Focusing on conventional wisdom

Focusing on conventional wisdom

By Meuthia Ganie Rochman

JAKARTA (JP): In Indonesia, conventional wisdom says that
development and economic growth should be export-led. This was
indulged in with relative success by the government in the mid-
1980s; the public felt released by the fact that Indonesia was an
attractive investment option for those wanting to export goods.

These industries quickly absorbed labor from urban and rural
areas and seemed to be a panacea for those wanting to go beyond
humble agricultural development. This overoptimistic notion
persisted in spite of some worrying illnesses in the industrial
sector.

Alternative conventional wisdom champions the trickle-down
economic growth that became popular in the late 1960s when
bureaucrats and economists agreed upon various subsidies to boost
the manufacturing and mining sectors. This approach then sparked
much criticism which the government responded to through social
programs from the Third Five-Year Development Program onward. In
spite of the criticism, the notion that some sectors needed
special subsidies continued to hold favor and indeed took on an
excessive form for some conglomerates. These kinds of subsidies,
even though they have been roundly criticized, in general are
publicly accepted.

The conventional wisdom most prevalent now focuses on the role
of the state in the economic globalization era. This global view
espouses that the role of the state is being eroded (quite
rightly) because the majority of economic activity cannot be
regulated by domestic authorities. Based on this theory,
deregulation increases the economic competitiveness of national
entrepreneurs. However in Indonesia, this attitude is still in
its infant stage.

What is conventional wisdom though?

Conventional wisdom is an edifice of an explanation about
something which is readily accepted uncritically. It embodies
metaphors -- an illustration, for example "locomotive" to
describe highly productive economic sectors -- and logic -- which
serves to explain the role of the metaphor and the relationships
between metaphors with other things. Both elements, metaphors and
logic, are usually generated when an economy runs well. The
people remember them as "the good old days" when "all good things
went together".

Conventional wisdom endures although the economic conditions
have changed. Certainly, then it raises questions as to the role
of economists that are supposed to be able to explain new
economic phenomena. Their explanation is that conventional
wisdom is not simply a matter of economics, but also politics
(interests) and sociology (the tradition of knowledge in
society).

From a political standpoint, a reasonable explanation is
needed for resource allocation. From a sociological point of
view, conventional wisdom contains the process of reconstruction
through interaction between various groups, for example
bureaucrats, intellectuals, community leaders, and so on. This is
about the orientation of a society in formulating and explaining
what is called "social problems".

In this respect, there is no difference between industrialized
societies -- understood as more rational and well-informed -- and
developing societies -- understood as less critical and lacking
information. Conventional wisdom exists in both categories of
society. This is because societies in industrialized and
developing countries are similarly complex so that the usage of
metaphors and categories is inevitable. The problem is that
societies suffer from a lack of time and method to revise already
produced metaphors and concepts. Ben Okri, a prominent Nigerian-
born novelist, in a very insightful BBC interview last year, said
that modern societies needed more than just ordinary
universities, but a "Faculty of Seeing Clearly".

Fred Bloc, an American sociologist from the University of
California at Davis, wrote in 1996 about conventional wisdom in
the United States. One of the most popular theories is the
metaphor that illustrates the state as a vampire which sucks
society's funds through various taxes. The underlying logic is
that those funds are not reinvested in efficient sectors, thereby
leading to economic downtown. This conventional wisdom has
another metaphor that illustrates money as the lifeblood of the
economy. A certain amount of blood is needed in the human body: a
lack of money causes the economic body to ail. With this way of
viewing money (for investment), people tend to see economic
problems as a problem of investment. Other possible causes, such
as economic organization and technology selection, are ignored.

Conventional wisdom overlooks many parts of many problems.
This is because people want to hang on to something
comprehensible in this complex world. Conventional wisdom is also
encouraged by a negative attitude toward a certain group, for
example businesspeople of Chinese origin, or government agent.

In the trickle-down development theory, what is abandoned is
the institutions that serve the trickle-down process. There are
some, insufficiently inadequate, efforts to discuss this aspect.
In the conventional wisdom on an export-led economy, what is
overlooked, for example, are questions about the sustainability
of imported components and future competition with other
developing countries which produce similar commodities.

Most Indonesians' understanding of globalization is still very
simplistic, sometimes emotional, and therefore overlooks many
aspects. The difference between internationalization and
existence of global regulations is blurred. The movement of
money, people, and investment across national boundaries is
indeed increasing. However, this does not mean a new set of
international regulations has replaced national authorities.

A study by Linda Weiss (1997) shows that internationalization
is greatly promoted by governments in industrial countries such
as Japan, Taiwan, and South Korea, following in the footsteps of
their counterparts in Europe and the USA. Many important aspects
of enterprises from countries which do business internationally
are still embedded in domestic regulations, such as a share of
assets, ownership, management control, research and development,
and highly skilled employees. These enterprises benefit from
domestic institution networks, including the state.

Secondly, the role of the state is not less important than
before. It is only that this time the state concentrates more on
coordinating domestic responses to international market forces,
including negotiations, information development, human resource
development coordination and development of the legal system.
Unquestionably this new role requires certain qualities from the
bureaucracy itself, including norms of efficiency and
accountability.

Thirdly, illusionists of globalization generally overlook the
character of the increasingly dominant production base, namely
ideas. This mode of production should be guaranteed by
intellectual rights. Industrialized countries are very concerned
to protect their assets in this field which they do by using the
hands of bureaucracies in other countries to enforce intellectual
rights. Incorrect views about globalization are partly engendered
by government attitudes around the world. Globalization, as a
very complex process for almost everyone, can be seen as a
scapegoat for the failure of domestic policies.

Back to conventional wisdom, what is the root of this
uncritical attitude? In Indonesia, society has still yet to
develop critical minds supported by punctuality, discipline and
meticulousness. Society finds it can survive with general and
artificial information. Secondly, society identifies progress not
by knowledge, but by information. Information is a description of
something, whereas knowledge contains substance. Thirdly, there
is a lack of expertise.

Our society gives overwhelming authority to the government,
but suffers a deficiency of authority among its citizens. As a
simple example, it is a luxury to develop knowledge within
individual professions. Hence everyone goes everywhere but
arrives nowhere.

The writer, a lecturer at the Department of Sociology,
University of Indonesia, currently a PhD candidate at Nijmegen
University, the Netherlands.