What is a people-driven strategy?<\/p>\n
By Dj. A. Simarmata<\/p>\n
JAKARTA (JP): An article by colleague H.S. Dillon in this
\nnewspaper on April 10 was intriguing to me in that it shed some
\nbadly needed light on the protracted debate involving the recent
\ncrisis and the country's development.<\/p>\n
There have been many seminars or discussions on the issues,
\nbut like the Great Depression of the 1930's, the case is never
\nclosed.<\/p>\n
Dillon cited economist Professor Sumitro Djojohadikusumo's
\ncall to undertake a fundamental change in our development
\nstrategy based on careful study into the causes, effects and
\nimplications of the crisis.<\/p>\n
Dillon responded by stating that the causes of the crisis were
\nnamely injustice and discrimination, along with the massive
\noutflow of capital.<\/p>\n
He proposed a people-driven strategy, agriculture development
\nand agro-industrialization. But is a people-driven strategy
\ncompatible with agriculture development and agro-
\nindustrialization, and does it contradict market and technology-
\ndriven strategies?<\/p>\n
To some extent, the effects and implications are easier to
\npinpoint, namely poverty, the spectacular rise of the government
\ndebt -- both domestically and internationally -- and so on. On
\nthe positive side, the crisis did lead to the ousting of
\nSoeharto, something that was unimaginable before the crisis.<\/p>\n
Literature about the crisis, however, lacks a systematic study
\nof the causes and tends to generalize the problems the nation is
\ncurrently faced with.<\/p>\n
It is important to cite Joseph Stiglitz, who said that most
\neconomists in developing countries were only engaged in economic
\njournalism, having no value for formulating sound economic
\npolicies.<\/p>\n
Solid empirical research is needed. A reading of Alan
\nGreenspan's biography reveals the many years he devoted to field
\nstudies before becoming a central banker.<\/p>\n
A country like Indonesia is desperately short of good economic
\npolicies prepared by apt economists with solid and up-to-date
\nknowledge and experience.<\/p>\n
Citing the economist Sarbini Soemawinata, the country needs "a
\nreal solid picture" of the economy.<\/p>\n
Statistics from 1995 show that more than 20 million people are
\nlandless laborers, and more than 30 million are small
\nlandholders, having less than half a hectare of land. Most of
\nthese people live on Java.<\/p>\n
The question is whether agriculture is still appropriate for
\nJava. If it is, should it be land-intensive or knowledge-
\nintensive agriculture?<\/p>\n
Neither is feasible, because land is scarce and people are
\nlacking in education, as Dillon stated.<\/p>\n
But land is abundant in Kalimantan, Papua (officially Irian
\nJaya), and Sumatera. Our most pressing problem for Java is to
\nfind the most appropriate means of absorbing the landless
\nlaborers and small landholders. Hence, the best strategy for Java
\nis labor-intensive clean industries and not those which are
\nwater-intensive.<\/p>\n
The agro-industry terminology itself raises some confusion. Is
\nit an industry or an agriculture?<\/p>\n
Industrial activities are conducted inside a building and
\nprotected from the elements. Because of this prices can be
\nstabilized.<\/p>\n
Agriculture, however, is conducted out in the open, climate
\ndependent, and needs a comparatively large amount of land to
\nyield a profit.<\/p>\n
So where lies agro-industry? In short, agro-industry belongs
\nto activities of an industrial nature. A people-driven strategy
\nis not synonymous with agriculture. If agriculture is a dominant
\nactivity, a people-driven strategy is equivalent to agricultural
\ndevelopment.<\/p>\n
If the country is in the industrial stage, it is determined by
\nindustrial development in which principal activities provide
\nincome and jobs.<\/p>\n
But what about market-driven development? In a true market
\nsystem, both the products and processes are derived from people's
\nlegitimate needs.<\/p>\n
The market is a place where they freely buy what they need,
\naccording to their tastes and incomes, and where they sell
\nproducts, too. People in the market practice truly decentralized
\ndecision-making. This is a democratic way of living.<\/p>\n
The true market system promotes and maintains the
\ndecentralized system. So let there be the market, and let there
\nbe freedom for everyone to choose what to buy and sell.<\/p>\n
Every person has individual talents, leading to specialization
\nand productivity, and this can become a source of welfare
\nimprovement for the country. A development strategy has to enable
\neveryone to do what they are good at.<\/p>\n
Nobody can provide all the things he needs in a specialized
\neconomy. Everyone has to be able to exchange his products with
\nthe products of others, and the market guarantees this process.
\nEveryone will inevitably depend on the products of others,
\nprovoking an interdependent system.<\/p>\n
Hence, the market is an institution enabling individual
\ntalents to flourish, while at the same time a means of securing
\nsocial welfare. Instead of an adversary, the market becomes a
\nfriend.<\/p>\n
Interchange of products between the islands is equal to
\ndomestic inter-islands trade. Promoting internal trade would lead
\nto more solid national economic unity.<\/p>\n
Intensive domestic trade entails domestic travel of persons,
\nwhich supports nation building.<\/p>\n
Domestic trade is the other side of regional specialization in
\ninternational trade. Both regional and individual specialization
\nalso improve our national welfare. So the market is again a
\nfriend, not a foe, synchronizing its multiple objectives.<\/p>\n
The writer is a lecturer, author of several books, and an
\neconomics consultant in Jakarta.<\/p>",
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