Studies in the Political Economy of New Order Indonesia

Vedi R. Hadiz

Farchan Bulkin
 “State and Society: Indonesian Politics Under the New Order, 1966-1978”
PhD dissertation / University of Washington / 1983

 Mochtar Mas’Oed
Ekonomi dan Struktur Politik Orde Baru 1966-71
(New Order Economy and Political Structure 1966-71)
Jakarta / LP3ES / 1989

Daniel Dhakidae
 “The State, the Rise of Capital and the Fall of Political Journalism:
Political Economy of the Indonesian News Industry”
PhD dissertation / Cornell University / 1991

That the three most important works—in the eyes of this reviewer—on Indonesian political economy by Indonesians were all written some time ago is reflective of how Soeharto’s New Order marginalized analyses of capitalism and class by suggesting links to the Marxism that it outlawed. It is also noteworthy that they were all originally done as PhD dissertations in overseas (specifically, American) universities. With few exceptions, most of the other important work has been done by non-Indonesians: works by the Australian scholar Richard Robison (1986) and the American Jeffrey Winters (1996) perhaps come to mind most immediately. Apart from these three dissertations, one is hard-pressed to find many serious works of contemporary political economy by Indonesians.

The most recent of the three works under consideration here is Daniel Dhakidae’s thesis on the Indonesian press industry, completed almost exactly a decade ago at Cornell University. The two others were completed as early as 1983. One, on Indonesian state and society, was written by the late, could-have-been great, Farchan Bulkin, as a dissertation at the University of Washington in Seattle. Even now, it is not well known except to a handful of his old friends and colleagues. Mas’oed’s work on bureaucratic authoritarianism and corporatism in the early New Order was a PhD thesis originally completed at Ohio State University in 1983, but translated and published as a book in the Indonesian language in 1989.

It is interesting to note that both the PhD theses of Dhakidae and Bulkin remain unpublished, and furthermore, are unavailable in any shape or form in the Indonesian language. Bulkin’s work is primarily remembered by Indonesian scholars through a series of articles partly based on his PhD thesis that he published in the mid-1980s in the Jakarta-based journal Prisma, then Indonesia’s main scholarly publication, while Dhakidae has presented only portions of his thesis in seminar papers.

Bulkin’s thesis arguably remains the most theoretically sophisticated work on political economy undertaken by an Indonesian scholar to this day. It is concerned with the social basis of the Indonesian state, relating it to features of “peripheral capitalism” and ups and downs in the political fortunes of the country’s “middle class groups.” Dhakidae’s pioneering work on the print media is so grand, painstaking, and meticulous that it would no doubt be the major reference point for Indonesian media studies had it been published. Like Bulkin’s work, it has clearly not received the recognition it deserves and is under-cited. Mas’oed’s work helped to introduce a new generation of Indonesian students and academics in the 1980s to a body of theoretical literature and concepts—borrowed especially from studies of Latin America—by applying them to the Indonesia case in a studious, but not overly rigid manner. These were the concepts of bureaucratic authoritarianism and of corporatism, also explored at length by Bulkin and so often utilized by Indonesian scholars of politics and society until the very end of the New Order.


State and Society

Bulkin’s approach is the most clearly historical of the three works considered—though all of his data sources are secondary—and comes armed with quite a complex theoretical framework with which he attempted to re-interpret this data. The way in which he did this was fairly novel at the time. Bulkin’s main argument was that Indonesia was trapped within the structures of “peripheral capitalism,” a concept borrowed from the noted scholar of the Indian sub-continent, Hamza Alavi (1972; 1982).

For Bulkin, peripheral capitalism had a colonial character, being overly reliant on primary production “with the result that manufactured goods required for domestic consumption had to be imported.” It was dependent as well on the export of raw materials, causing vulnerability to international market fluctuations, and was distinguished by the fact that economic power remained in the hands of foreign corporations that repatriated profits overseas. The New Order, according to Bulkin, represented the reassertion of a peripheral capitalism damaged previously by war and economic depression—“with respect to the external dependence upon the international market and capital financing sources, economic structure and institutions.” The residual influences of dependency theory were clearly displayed in Bulkin’s work, as they were in Alavi’s.

