Hardest part of democracy: Creating beneficent state

Hardest part of democracy: Creating beneficent state

Peter Milne, Jakarta

Few can doubt the historic importance of the peaceful and
democratic passing of executive power to Indonesia's first ever
directly elected president later this month -- with the former
general-turned-democrat, Susilo Bambang Yudhoyono as the winner.

Indonesia and its citizens deserve a standing international
round of applause for this achievement in just six years since
former president Soeharto stepped down in disgrace in May 1998.
Not only is this transition towards political democracy of
immense significance for the future of Indonesia and its people,
but it also sets a major precedent for the rest of the Muslim
world, if not most of the developing world.

However, before we allow ourselves to be carried away on a
wave of euphoria similar to that witnessed after the country's
first free-and-fair general election in 1999, it is worth
reflecting on what still remains to be done on the journey
towards fuller liberal democracy.

If the long-term goal of democracy in Indonesia is prosperity
and personal freedom, then increasing political democracy through
direct presidential elections is only one, albeit important,
small step. Only a deeper liberal democracy, complete with a
wealth-creating liberal market, can nurture prosperity and
personal freedom. Liberal democracy is only half-baked where
personal freedom exists in the absence of a liberal market.

One of the hardest steps for Indonesia in moving towards a
deeper democracy in the next few years is likely to be in
accepting and embracing a truly liberal market economy. But while
many may beg to differ, it is this democratic relationship
between politics and the market that will create full democracy
in the sense of prosperity, equality and the best use of the
state's resources -- not to mention the protection of the very
democratic processes that this transformation rests upon.

For so long, Indonesians have been imprisoned by the idea that
somehow their indigenous wealth was being taken from them --
either by devious foreigners or by each other. This mindset is
the antithesis of a democratic and liberal quest for creativity
and opportunity. What Indonesians need to focus on now is not
fighting over how much of the cake they can each lay claim to;
after all, this is a zero-sum game in which what one person takes
another must forfeit.

Instead, if a culture of liberal democracy (and the creation
of a liberal market) is channeled into making the cake bigger,
then all Indonesians stand to benefit. This is just as much an
indispensable component of liberal democracy as directly electing
a new leader.

So, what are the main characteristics of this beneficent
liberal democratic state liberal democratic state that can both
create wealth and ensure that it is distributed more fairly?

Using three qualities suggested by Martin Wolf, associate
editor of the Financial Times suggests three in his recent book
Why Globalization Works,let's look at the Indonesian situation.

First, Indonesia needs to develop a new morality as it moves
away from the predatory state of the past, typified by the latter
Soeharto years, on its journey towards a successful advanced
liberal democracy. This requires the establishment of the rule of
law, administered by honest judges and, most crucially, a state
in which the military finally accepts to work under civilian
leaders.

There are three components to this new morality. Indonesia has
already largely achieved the first component, namely providing a
government elected by popular consent. The second component is
that some of the state's prosperity must be used to pay the
military adequately. In return the military must, over time,
accept either to bring all its off-budget finance on-budget, or
to return those sources to state control. Third, a symbiosis
needs to be achieved between two cultures that are innate to the
state: a commercial culture and a guardian culture.

The commercial culture depends on the sanctity of contracts,
honesty in business, innovation, openness towards foreigners and
the assets that they can bring, and the acceptance of dissent.
Conversely, those who uphold the guardian culture of the state
must eschew the world of business and instead focus on issues of
discipline, honor and professionalism in protecting the state's
institutions and integrity.

The second component of a secure liberal democracy is a fully
constitutional system that entrenches individual freedoms and
establishes representative parliaments. But while the relatively
free-and-fair electoral process in Indonesia is a huge step
forward, it is worth noting that only the 128- member of the
Regional Representatives Council (DPD) was directly elected.

Furthermore, the new parliamentary rules of "recall" give
inordinate power to political party bosses, who can replace
members of the House of Representatives (in their party) on a
whim. This prevents legislators from voicing their own opinions,
far less the concerns of their constituents.

One further attribute of a constitutional democracy is that
there should be constraints placed upon the power of the
executive through a system of checks and balances, together with
oversight and the monitoring of legislature. Only through such a
system can the rule of law be ensured and abuses avoided.

Furthermore, for democracy to remain secure, and to protect
the sanctity of contracts and private property, there must be
limits on the extent of inequality in society. Failing this, the
specter of populism arises, whereby poor majorities are tempted
to seize wealth from rich minorities.

Therefore, governments must be sincere in addressing the
concerns of the majority, while also explaining the realities.
The third component of a beneficent state is allowing regulatory
competition, something that many in the Indonesian elite have a
strong aversion to. Regulatory competition is just as important
in allowing the market to function optimally in searching out
opportunities, measuring risk and creating wealth.

Susilo has been elected by a truly democratic process. This is
a crucial first step, but only that. Far harder hurdles will
follow in seizing the moment and maintaining the momentum by
pushing for the implementation of a fuller expression of liberal
democracy in Indonesia.

The author is freelance writer on Indonesian politics.