Turkey initiated its long process of integration with the world commodity and financial markets in 1980, and the successive stages of liberalization have been surveyed and are overviewed here. Since its early inception, the Turkish adjustment program was hailed as a model by the orthodox international community, and was supported by generous structural adjustment loans, debt relief, and technical aid; currently, the Turkish economy can be said to be operating under conditions of a truly open and liberalized economy, and in this setting, many of the instruments of macro and fiscal control have been transformed, and the constraints of macroequilibrium have undergone major structural change. The analytics of the two distinct phases of liberalization (1980–8 and 1989–98) is the theme of the first section of this chapter, where the modes of accumulation and surplus creation under both subperiods are addressed separately; the second section carries this analysis to microaspects of adjustment and reports on the evolving patterns of employment, labor productivity, and overall informalization of the labor force. Responses to pressures of international competitiveness and the emerging patterns of income distribution are studied in the third section, and in the fourth section, the preceding analysis is applied to size distribution of income and the incidence of postliberalization adjustments on poverty. The incidence of globalization on public sector accounts and the state's changing role in the provision of public goods are narrated in the fifth section, and the sixth concludes with an overview of the social policy implications of globalization.

The Justice and Development Party (or AKP) era in Turkey has witnessed the emergence of a new welfare regime resting on voluntary public and private transfers. This system has been replacing the former welfare system in which the right to social welfare benefits was constitutionally guaranteed. The new welfare system has tended to distribute transfers on a selective and unequal basis. This article analyses the size and effects of this system using a social class-based analytical framework. In explaining class structure in Turkey, we use the official Household Budget Survey database. The results indicate a massive process of proletarianisation has taken place. Our results indicate that the working classes have constituted the majority of the poor. In this environment, the shares of voluntary public and private transfers in the incomes of households have been rising. For some classes, like rural unemployed, urban unemployed and agricultural labourers, these transfers have captured a very high share of the incomes. These transfers have also been distributed very unequally. Their share in the central budget has also been rising. All these point to the emergence of a new neo-liberal welfare (poverty) regime as part of a new labour control regime.

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