Among the other arguments proposed by Bulkin was that the New Order “was forced to legitimize and rationalize the objective conditions of peripheral capitalism” because its narrowly developmentalist economic policies alienated large sections of the population, including critical “middle class groups.” He suggested that this placed its leaders in a contradictory situation: their “economic policies especially tended to delegitimize the regime, but to maintain a political structure in which they could pursue their economic interests required political legitimacy.” The “essence of the problem,” as Bulkin put it, was to “legitimize the conditions of peripheral capitalism for the sake of political stability and the social acceptance of the regime.” Therefore, the “chief political projects” of the New Order were to create a political system that was “programmatic and pragmatic,” and to maintain “a viable electorate machinery.…” Nevertheless, it was also continuously concerned with the “cooptation of political, economic, and bureaucratic forces,” as well as the “maintenance of political and bureaucratic institutions for repression and coercion.”

For Bulkin, these projects had real and ideological repercussions. Foremost was the reification of a bureaucratically defined Pancasila as state ideology. This ultimately entailed the imposition of such ideas as the “dual function” of the armed forces, corporatism and organicism, developmentalism, and opposition to mass-based politics. These ideological manipulations concealed the “reconsolidation of the structure of peripheral capitalism” upon which bureaucratic and regime interests were dependent.

But the main story that Bulkin presents is that of the ups and downs in influence of Indonesia’s small “middle class groups.” (Significantly, this concept is nowhere as rigorously defined as the other key concept of peripheral capitalism.) For Bulkin, at least since the early twentieth century, the fortunes of these groups have fluctuated. Sometimes it seems that they are able to confidently ride the tide of history, but at other times, they appear to be completely overwhelmed as more powerful social actors, like the military, come to occupy center stage. Perhaps nothing illustrates this better than the failed period of parliamentary democracy in the 1950s, which saw middle class groups finally clear the political arena in favor of Soekarnoist policies that created the setting for the advance of authoritarianism. Clearly Bulkin was writing from a perspective that privileged the role of the middle class, perhaps especially its intellectual and business representatives, as a relatively unambiguous pro-democracy force. The absence of democracy in Indonesia was due mainly to the absence of a strong middle class capable of developing a strong “national” economy. This position was clearly reflective of the influence of a type of Marxism, like dependency theory, which essentially belonged to the petty bourgeoisie.

Reflecting the failings of dependency analyses, the internal logic of Bulkin’s framework does not allow for significant changes in the structure of Indonesian capitalism since colonial times. It is a relatively static, un-fluid picture of Indonesian society and capitalism, forever doomed to be under the control of foreign capital and its domestic partners. Interestingly, Bulkin was writing just as an interesting phase in Indonesian capitalism was beginning: a more open embrace of international capitalism and markets through export-led industrialization. This coincided with the rise of major state-connected conglomerates that hijacked the process of “economic liberalization” for their own interests. However, Bulkin’s analysis hardly allowed for the rise of a politically and economically significant domestic bourgeoisie—trapped as Indonesia was in the structures of a peripheral capitalism dominated by foreign capital. The main contrast here is perhaps with the work of Robison, especially his Indonesia: The Rise of Capital (1986), which saw a capitalist revolution transforming Indonesian state and society, engendering new classes and social groups. Chief among these was the bourgeoisie. The difference is that Robison didn’t assume that the bourgeoisie, or the middle class, would always have a vested interest in democratization.


The Structures of Power

Better known to Indonesian academic circles than Bulkin’s work is Mochtar Mas’oed’s study of the economic and political structures of the early New Order. Never published in English, however, it too is absent from the reference lists of non-Indonesian academic works on Indonesian capitalism and society.

