Lessons for coping with economic troubles<\/p>\n
Demokratisasi Ekonomi dan Pertumbuhan Politik (Economic
\nDemocratization and Political Growth);
\nBy Prof. Dr. Loekman Soetrisno;
\nKanisius, Yogyakarta, 1997;
\n308 pp;
\nRp 20,000<\/p>\n
YOGYAKARTA (JP): History apparently always repeats itself. The
\nnation's economic crisis is not the first of its kind; there have
\nbeen two others in the postcolonial era.<\/p>\n
The first occurred in the 1950s and lasted until 1965. It was
\nmarked by a minimum of foreign exchange, while needs, especially
\nof textiles, were very high. The second arose in the 1980s when
\nthe price of crude oil tumbled on the world market.<\/p>\n
In the past six months, we have confronted the third.<\/p>\n
The government is working hard to cope with the situation.
\nWhatever steps it ends up taking, we are privileged to have
\nLoekman Soetrisno's latest book as an additional resource.<\/p>\n
He clearly explains the model of development implemented by
\nthe government in the past 30 years, and he offers another model
\nof development -- what he terms \"betting on the weak\" -- as a
\nmodel of the people's economy. He defends the latter as more
\ndemocratic.<\/p>\n
Loekman states the government opted for a model of development
\nof \"betting on the strong\", which places hope on development by a
\nhandful of major national and foreign investors, in the past 30
\nyears.<\/p>\n
It was assumed this model, from the capital and
\nentrepreneurial spirit of the investors, would be capable of
\naccelerating economic growth through modern industrialization,
\nand that equitable distribution would be automatically created.<\/p>\n
To ensure the smooth business transactions of the investors,
\nLoekman argues the government was compelled to act in an
\nauthoritarian way to safeguard political stability. In addition,
\nthe government granted facilities in the fields of investment,
\ntaxes and others.<\/p>\n
Realities were at odds with assumptions. The model was not
\nonly unable to stimulate a solid economic growth but it created
\nan economic crisis: scarcity of employment, monopoly, nepotism
\nand the demise of various people's economic activities as a
\nresult of the asymmetrical competition by strong investors.<\/p>\n
Moreover, Loekman claims the authoritarian stance revived by
\nthe government gave rise to fear in the community, which finally
\nled to an arrogant mentality of some members of the government
\napparatus, collusion and corruption. In addition, the majority
\nof citizens relinquished their creativity due to fear.<\/p>\n
Loekman uses as an example the small batik industries which
\nonce flourished in Yogyakarta.<\/p>\n
In 1958, 648 people's batik industries were registered. By
\n1990, only 5 percent of them remained.<\/p>\n
Their demise was due to two factors, Loekman writes. First,
\nthe government had never given serious and continuous attention
\nto these small industries. History shows that this sector was
\noften only seen as a buffer when the country was in an economic
\ncrisis, mainly to overcome the scarcity of employment
\nopportunities. The crisis over, Loekman says the government would
\ndirect its attention again to the \"betting on the strong\" model.<\/p>\n
Second, as a consequence of that model, the monopoly of strong
\ninvestors, both in raw material and in the market, could not be
\navoided. Apart from the capacity to lower prices of batik,
\nstronger businesses also provided better quality and designs of
\ntextiles compared to the small industrialists. Inevitably, the
\nsmall industries lost their market.<\/p>\n
Betting on the weak<\/p>\n
From the above case, it should be noted that the people's
\neconomic activities can really become a buffer for the scarcity
\nof employment opportunities in a crisis.<\/p>\n
A research conducted by the Center for the Research of Rural
\nand Regional Development of Gadjah Mada University in 1985 in
\nYogyakarta, Central Java, and Madura, East Java, found that 51.8
\npercent of the workforce of both sexes were employed in the batik
\nindustry. It effectively absorbed those workers not employed in
\nagriculture or industry.<\/p>\n
Loekman's recommendation is that developing countries like
\nIndonesia should focus on the \"betting on the weak model\".<\/p>\n
The people's economy assumes that development must be based on
\nthe strength and potential inherent in the people's economy.<\/p>\n
Compared to its converse model, the people's economy model is
\nslower in reaching acceleration toward national economic growth.
\nBut the weakness is compensated by the strength of the model, its
\ncapacity to create equitable distribution of development and
\nbusiness opportunities in the community. It will enhance the
\npeople's creative and self-reliant capabilities to push economic
\ngrowth.<\/p>\n
Loekman writes that this model has been implemented by China
\n(under the policy of \"standing on two feet\"), Taiwan, Korea and
\nJapan, all of which pay significant attention to agriculture and
\nrural industries. It is interesting that it has been able to
\nsolve economic problems and issues of equitable distribution in
\nthose countries.<\/p>\n
Loekman Soetrisno's ideas may provide alternatives to the
\nmainstream model of our development. At the very least, Loekman
\nwants to remind us and let us learn from history, our own and
\nthe development of other Asian countries. His work should be read
\nby involved government bureaucracies and those interested in the
\nfuture of this nation's development.<\/p>\n
-- Celes Reda<\/p>\n
The reviewer is a student at the Institute of Agriculture in
\nYogyakarta.<\/p>",
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