Sat, 03 Jun 2000

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.