Of the three works considered here, Mas’oed’s is the most theoretically eclectic and the least influenced by the Marxist tradition of scholarship on development and capitalism. Instead, it primarily engages theories of political development as represented in work on Latin America by such scholars as Juan Linz and Philippe C. Schmitter. Mas’oed is essentially concerned with tracing the development of the New Order’s economic and political framework during its early formative period of 1966-1971, that is, until the first of a series of tightly controlled general elections held during the long Soeharto era.

The book begins with a review of different approaches to politics, arguing against those that veer toward systems-analysis (of the Eastonian kind), those that neglect the significance of interests, and those that ignore the interaction between domestic and international factors. He rejects mainstream modernization theory, which he suggests sees an unproblematic link between economic modernization and political democratization. He argues that the capitalist path of development in the Third World showed a correlation instead with the absence of democratization and the rise of authoritarianism.

Mas’oed’s own theoretical framework attempts to combine Guillermo O’Donnell’s (1973) bureaucratic authoritarian state model and Phillip Schmitter’s (1974) model of state-corporatism, which look at political formats dominated, respectively, by an insulated, technocratic, and authoritarian bureaucracy and by state-established corporatist vehicles of societal representation. The first, says Mas’oed, is useful in understanding the mechanisms of state controls over political life and the second, the necessity for co-optation once economic development produces new demands in society. He is aware that other scholars, notably Dwight King (1978) and Karl Jackson (1978), have attempted similar analyses of Indonesia, but Mas’oed insists that King was negligent in modifying the Latin-American theoretical framework to fit the specific Indonesian situation and that Jackson—who followed on Fred Riggs’ (1966) work on Thailand’s “bureaucratic polity”—underestimated the capacity of the presidential office to override the bureaucracy.

In addition, Mas’oed devotes a lot of attention to the correlation of interests in the early New Order between international capital and Indonesia’s new military rulers, intellectuals, and ideologues in supporting a capitalist development path. A crucial legacy, for Mas’oed, was the abject failure of Soekarno’s autarchic, socialism a la Indonesia policies in helping to legitimize this path. Mas’oed also elaborates on how the embrace of capitalism went hand in hand with the emergence of party and electoral systems as well as social representation models that were both exclusionary and state dominated, rather than genuinely democratic.

Many of Mas’oed’s observations had come to appear routinely in analyses of the New Order—especially those of its critics—even as Indonesian capitalism and society was transformed by the thirty years of Soeharto’s reign. In that sense, they soon became somewhat commonplace, while the New Order’s growing complexities required new kinds of analyses. For example, Mas’oed’s work is as ill-equipped as Bulkin’s to deal with such phenomena as the consolidation of a “capitalist oligarchy,” at least during the last decade of the New Order, which was premised on the fusion of the interests of politico-bureaucratic and capitalist families. This reflected both the rise of a domestic bourgeoisie and the very instrumental appropriation of the institutions of state power by powerful coalitions of interests. The result was a vast, predatory network of patronage that centered on Soeharto, beginning in Cendana Palace and extending down to the cities, regions, towns, and villages. Arguably, the constituent elements of this capitalist oligarchy are still salient in post-Soeharto Indonesia, as they regroup and reconstitute themselves within new still-predatory alliances.

Perhaps it is not surprising, therefore, that even by 1989, Mas’oed had abandoned part of the framework of his original PhD thesis. In fact, Mas’oed ends the postscript of his book by quoting the American Indonesianist Bill Liddle, who argues in voluntarist fashion that the most important variable in Indonesian politics was the leadership style of President Soeharto. This represented a drastic departure from the structuralist thrust of the thesis and perhaps reflected more exasperation with the perceived inability of theory to “keep up with events” than a thorough process of theoretical re-examination.


Capitalism and the Press

Like Bulkin’s work, Dhakidae’s has never been published. But it is a path-breaking work on the Indonesian press industry and is the only one of the three considered here that relied on primary data and extended periods of field research. Indeed, the data collected for this dissertation is quite astounding and includes information gathered through numerous interviews with such figures as the obnoxious Harmoko, Soeharto’s long-standing Minister of Information. Its pages are filled with tables and statistics on everything from newspaper distribution in different regions to the country sources of origin of newsprint industry imports.

