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Social, Political and Economic Forces Shaping the Emergence and Development of Accounting Eko Ganis Sukoharsono University of Wollongong

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Social, Political and Economic Forces Shaping the Emergence and Development of Accounting Eko Ganis Sukoharsono University of Wollongong University of Wollongong Research Online University of Wollongong Thesis Collection University of Wollongong Thesis Collections 1995 A power and knowledge analysis of Indonesian accounting history: social, political and economic forces shaping the emergence and development of accounting Eko Ganis Sukoharsono University of Wollongong Recommended Citation Sukoharsono, Eko Ganis, A power and knowledge analysis of Indonesian accounting history: social, political and economic forces shaping the emergence and development of accounting, Doctor of Philosophy thesis, Department of Accountancy, University of Wollongong, 1995. http://ro.uow.edu.au/theses/998 Research Online is the open access institutional repository for the University of Wollongong. For further information contact Manager Repository Services: [email protected]. A Power and Knowledge Analysis of Indonesian Accounting History: Social, Political, and Economic Forces Shaping the Emergence and Development of Accounting A thesis submitted in fulfilment of the requirements for the award of the degree DOCTOR OF PHILOSOPHY from UNIVERSITY OF WOLLONGONG by EKO GAMS SUKOHARSONO Drs (MCE Indonesia), MCom (Hons) Department of Accountancy March 1995 Declaration I hereby declare that this thesis has not been submitted previously as part of the requirements of another degree and that it is the result of my own independent research Eko Ganis Sukoharsono Sukoharsono: Acknowlegment ii Katjep Abdoelkadir (University of Indonesia), Dr B. Wahjudi Prakasa (University of Indonesia), Dr Bambang Sudibyo (Gadjahmada University, Indonesia), Dr Ronny K Muntoro (University of Indonesia), Dr Warwick Funnell and Dr Sudhir Lodh of University of Wollongong. i I also would like to thank the World Bank through the Ministry of Education and Culture, the Republic of Indonesia - Accountancy B Project for its generous scholarship to undertake my PhD program. My travels and research were also financed through generous grants made by Malangkucecwara College of Economics, Executive Committee for the Foundation of Y3P Malang, Department of Accountancy - the University of Wollongong. I am most obliged to them all for making this research possible. And finally, immeasurable gratitude is also due to my wife, Iin, and sons, Brilly and Bram, who suffered through late nights, weekends, and school holiday absences as I concentrated on writing this thesis. Sukoharsono: Abstract iii Abstract Central to this study is the belief that it is important to understand the development of accounting in its social context. Accounting is regarded not as a purely technical apparatus outside the realm of the social, but its knowledge and discipline have attached to a variety of contingent forms within society in the range of rationales and socio-political contexts. Through this understanding, the study seeks to explore the genealogy of accounting history in Indonesia. The aspect of accounting knowledge and discipline focused upon is its emergence and development, in the context of a 'coming into the light' of accounting in the form of a calculus discipline and socio-political knowledge during the Dutch colonisation of Indonesia. This involved a genealogical analysis of accounting in connection with the development of a new knowledge of writing and numerical notation (the Hindu-Arabic numerals) in Indonesia. The development of accounting in Indonesia is understood not as a 'sudden' process, but rather, genealogically, emerged through a long and complex process of history. Long before the arrival of the Dutch in Indonesia, accounting in the form of calculative practices had emerged having definite objects and objectives of calculations. The kingdom periods and the transformation of religious influences from Buddhism and Hinduism to Islam contributed to the development of accounting in Indonesia. During the early seventeenth century, Indonesia changed from a rural- independent to a colonial society. This was due to the arrival of the Dutch in the Indonesian archipelago. 