1 Transformation of Turkish State In the Context of Regulation School: The Political Ecomoy of State Budget 12 Dr. Erdal Eroğlu ABSTRACT: This study aims to analyse the transformation of capitalist state in Turkey in the context of regulation school considering accumulation regime and modes of regulation. Regulation school emphasizes that the historical development of capitalism is based on social and political interventions and arrangements, and it focuses on the institutional mechanisms that stabilise, facilitate and restructure the cyclical relation between production and consumption, which are both necessary for capital accumulation. Therefore, it is quite important to analyse the role of state in ensuring stability during accumulation regime crises, which occur in certain periods of capitalism, from the perspective of political economy. Consisting of public expenditures and taxes, state budgets are accepted to be the most important regulatory tools. Starting from this fact, this study analyses the state’s role as a regulator through its budget in accumulation regimes in the post-1980 period in Turkey. Key Words: Regulation School, Accumulation Regime, Capitalist State, Political Economy of Budget 1. Introduction Given their nature, states have been in existence for a very long period of time. The fiscal management of states along with public expenditures and income has evolved into its current state after going through several transformations since its very beginning. Throughout history, the main function of states has been to regulate and arrange social relations based on existing production relations. States have also looked for new forms that would match the changing structure of capitalism (Hirsch, 2011: 20). How the state handles this process depends on existing technical end economic conditions and above all, on social power balance (Hirsch, 2011: 20). Even if states may appear in different forms (like social state and welfare state), the shared objective of all states is to overcome social conflicts. This is related to the regulations made by the state in socio-economic reproduction processes. In this regard, it could be stated the capitalistic state has two main functions. The first is its accumulation function, which is more systematically handled within classical Marxist state understanding and Regulation School succeeding it. The other is the legitimisation function of state apparatus, which serves for the reproduction of capitalist state system at social level and which was mentioned by Antonio Gramsci and Louis Althusser and elaborated by different scholars studying capitalist state (Althusser, 2003: 168-169; Portelli, 1982: 20). Capitalist states have been trying to create a legitimate ground so that they can manage the social gap and polarization, which are getting more and more profound as a result of neo- liberal policies applied in the new accumulation regimes. In fact, the new accumulation regimes have been offered as a solution to the systemic crises since 1970s in particular. In most political and economic crises resulting in an impasse, capitalist states usually implement two different methods: They either have recourse to coup d’état, which involves violence; police power, which has become paramilitary and legal sanctions, which include prohibitions, or they take advantage of budget and money policies, which serve for the revaluation of capital, through taxes and expenditures. Although the methods applied by capitalists states can clearly be felt in social sphere (daily life), they are embodied and thus become visible in states’ budgets through taxes and expenditures. In other words, public finance stands as a field where all this 1 This paper is based on an PhD study titled “The Political of State Budget in the Context of the Historical Developmen of State: An Analysis of Turkish State Budget” (Uudağ University, Institute of Social Sciences), 2016. 2 İş Güç IŶdustrial ‘elatioŶs aŶd HuŵaŶ ‘esources JourŶal, July ϮϬϭ6, vol. 18, no. 3, pp. 81-108.