former, but unable to fully embark on the latter, it is prone to corruption, and is unlikely to be sustainable with its current structures. Due to the increasing role of links between businesses and presidents’ family circles, neoliberal statism could sink into crony capitalism. These dangers are further exacerbated by reliance on cash flows from advanced countries, the reversal of which dealt a blow against the construction boom in 2018.
Throughout the 2010s, state-driven construction was still too heavily reliant on properly neoliberal sectors, especially finance. This set the limit to Turkey’s megaproject boom: As globally available hot cash tightened, the Turkish economy crashed, as we saw in the section on Erdoğanism. The crash was bad for the construction sector too. Erdoğanist megaprojects have been dependent on state guarantees. For instance, when the giant bridges and highways built through public–private partnerships cannot collect enough tolls, the government pays corporations to match up the guaranteed profits. As the government’s ability to expand such cash declined due to the 2018 currency shock, private companies announced their intention to sell their stakes in Erdoğan’s signature projects (e.g. Osmangazi Bridge, İstanbul International Airport and Gebze–Orhangazi–İzmir Highway). Beyond such signature projects too, both public and private construction companies are dependent on foreign loans, which have become bigger burdens after the currency shock. As a result, they slowed down their activities (Yagci, 2021). All of these dynamics culminated in a reversal of the aggregate trends in construction. Construction activity overall, as well as its employment-generating capacity, suffered a steep decline after 2018 (see Figures 1 and 2). In short, rather than a ‘deepening’ of neoliberalism (Fraser et al., 2013), neoliberal statism attests to its instability.
The Turkish economy plunged into an even deeper crisis in late 2021 after the governing party’s interventions in exchange and interest rates. Currently, analysts are divided over whether these interventions signal a transition to a different growth regime, or rather constitute haphazard reactions to structural decline. On his part, Erdoğan declared that the party’s latest policies amount to a ‘war of liberation’. This war, in his rendering, entails further reducing dependence on foreign capital. Erdoğanist intellectuals also argue that the president’s intensifying control over exchange and interest rates will increase production, mass employment, and exports in the long run. They hold that these interventions are part of a larger transition to a growth model that also involves growing state sponsorship of and control over select sectors. This packaging displays signs of hyperbole, since the government’s actions in late 2021 and early 2022 do not seem consistent enough. Nevertheless, this paper’s analysis of the state’s role in boosting mass employment throughout the 2010s suggests that the government has been paving the way for a growth regime change. If the events of the 2010s are any indication, the government’s further magnifying control of the economy is likely to result in even more profound pro-government active mass consent as well as growing mass opposition in the 2020s. As importantly, both the president and pro-government journalists have singled out (neoliberal) economists as the real culprit of the 2021 crisis. These moves indicate a self-consciously anti-neoliberal framing on the part of the government and its supporters. Statism is now eroding neoliberalism at a faster pace, and this erosion borders on an explicit disavowal, even if it is too early to tell how far the government will go in dismantling remnants of Turkey’ earlier economic model.