'Colonialism' determined Dutch policies in the archipelago. It is argued that the development of 'advanced' accounting as a complex form of Sukoharsono: Abstract iv information-production, information-retrieval and systematic double-entry bookkeeping belongs to the period of Dutch colonialism in Indonesia. The Dutch used accounting as an institution and technique to discipline those who were subject to their influence. Accounting had an important role as a means of supporting the development of a colonial system in Indonesia. This study concludes that accounting during the period of Dutch colonisation played an important part by not only providing technical calculations (for example, assessing prices, cost and profit), but also diverse roles in social, economic and political life. Sukoharsono: Contents v Contents Acknowledgment i - ii Abstract Hi - iv Contents v - vii Chapter I introduction pp. 1-25 - The Problematic History of Indonesian Society - Kingdoms, the Buddha and Hindu Influence - Muslim Reign - The Establishment of Colonisation - Accounting as Social Discipline - Colonial Accounting -Accounting in Questions Part One : Accounting and Its Relationship to "Power and Knowledge": A Philosophical Methodology Choice Chapter II : Methodological Research in Accounting History: Towards an Alternative Account of Power and Knowledge Relations pp. 26-51 - Foucault: History, Philosophy and Its Meaning - Foucault, History of Ideas and Marxian Historicism - Foucault as a Historian of the Present - Implications of Foucauldian Power-Knowledge Relations for Historical Accounting Research Chapter III: Accounting History in 'New' History pp. 51 - 84 - Foucault and Accounting History Research - Accounting as a Form of Power-Knowledge - The Development of Early Alphabetic Revolution -Alpha-numeric: A New Knowledge of Writing - Double-Entry Bookkeeping as Disciplinary Technique - Power of Accounting - Accounting and the Construction of Individual and Organisational Efficiency -Accounting and Social Practice Sukoharsono: Contents vi Part Two: The Genesis of Accounting in Indonesia Chapter IV : The Dawn of Indonesian History: Early Social and Economic Structure pp. 85 -106 - Early Trading Posts and Kingdoms - Indonesia in the Early World Sea Trade - The Hindu and Buddha Periods - The Greatness of the Srivijaya Kingdom Period - The Golden Age of the Majapahit Kingdom Chapter V : The Coming of Islam: Early Rituals, Antecedent Accounting, and Administrative Affairs pp. 107 -131 - Early Development of Islam - The Knowledge of Writing and Commerce upon the Coming of Islam - Numerical Notations - Transition from Hindu Learning to Islamic Economy and Administration - Early Islamic States and Public Finance Chapter VI : The Emergence of Double-Entry Bookkeeping: Dutch Colonialism in the Early Seventeenth Century pp. 132 - 157 - Political, Social, and Economic Evolution: Dutch Colonial Power - Dutch Political and Social Penetration - Economic Influences: Under Dutch Colonialism in the Seventeenth Century - The Early Use of Money - The Origin of Money - The Development of the Currency System - The Genesis of Bookkeeping in Indonesia - Early Double-Entry Bookkeeping Introduced Part Three: Accounting and Its Power: The Cradle of Colonialism Chapter VII : Colonial Accounting pp. 158 -182 - Monopolism and Colonialism - Jan Pieterszoon Coen, a Powerful Accountant - An Accountant as a Governor-General - Costing Calculations under Coen - Dutch Colonial Accounting Chapter VIII: The Domination I: The Age of Capital pp. 183 - 206 - The Dutch Company Expansion - The Politics of the Company's Capital Accumulation - Colonial Investment - Labour Force and Colonial Employment Sukoharsono: Contents vii Chapter IX : The Domination II: Accounting, Colonial Capitalism, pp. 207 - 235 and Liberal Orders - Radical Change of Capital and Administrative Policies - A New Capitalist Banking System - Netherlandsche Handel-Maatschapij (NHM) - The Javasche Bank - New Dutch Financial Policies - Industrial Innovation Chapter X : Con elusion pp. 236-260 - A Genealogy of Accounting: A Complex of Historical Social Structures - Early Indonesian Commerce - The Muslim Contribution - Money and Dutch Colonialism - The Disciplinary Power of Accounting - Coen and His Accounting System - Colonial Discipline - Accounting and Colonial Capitalism - Implications and Further Research References pp. 260-278 Chapter I: Introduction p.l Chapter I Introduction ... it is important for those working in any discipline to know the basis on which they rest their claims to knowledge. Gaffikin, 1989 During the last two decades there has been a growing awareness by accounting researchers of the need to place the development of accounting in its social context (eg., Hopwood [1978, 1987], Burchell, et al [1980, 1985], Cooper and Sherer [1984], Loft [1986], Hoskin and Macve [1986, 1988], Miller and O'Leary [1987, 1990], Hopper and Macintosh [1993], and Sukoharsono [1994]). ' Accounting, it has been argued, has played an important role in the construction of modern society. The social contexts of the accounting discipline are recognised. Attention has been focused not only on technical matters, but also has been directed to a variety of agents and agencies, ranging from the genealogy of accounting knowledge and the profession, to the diverse bodies of experts claiming a legitimate knowledge of economic and social life. New ways of posing questions in research orientations are formed out of diverse materials and in relation to a heterogeneous range of
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