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.