The author’s aim is clearly to write a political economy of the mass media. This is juxtaposed against three other approaches to the mass media. The first is the socio-political history approach that looks at the role of the press in relation to the birth of nationalist movements, democratization, and the like. The second approach is found in conventional media or communications studies-type work that is primarily concerned with content analysis. The third, according to Dhakidae, is the crude Marxist type that is economically reductionist—viewing the mass media as simply part of a superstructure determined by the requirements of the economic base. In contrast, Dhakidae explores the Indonesian print media as an industry that grew rapidly with the advance of industrial capitalism—a development that changed the very character of journalism in Indonesia. The commodification of the news media, he essentially argues, has led to the death of the tradition of “political journalism.”

The origins of this political journalism are traced back to the rise of Indonesia’s nationalist movement and to the early post-colonial period, during which newspapers associated with political parties thrived. The policies of the New Order state in particular, which encouraged both the commercialization and depoliticization of all spheres of life, are credited with political journalism’s demise. Significantly, journalists deemed to be Left-leaning were banned by the New Order from practicing their craft. Indeed, there is much detail about the impact of state regulation on the growth and character of the news industry in Indonesia. The most important was clearly the practice of allocating press publication licenses, which became so coveted as to spur the creation of a lucrative black market involving Department of Information officials. To successfully attain one of these licenses was always a blessing for news media entrepreneurs, while revocation was tantamount to the kiss of death—for the publication as well as its employees. Journalists had to be forever aware that they should practice a “free but responsible” type of journalism.

In spite of large sections on state policy, the most fascinating parts of the thesis deal with the “rise of capital” in the industry, specifically the rise of the giant Kompas, Tempo, and Pos Kota groups (the last owned by Harmoko himself). Key developments included the introduction of ever more sophisticated production technologies and the rise of advertising revenue. Thus, somewhat paradoxically, the more sedate and non-controversial news reporting became, the bigger it was as a business. Dhakidae goes so far as to suggest that Tempo became an “advertisement magazine…. became capital unto itself, being able to cut off its economic performance from its quality.”

Dhakidae’s work reflected a trend in the study of Indonesian political economy: as the whole of Indonesian capitalism became increasingly difficult to study due to its growing complexity, there was more focus on specific industries or groups of industries. In spite of its wealth of data and keen, often biting observations, however, one is still left with the desire for a clearer picture of the political interests and attitudes of the new species conjured up by the industrialization of the news media: the journalist as capitalist. Was there a contradiction between the imperatives of the depoliticized brand of New Order journalism and that of capital accumulation through the “selling” of political news? What about the entrance of crony capitalists into the news industry, a development that occurred a little too late to be fully dealt with by Dhakidae? Moreover, perhaps somewhat unfairly, one is tempted to ask how the study stands up to scrutiny today, as the unravelling of the New Order has been accompanied by the proliferation of overtly political newspapers, magazines, and tabloids, for which political news itself has quite clearly become commodified. Has a bastard version of the press been born by the joining of industry and politics? In the current “survival of the fittest” news industry—no longer reliant on official licences—numerous publications have now come and gone, while the big players, Kompas, Tempo and the like, are still triumphant.

The lack of serious studies of Indonesian political economy by Indonesians was, I think, due to the New Order’s political marginalization of Marxist analysis. Though certainly not all political economy studies are Marxist-inspired—and many are clearly anti-Marxist—the twin themes of capitalism and class were generally regarded as belonging to the discourse of the political Left. Ironically, therefore, with few exceptions, Indonesians have rarely dealt with some of the more pressing analytical issues associated with the rise of capitalism in Indonesia. Analyses of Indonesian politics and society by Indonesians have often tended toward some of the most banal forms of narrow behaviorism. The fall of the New Order and the resultant opening up of political space may eventually see the production of new studies by Indonesians of Indonesian political economy.

Vedi R. Hadiz
Vedi R. Hadiz teaches in the Department of Sociology, National University of Singapore.

Kyoto Review of Southeast Asia. Issue 1 (March 2002). Power and Politics


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