A New Capitalist Indonesia

Monique Dulac

GEOG 4632

Professor Joe Bryan

7 February 2011
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Indonesia is an archipelago that consists of 17, 508 islands, of which only approximately

6,000 are inhabited. The beginning of this inhabitation is theorized to have begun as far back as

two million years ago, as dated from the fossilized “Java Man”. To say that historically this

society and culture of people is steeped in tradition would be an understatement. The beauty and

resources that this country holds has been pursued by many other cultures in hopes that they

could profit from trade. Like a beautiful, mysterious woman from across the room many have

tried to conquer her, but none have had permanent success. The political and economic

development of Indonesia is very new. How does this country of thousands of islands, a

plentitude of natural resources, strong traditions, opposing religions, and millions of citizens

develop into the modernized capitalist society that it is trying to attain today?

Early Indonesia was organized as a communal society where the individual had very

limited freedoms outside of his group or village. This culture is soaked in traditions of the past

that take up the majority of the day in preparations and seasonal celebrations. In 1512 the

introduction of the first Europeans (Portuguese) was the beginning of the end for this traditional

way of life. By 1602 the Dutch has officially established the East India Company and became

the authority in Indonesia. With them they brought a colonial administration in which to rule

over them. The Dutch saw enormous economic opportunity in spice trade with Indonesia. Since

they had no established government or military to speak of it was quite easy to obtain control

over the country. The simplistic way of life that the traditional Indonesian village followed was

not conducive to the goals of the Dutch. Tineke Hellwig and Eric Tagliacozzo state “The Dutch

began to unify some of the island under their coercive control, forging alliances with indigenous

rulers. The intensified administration and exploitation of natural resources and the labor force

meant huge profits for the Netherlands and a pauperization of the indigenous peoples.”1 The
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Dutch held the locals under the ceiling of their ‘contradiction of capital’ economic outlook.

These were not people to them, but merely labor in which to produce capital (spices) that they

could trade in return for great amounts of wealth. This imperialistic view that the Dutch had on

the Indonesians continued until the Japanese occupation in 1942 during World War II.

In August 1945, two days after the Japanese occupation ended, Indonesia declared its

independence for the first time in modern history. President Sukarno was elected as the

country’s nationalist leader. After hundreds of years of being under a foreign oligarchy the

transition to independence had enormous hurdles. Sukarno favors foreign investments in order

to develop the country more quickly. This type of governance was frowned upon by the

traditional communal law found in rural villages, where the idea of technological advances and

social changes were viewed as a negative impact on the fabric of the community. People in

urban areas of Indonesia that had been more influenced by Western ways were extremely

supportive of this administration in the beginning. No longer were they under the thumb of

Dutch colonialism. Now they could buy, own, and sell they’re own land, goods, and services. In

1952 Justus Van Der Kroef argued: “The dynamic Westernized urban nationalism has collided

with the old social order. In their anxiety to modernize Indonesia, political leaders have

attempted to change the customs of the past and to adjust the average Indonesian as quickly as

possible to a new order of national independence.”2 Sukarno held office until 1965 when General

Suharto, who had been holding the head of the military position, over threw him. This was a

tumultuous period as the strength of communism, Islam and nationalism were all fighting for

control of the country. The political stability during Suharto’s years in office (65’-98’) was

shaky at best. His goal was to create a capitalist utopia with his country; only he saw it by means
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through strict military control. This created great strife within Indonesian society and culture

and more often than not led to bloodshed.

The geographical implications that Indonesia has faced have been both a blessing and a

curse to its development. The fertile soil that coats these islands is, in part, thanks to the

volcanic eruption of Krakatoa in 1883, which was a devastating loss of life at the time, but the

fall out of the ash created some of the most fertile soils in the world. This has led Indonesia to

be second only to Brazil in diverse ecosystems. The location of the islands on popular sea trade

routes and the Silk Road also increased its popularity with the outside world. Geographic

downfalls are that it is in the tropics and with that breed’s disease and poverty. Although it is a

rich exporting country there is still a significant divide between the bourgeois and proletariat

societies. Safe drinking water, sewers, education, and basic hygiene are all very serious

contenders in the fight for class equality.

