From bureaucratic to plutocratic capitalism

Figure 2: Development of capitalism in Indonesia

2.3 From bureaucratic to plutocratic capitalism

This chapter positioned this study within the broad range of research on the Chinese minority as well as on capital in Indonesia and developed an analytical framework to be used for the subsequent historical and empirical chapters. Because, ‘as always, neither economics nor cul- ture can explain everything’ Reid 1997: 37, I made clear that I regard ethnicity as an impor- tant variable that, however, has to be embedded in a structural discussion based on the mate- rial politico-economic conditions. Only then is it possible to adequately inquire about the power of the bureaucrats and the role of capital during the New Order and outline potential developments for the post-Soeharto time. In general, the study is in agreement with classical social conflict theories of the capitalist state that regard capital as the ruling class, with either instrumental or structural power over the state apparatus. In fact, I argue that after 1998, the capitalists have increasingly been able to loosen the reins that used to hold them down, while the politico-bureaucrats have much less of an uncontested, instrumental grip on the state and its apparatus. For the New Order, however, we have to reconsider the position of the Chinese capitalists. Given their ethnic ascription, they can hardly be seen as the ruling class. Instead, it makes more sense to define the state managers as the dominant part of a politico–business power bloc in charge of and in complete instrumental control over the state. The reason they were bureaucratic capitalism oligarchic capitalism plutocratic capitalism Chinese capitalists politico- bureaucrats re la ti ve s tr en gt h New Order future 1998 quasi autonomous from capitalist power lay in the effective limitations they put in place against the Chinese capitalists through 1 the marginalisation of Chineseness, 2 the accu- mulation of an own capital base that, however, derived from within the state, and 3 the co- optation of the capitalists in their bureaucratic oligarchy, in which they were the dominant fraction see Chapter 3. Capital was structurally important particularly towards the end of the New Order, but politically so much handicapped that it could have never translated its structural power into direct political action. The end of the New Order can thus be seen as the end of a deviation and as a ‘normalisa- tion’ of capitalism. With the help of Hutchcroft’s typology of capitalisms, it is possible to de- scribe the shift of Indonesia’s political economy from a bureaucratic form of capitalism to- wards a more distinctly plutocratic form. This change, however, merely reflects a modifica- tion of the internal hierarchy of the oligarchy in favour of capital, but not a disruption of the basic oligarchic power structures prevalent in Indonesia for the last decades. 3 LIMITED CAPITALISTS: CHINESE BIG BUSINESS AND THE STATE BEFORE 1998 The often turbulent history of Indonesia had one constant element: a predominantly Chinese capitalist class characterised by economic strength and political weakness. This chapter seeks to make sense of this contradiction, explaining the reasons for Chinese big business’ incapa- bility to translate economic power into political power. At the same time, I will explore why, since colonial times, the economic vigour of Chinese capitalists remained unimpaired. More pertinently, how did they maintain and even expand their economic power despite being per- manently branded and treated as ‘foreign Orientals’ by successive governments? Or did the perpetuation of their pariah status constitute the necessary conditions for their success? Culturalist accounts perceived Chinese business success as an inconsistency difficult to explain, because in most regimes the rhetoric as well as the corresponding policies of the re- spective rulers were targeted against ethnic Chinese. Hence, many culturalists attributed the prominent economic role of Sino-Indonesians to their primordial business acumen that pre- vailed over all political adversity e.g. Mackie 1989; Suryadinata 1997. In contrast, I argue that the ‘Chineseness’ of the capitalists was indeed the most important factor, not because it referred to innate ethnic abilities but to a feature that could be purposefully constructed and instrumentalised by the state. It is suggested here that ethnic Chinese businessmen, as mem- bers of a marginalised minority, were deliberately placed in the position of what I term ‘lim- ited capitalists’ – wielding structural power through their ownership of capital, but remaining politically handicapped due to the marginal social position of the ethnic group they were as- signed to. Through this they constituted an ideal, rather harmless bourgeoisie to be co-opted as willing financiers and junior partners in mutually beneficial predatory alliances with state officials, thus perfectly complementing the hegemonic authority of the politico-bureaucratic rulers. By tracing back the structural conditions for the emergence and existence of Chinese big business, this chapter will show that colonial patterns of state–business relations persisted throughout Indonesian history. Every regime maintained and used these historical legacies, which singled out the Chinese capitalists as ‘foreign’; and they themselves as ‘essential out- siders’ Reid 1997 benefited from these arrangements no less than the holders of bureaucratic power. I will focus on the symbiosis between the conglomerates and the state during the New Order, which will provide detailed observations on the power structures that were rooted in colonialism and – at the same time – remain immensely significant for contemporary Indone- sia’s political economy. And even if they seem to be busy revolutionising themselves and the conditions, creating something which has never been there before, exactly in such epochs of revolutionary crisis they conjure anx- iously the spirits of the past to be of their service, assume their names, battle slogan, costume, to en- act, in such time-honoured disguise and with such borrowed language, the new scene of world history. Marx 1960: 115 21

3.1 Determinants: Chinese capital in historical perspective