New feudalism emerges in RI economy

New feudalism emerges in RI economy

Ignas Kleden, The Center for East Indonesian Affairs (CEIA),
Jakarta

Cultural patterns have never been a big issue in the
discussions about the Indonesian economy. However, if we look at
current government policies on price the increases, it becomes
increasingly obvious that some old established cultural patterns
are still at work even in supposedly technical matters such as
the economy. One of those old cultural patterns is a feudalistic
value system, which is usually assumed to have been overcome by
national independence, and therefore tends to be ignored despite
its ongoing prevalence in both politics and economics.

In its classical form feudalism is based on a unique social
division of labor between gentry and peasantry. The gentry or
nobility takes care of power and culture whereas the peasantry or
commoners are responsible for carrying the day to day economy.
This was apparently the case because people of the nobility were
considered too refined to be involved in manual labor, to plow
land, to plant seeds and to take part in the harvesting.
Conversely, the commoners are seen as too unrefined to deal with
the arts and culture. They are supposedly not learned enough to
engage in politics and too provincial to concern themselves with
state affairs. In that case they have to rely on the nobility for
political protection and cultural finesse and they have to
deliver agricultural produce and have to pay other tributes in
return.

This is to say in old feudalistic society, the economy is
never a mode of production but merely an attribute of social
status. It is supposed to become a concomitant trait of a
position one assumes in the social hierarchy. In the case of
Indonesia the feudal system has never been seriously overcome
because it was retained purposely by the colonial administrators
as a means of indirect rule. In this indirect rule the local
nobility was made an agent of colonial rule, using their
traditional legitimacy to govern their own people, without,
however, having the leadership over the governed. The strange
dynamics of indirect rule created a situated wherein the local
elite became the rulers and power-wielders without assuming true
leadership, because the leaders in both politics and the economy
were the Dutch colonial rulers who had the luxury of not having
to trouble themselves with ruling over the local people directly.

In that system the loss of political and economic leadership
was compensated for by a good life for the local nobility with
all its social paraphernalia such as handsome salaries, big
houses, a great number of house servants and military support
from the colonial government to ensure the obedience of the
peasantry. Besides that, the old exchange system between the
gentry and the peasantry was maintained by letting the commoners
keep paying tributes to their lords as had always been the case
in times past. To make a long story short, in a feudalistic
system it is the commoners who are responsible for the economy --
both their own economy and that of their lords.

Now that the students and other concerned citizens are
gathering steam with their protests and demonstrations against
the massive price hikes, it is time to closely examine our
economic behavior, which has resulted in these price increases.
In the first place, the commoners who have nothing to do with the
cash shortage within the government, are now obliged to pay even
more, whereas the "economic lords" who obviously are the ones at
fault in this economic crisis -- because of their corruption and
an inability to rectify things like non-performing loans-- are
generously tolerated while enjoying a release from responsibility
and not generally held to account for their errors.

Needless to say, what has been taking place in the first weeks
of 2003 -- the divestment of Indosat to Singaporean STT as the
best example -- showed clearly the government's effort to hunt
for easy and quick cash. The argument by Minister Laksamana
Sukardi is that there are only two choices, either Indonesia has
to keep poorly-performing state-owned enterprises as mere
liabilities or the government has to accept the lesser of two
evils by selling those companies to foreigners in order to get
some cash and have these companies work under efficient foreign
management which is more professional and capable. This argument,
it seems to me, does not hold for at least two reasons.

On the one hand, Indosat is known as one of the best
performing state-owned companies, and cannot be attributed to the
category of "mere liabilities". On the other hand, we should keep
in mind that the state as such is not a trader by all criteria.
One of the basic economic responsibilities of the state is to
encourage economic institution-building. The economy is much more
than a cash and carry transaction but the founding of productive
institutions and the formation of productive behavior. If the
government, for the time being, turns out to be unsuccessful in
fulfilling this responsibility, something else should be
undertaken to correct the failure. The failure in economic
institution-building cannot become a rationale to get rid of this
responsibility by means of selling off assets to foreigners.

In the second place, very little efforts have been made to
stop the corruption and rot which continue to be a "black hole"
which keeps sucking away state money illegally and, ironically
with striking impunity. We need an independent study which can
demonstrate the extent to which the ongoing corruption has
drained away public money, a situation that will continue to
worsen on a daily basis unless some serious action is taken to
halt it immediately. At the same time without even the smallest
hint of being considerate the price hikes have been decided upon,
though this decision most adversely affects and puts the burden
on the common people. A situation where the commoners are being
required to pay for the losses as a result of the crimes of their
"economic lords".

This becomes all the more obvious if we compare the increase
of prices for premium gasoline (Rp 1,810 per liter) and for
automotive diesel (Rp 1,890 per liter), whereas there is no price
hike for regular gasoline, locally known as premix. This
differential demonstrates one thing: people who ride buses and
other public transportation as well as fishermen who use diesel
for their boats are required to pay more than those who are
already wealthy enough to afford to drive luxury cars. It would
certainly be more sympathetic politically and more justified
morally if it was the other way around. Why are those who can
afford to buy expensive cars not obliged to share more of the
burden of the price hikes in order to subsidize the commoners who
have much less money?

The official argument that the price hike will produce more
cash, which in turn will trickle down to the peasantry in the
form of various sorts of compensation, does not hold water
either. The ridiculous question is this: Why on earth should we
marginalize people who are already marginalized economically by
giving them extra burdens in order that later, we can appear
generous by indirectly compensating the common folk with the
money they have to pay now in the form of price hikes? The above
official argument does not hold because there is no guarantee
whatsoever that various sorts of compensation will in fact
trickle down to the commoners. It is much more likely on the
basis of many precedents that those forms of compensation will be
treated as the tributes the commoners have to pay to their lords
who usually enjoy the luxury of being entitled to more facilities
and privileges without having more obligation and responsibility.