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REORGANISING POWER in INDONESIA: the POLITICS of OLIGARCHY in an AGE of MARKETS Richard Robison and Vedi R

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REORGANISING POWER in INDONESIA: the POLITICS of OLIGARCHY in an AGE of MARKETS Richard Robison and Vedi R ‘Russia and the other transition economies have taught us that policy change involves a struggle over assets and that market-oriented reform can be hijacked to sustain, or even generate, new structures of power and corruption. In this powerful and historically rich book, Robison and Hadiz make the same point for the Indonesian oligarchy, showing its tremendous resilience in the face of a variety of external and internal pressures, from the IMF to the democratic opposition.’ Stephan Haggard, University of California San Diego, USA ‘[This] is the first study to spell out the nature of the relationship between a national oligarchy and the global market place. As such it is not only an important empirical study, it also represents a major critique of the neo-classical understanding of development that prevailed throughout the late 20th century.’ Richard Higgott, Editor, The Pacific Review ‘Vedi Hadiz and Richard Robison argue that what is taking place in Indonesia is the reorganization of the power relations incubated within the Soeharto regime rather than their fundamental transfor- mation, and that democratizing was instituted for the survival of the interests nurtured under Soeharto's rule as the institutional structures of the New Order became unviable. A must read for anyone inter- ested in Indonesia and “third world” transformations.’ Takashi Shiraishi, Kyoto University, Japan REORGANISING POWER IN INDONESIA Reorganising Power in Indonesia is a new and distinctive analysis of the dramatic fall of Soeharto, the last of the great Cold-War capitalist dictators, and of the struggles that are reshaping the institutions and systems of power and wealth in Indonesia. But this is more than a pathology of power and conflict in Indonesia. It is, at the same time, a broader political economy of regime change engaging the major theoretical debates about how institutions and states are changed, and how systems of social power survive, fail, or are transformed. The book challenges neo-liberal accounts where centre stage is taken by rational individuals making choices about policy, or by technocrats able to insulate themselves from predatory raiders within a state emptied of politics. Instead, it is argued that policies and institutions are forged in bitter social conflicts about power and its distribution. Thus, in the case of Indonesia, the dramatic events of the past two decades are understood essentially in terms of the rise of a complex politico-business oligarchy and the ongoing reorganisation of its power through successive crises, colonising and expropri- ating new political and market institutions. With the collapse of authoritarian rule, the authors propose that the way was left open for this oligarchy to reconstitute its power – to reinvent itself – via new accommodations with populist and predatory interests within broader society and within the new institutions of newly democratic Indonesia. These are questions made even more critical today as the US struggles, once again, in Iraq and elsewhere, to comprehend why expectations of market reform, democratic tran- sition and social change are often overtaken by a metamorphosis of reactionary interest or by a descent into chaotic and unconstrained systems of oligarchy. This is a book not only for researchers and students but for anyone interested in political economy, political sociology, development studies, and Southeast Asian politics and society. Richard Robison is Professor of Political economy at the Institute of Social Studies in The Hague, The Netherlands and was formerly Director of the Australian Research Council’s Special Centre for the Study of Political and Economic Change in Asia at Murdoch University, Australia. Vedi R. Hadiz is Assistant Professor in the Department of Sociology at the National University of Singapore and was previously Research Fellow at the Asia Research Center, Murdoch University, Australia. ROUTLEDGECURZON/CITY UNIVERSITY OF HONG KONG SOUTHEAST ASIAN STUDIES Edited by Kevin Hewison and Vivienne Wee LABOUR POLITICS AND THE STATE IN INDUSTRIALIZING THAILAND Andrew Brown ASIAN REGIONAL GOVERNANCE: CRISIS AND CHANGE Edited by Kanishka Jayasuriya REORGANISING POWER IN INDONESIA: THE POLITICS OF OLIGARCHY IN AN AGE OF MARKETS Richard Robison and Vedi R. Hadiz REORGANISING POWER IN INDONESIA The politics of oligarchy in an age of markets Richard Robison