Industrialization in connotation with the free market system in the Republic of Indonesia

today is rampant. The environmental degradation that has occurred because of the massive

deforestation in order to build more or to create room for more crops is staggering. Conservation

is not the word on most Indonesians tongues, especially those who are sold on the idea of a

capitalist society. The freedoms of an urban Indonesian are tied around materialistic and

monetary goals. They see developed countries such as Europe and the US as their ultimate

lifestyle goal, that happiness is only attained while wearing Levis, driving in your car talking on

your cell phone. John Maynard Keyes put it perfectly when he said: “To those who sweat for

their daily bread leisure is a longed-for sweet – until they get it.”3 This is where I believe the

future on Indonesia is headed. Just like in Europe and the US, once we get want we want it is no
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longer good enough, and we want more. The grind to create the Republic of Indonesia into an

international capitalistic contender will no doubt continue on.

The question of how all of this history, war, economic gain and loss, cultural and

traditional differences plays into the development of a capitalistic Indonesian society is quite

complex. It is these very characteristics that have made this country into the valuable resource it

is today. Will this country be able to environmentally and ecologically keep up with the

insatiable demands of its people? Probably not. At least not at the rate they are going now.

Keynes argued that the whole function of the economy is so that people receive the basic

necessities for survival. What this economy is after is well above and beyond what basic

requirements are needed. As a whole we as human beings are the most un-sustainable species on

the earth. Adam Smith was correct in saying: “The propensity to truck, barter, and exchange one

thing for another is common to all men, and to be found in no other race of animals.”4 This is

especially so in Indonesia. Many of the native flora and fauna are on the brink of extinction

because of the inexhaustible drive for economic dominance. The traditional ways of the

indigenous people are still strong, but over powered by the cloud of development. The past 300

years in this archipelago has seen more damage to the environment from expansion and

commerce than the past 1,970,000 years (volcanic eruptions excluded). Adam Smith noted that

the Native Americans had plodded along well enough before the Europeans arrived with

grandiose ideas of “bettering” their way of life, educating the ‘heathens’ and bringing some

civility to their world. A look at North America back then in comparison to now leads to a great

debate as to how much “better” the Europeans really made it.

Will the Republic of Indonesia become a successful capitalist society? Possibly. I

personally hope that it comes about in such a way as John Keyes described a free market society.
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That the State controls the market to a certain extent in so which it doesn’t cause or create

additional risk, problems or inefficiencies. Not so that it takes the place of capitalism, but so that

the in’s and out’s of the system work for the benefit of society and environment. In the grand

scheme of things the State has the ability to see the overlying picture, how one thing effects

another and the ripple effect. Placing attentive personnel in the administration is one way that a

developing country, like Indonesia, can continue to grow and prosper without leaving enormous

damage behind for future generations to clean up.

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Notes

1. Tineke Hellwig and Eric Tagliacozzo, The Indonesian Reader (London: Duke, 2009),
9.

2. Justus Van Der Kroef, “Society and Culture in Indonesian Nationalism,” American
Journal of Sociology 58, no. 1 (1952): 13.

3. John Maynard Keynes, “The Collected Writings of John Maynard Keynes, Vol. IX
Essays in Persuasion,” The Development Reader (New York: Routledge, 2008), 93.

4. Adam Smith, “An Inquiry into the Nature and Causes of the Wealth of Nations,” The
Development Reader (New York: Routledge, 2008), 62.
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Bibliography

Hellwig, Tineke and Tagliacozzo, Eric, The Indonesian Reader. London: Duke, 2009

Keynes, John Maynard, “The Collected Writings of John Maynard Keynes, Vol. IX Essays in
Persuasion,” (1931) The Development Reader. New York: Routledge, 2008. 89-94.

Kroef, Justus Van Der, “Society and Culture in Indonesian Nationalism,” American Journal of
Sociology 58, no. 1 (1952): 11-24

Smith, Adam, “An Inquiry into the Nature and Causes of the Wealth of Nations,” The
Development Reader. New York: Routledge, 2008. 58-63