RI waiting for a new 'messiah'

Satish Mishra, Head United Nations Support Facility for Indonesian Recovery, Jakarta, satish.mishra@undp.org

If we cannot go back in time, we must go forward. If we do not, the present will devour the future. History is often unforgiving to those who do not learn from the past.

The leadership and direction that we crave in Indonesia must arise out of democratic processes and politics. It is not to be found in the ranks of men with medals.

Times have changed. Social values and expectations have changed. Fairness and justice are no longer words we read in Stalinesque constitutions. The world is swept by the new age of information and connectedness. Democracy is a very popular concept these days.

Democratic polities appeal to different people for different reasons. For some it is a desirable end because it widens individual freedoms and capabilities. For others democracy also makes sense as a means of development and economic growth. This is especially important as an economy reaches higher levels of sophistication and division of labor. Modern economies need to coordinate millions of individual transactions. Democracy provides the institutional anchor for such a system of individual decision making.

A third major reason for preferring democracy as a political system is because of the relatively greater stability of democratic institutions. This is because democracies are better at dealing with disagreements. Many economists have tried to estimate this stability enhancing properties of democracies. They have done so with complicated modeling and cross country regressions. They have tried to show that democracies while not always raising the tempo of economic growth have managed to lower economic oscillations below the trend line.

Others have put the point more simply. Democracies are more stable because they are able to evolve and mature without violent revolutions. As Mancur Olson, one of the most influential of institutional economic writers of the day writes:

"Not surprisingly, then, capital often flees from countries with continuing or episodic dictatorships, even when capital has great scarcity value in these countries, to the stable democracies, even though the latter countries are already relatively well supplied with capital and thus offer only modest rates of return."

Olson cites that despite the experience of poor countries which have grown extraordinarily rapidly when they have a strong dictator with "unusually good economic policies", he notes that "such growth lasts only for the ruling span of one or two dictators."

Not surprisingly "almost all the countries that have good economic performance across generations are countries that have stable democratic governments."

In Indonesia today, a large part of the task of obviating future systemic crises is to construct institutional structures capable of withstanding unpredictable shocks. This is why priorities of systemic transition, rather than just economic recovery, must lie at the heart of a future action agenda.

What are the priorities so crucial to a successful management of Indonesia's systemic transition?

The first is clearly a reaffirmation of a commitment to democracy. This is fundamental because so much of the ills of the past were rooted in a system of government that centralized political and economic decision-making.

The second key priority is to dismantle the apparatus of crony capitalism, itself the inevitable by product of authoritarian rule under Soeharto. The central features are: the inter- penetration of military, state and large business interests, the entrenchment of powerful natural resource and infrastructure monopolies, the suppression of independent labor unions and wage bargaining mechanisms, the abrogation of individual property rights, and entrenchment of a kleptocratic state. The result was gluttony of economic growth with little regard for either its environmental consequences or the efficiency with which scarce capital was being used.

The third critical priority, as well as a pre-condition for continuing systemic transformation is the adoption of a civil- rights based social policy. This is needed for two reasons. First, because for all the much vaunted redistributionist initiatives of the New Order, the system remained in its essence a system of wealth concentration. True, Soeharto was not a Mobutu. The plunder of the state was regulated by a sophisticated system of booty sharing. The number of absolute poor declined steadily. But real wages remained near subsistence even during the boom years of Indonesian industry. Industrial assets remained concentrated in a few families.

Second, the credibility of an effective systemic transition requires a clear signal of a break from the past such that the individual citizen has an open stake in future institutional arrangements for wealth sharing and a voice in the making of such decisions.

One rather obvious way to do this is to adopt a universalist social policy that will proclaim the right of every Indonesian, qua citizen, to have access to minimum levels of education, health, social protection, and food. Such a rights based social policy will signal a regime shift and a barometer by which the success of future governments might be judged.

A fourth priority for peaceful effective systemic transition is to find ways of preventing social conflicts from spilling over into national disintegration. Regional decentralization is a move in the right direction, but will mean little unless richer regions are prepared to assist the poorer parts in meeting basic rights and entitlements.

Clearly, a cross regional consensus on key social priorities is required. An effective way to move this agenda is through the organization of an Indonesian Social Summit to arrive at a common understanding of these issues across the regions. The time has come to balance the center-region forms of communication to a horizontal dialogue across the region, if necessary with the help of the central government acting in concert with civil society.

The above is an ambitious agenda. That is how it should be. Historic crises of the kind that were triggered in 1998 are rare events. They challenge the very existence of the nation. This is the time for innovation and boldness. It is a time for rebirth and rebuilding. It is not the time to look for individual escape- goats and culprits. This is so even when some such as the IMF, the bureaucracy or the military make such time-honored targets. This is all a sideshow. The principal task is to devise a domestic agenda for action in the future. It is time to stop running down blind allies.

The views expressed in this article are strictly personal.