and Vedi R. Hadiz First published 2004 by RoutledgeCurzon 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by RoutledgeCurzon 29 West 35th Street, New York, NY 10001 This edition published in the Taylor & Francis e-Library, 2004. RoutledgeCurzon is an imprint of the Taylor & Francis Group © 2004 Richard Robison and Vedi R. Hadiz All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-40145-X Master e-book ISBN ISBN 0-203-67111-2 (Adobe eReader Format) ISBN 0–415–33252–4 (hbk) ISBN 0–415–33253–2 (pbk) CONTENTS Series editors’ preface ix Preface xii Acknowledgements xv Abbreviations and Glossary xvii PART I Historical and theoretical frameworks 1 Introduction: Economic crisis and the paradoxes of transition 3 1 Theories of change and the case of Indonesia 18 2 The genesis of oligarchy: Soeharto’s New Order 1965–1982 40 PART II The triumph of oligarchy 1982–1997 69 3 Hijacking the markets 71 4 Capturing the political regime 103 5 Disorganising civil society 120 vii CONTENTS PART III The oligarchy in crisis 1997–1998 145 6 Economic catastrophe 147 7 Political unravelling 164 Part IV Oligarchy reconstituted 185 8 Reorganising economic power 187 9 Reorganising political power 223 10 Can oligarchy survive? 253 Bibliography 269 Index 292 viii SERIES EDITORS’ PREFACE The establishment of the Southeast Asia Research Centre at the City University of Hong Kong in 2000 reflected an increased interest in Southeast Asia following two watershed changes. The first was the end of colonialism in Hong Kong, as the territory became a Special Administrative Region of China in 1997. This coincided with the second event, the Asian Economic Crisis, which struck down some of the major economies of the region, with some important political consequences. This book series reflects the Centre’s research agenda and seeks to advance the understanding of the political, economic and social forces that are shaping contemporary Southeast Asia. This series aims to produce books that are examples of the Centre’s emphasis on multi-disciplinary, comparative and holistic research. It also recognises that the political and economic develop- ment of Southeast Asia has often been turbulent, and that the contemporary era is no different. As the region emerged from decolonisation and war, rapid economic devel- opment reconfigured the societies of Southeast Asia. From the mid-1970s, a number of Southeast Asian economies enjoyed periods of significant economic growth. The economies of Singapore, Malaysia, Thailand and Indonesia ben- efited from a more generalised development in East Asia, and made rapid advances, becoming some of the most dynamic economies and societies in the world. Huge flows of foreign capital and the development of relatively powerful domestic capitalist classes rapidly transformed these economies and their soci- eties. The international financial institutions celebrated the region’s economic success, urged a continued unfettering of markets, and extolled the benefits of enhanced globalisation. But the negative social outcomes of the 1997 economic crash posed new challenges for the region’s development models, and demanded a questioning of the processes associated with capitalist globalisation. Further, the economic crash confronted the region’s political regimes with significant challenges. The most notable of these was the collapse of Soeharto’s New Order in Indonesia. This confluence of economic and political turmoil stimulated a reassessment of the impacts of globalisation and associated ideas about regionalisation. ix SERIES EDITORS’ PREFACE Nowhere has this reassessment been more vividly revealed than in the economic rise of China and the challenges and opportunities this poses for Southeast Asia. Understanding how Southeast Asians are negotiating the broad and multiple challenges – economic, political, social, religious and cultural – posed by globalisation, and how they are reinventing their societies are critical tasks. This is a central concern of the Southeast Asia Research Centre’s research agenda. A second research focus is the divisions of class, ethnicity, gender, culture and religion that appear as faultlines underlying Southeast Asia’s post- colonial nations. Such rifts shape diverse patterns of conflict in the region. A third area of research interest involves regional interactions, including those between states, within transnational civil society, business, labour, and migra- tion flows in and beyond the region. Finally, attention is given to the ways in which Southeast Asian political economies are being reinvented following the Asian Crisis, examining new patterns of politics, accumulation
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