Blaming politics for the abyss

Blaming politics for the abyss

By Satish Mishra

JAKARTA (JP): It is fashionable these days to blame politics
for everything. The downward revision of national income
projections by the Central Bureau of Statistics, the slow
progress of asset sales under the Indonesian Bank Restructuring
Agency and the swings in the value of the rupiah relative to the
dollar have one thing in common: political instability, lack of
political will, money politics or just plain politics.

"Politics" seems to be the one grand explanation. It has
become the deux ex machina of a faltering economic reform. It is
the one axiomatic answer to all possible questions. Why look
beyond "politics" if you want to find out why the Indonesian
economy is not yet back on track?

To be fair, there is some logic to seeing the hand of politics
behind all economic disasters. Being a trivial and somewhat
circular argument it cannot be easily refuted.

In a situation when the social fabric is rather strained, just
two and half years following the onset of one of the worst
economic collapses in Indonesian history, concepts such as
"political will", or lack of it, provide the perfect bludgeon
with which to assail the government.

It also serves to deflect questions over the inherent
soundness and solidity of the reform design. Such enquiries in
any case might be used to fuel a resurgence of the old order, to
give voice to domestic debtors over foreign creditors and to the
poor who never brought about the crisis over the few who did.

The political card also has the added advantage, very
important in the rough and tumble of economic crises, of
absolving economic technicians from the policy consequences of
their advice.

Crying politics is, therefore, tantamount to an abrogation of
responsibility. It is nothing more than playing the game of
musical chairs, of shifting the blame for the wrong diagnosis or
the wrong policy advice on someone else. In Indonesia today,
playing the political card is decidedly the wrong thing to do.

The reasons are fairly obvious. Indonesia is not just going
through a period of economic recession. It is also trying to
build a robust democracy. It is engaged in a dual transition;
from an authoritarian to a democratic political system, and from
a patrimonial or discretionary to a rules-based, arms-length
market economy.

The two are clearly inter-linked. It is difficult to have the
latter within the context of an authoritarian political system
which can override the very rules-based system that is expected
to mitigate the consequences of future economic crises. Democracy
and rule of law provide the foundation stone on which a rules-
based economy can be erected.

The problem is that there is not just one concept of
democracy. There are democracies and democracies, just as there
are different types of market economy.

This is true not just in practice but also in conception.
Which kind of democracy is relevant for a country in systemic
transition such as Indonesia? How should the exercise of
"politics" be viewed in such a context?

A democracy erected on the foundations of social choice theory
will see the role of politics as a stage on which different
agglomerations of self-interest bargain and reach workable
compromises.

Large numbers of competing interest groups will, therefore,
engender instability and might even make it impossible to arrive
at an agreement on a given policy direction.

On the other hand, deliberative democracy, embodying ideas of
public participation and public reason, allows society to rise
above these latent conflicts by defining public policy in terms
of the common good rather than an alliance of alternative
competing interests.

In the midst of a transition at the heart of which lies the
redefinition of the very rules of the game of public policy
making, the deliberative democratic model might well be the more
effective option.

In so far as one of the most difficult tasks of any systemic
transition is the transformation of an old but defunct social
contract to a new implicit social contract, the recourse to
public deliberation and reason might well be the only sustainable
option.

As economist Joseph Stiglitz says, such an implicit social
contract, "necessary to a market economy, cannot be simply
legislated, decreed or installed by a reform government. Some
such social glue is necessary in any society".

How does one manufacture this social glue? Arguably, in
Indonesia today, public deliberation of alternative policies
intended to serve the common good is more rather than less
necessary.

Systemic transformation cannot be engineered by the principles
of the market. The idealism of the forum needs to set the
boundary of the market. More rather than less politics is what
may well be needed.

"Politics in command" may not, therefore, be a bad motto for
the regeneration of economic growth and the establishment of a
more vibrant form of market institutions in postcrisis Indonesia.

The best minds in Indonesia should be eagerly jumping into the
political fray. What they should not be doing is timidly dipping
their toes in the political whirlpool and withdrawing them
quickly, as soon as they realize that the water is colder than
they had imagined.

The writer is the chief economist of the United Nations
Support Facility for Indonesian Recovery (UNSFIR). The views
reflected in this article are strictly personal and should not be
attributed to UNSFIR or any of the UN organizations.