Institutional Reforms of the Guided Democracy (1957-1965) Farabi Fakih Staff member, History Department, Gadjah Mada University, currently doing PhD at Leiden University Abstract Guided Democracy implemented a series of institutional reforms meant to coordinate national planning and control the civil service. I argue that the development of new institutions may allow for the formation of the New Order state. The article looks at how a highly politicized and very inefficient state was a precursor to Indonesia’s twentieth- century developmental state. Understanding more about the Guided Democracy state is essential in understanding the New Order state, and thus Indonesian post-colonial history. Keywords: Institutions, Guided Democracy, decolonization Introduction Democracy regime. The Guided Democracy state had important features anticipating the The aim of this article is to designate New Order state: it was modernist, centralist, the institutional development of the Guided and corporatist. Democracy (1959-1965) as one of transition. The Guided Democracy state was an This transitory period was one of the most experimental state. According to Soekarno; important ones for the political economy of ‘If we admit that the Indonesian revolution Indonesia in the twentieth century since is not yet over, we have to understand that it represented a shift of policy from the we will have to confront continued renewal … laissez-faire, neo-classicism of the pre-Guided Try this, if it doesn’t work, try another, if that Democracy to the corporatist, developmental- doesn’t work, then another … Revolution is a state Guided Democracy and New Order. New dynamic process.’ (Soekarno, no date: 62).This Order historiography has continuously stressed was in line with the reigning thought of the that the transition occurred as a result of the day. In 1956, Soekarno visited and marveled change of regime, from the Old Order to the at China’s state-led development process, two New Order. Guided Democracy was lumped years before Mao Zedong plunged his country together with the period of parliamentary into the experiment of the Great Leap Forward democracy (1950-1959) as an ‘Old Order’ to (Ghoshal, 1986: 96)1. The United Nations signify not only that their similarity, but also their inherent dissimilarity with the New Order. 1 Soekarno was greatly affected by ability of Communist Yet, much of the organizations, institutions and countries, especially China, in leading the people to create personnel of New Order hailed from the Guided massive industrial and infrastructural projects. He once said ‘if you were to ask me to make a comparison what I learned Farabi Fakih 97 Institutional Reforms of the Guided Democracy (1957-1965) designated the 1960s as ‘Development Decade’, policies and implementation on the ground. signifying a trans-ideological and naïve belief in One might protest that understanding the the efficacy of a development model that was, organizational/institutional reforms initiated in large part, developed in the United States during the brief Guided Democracy period and exported throughout the world by both is of little use. The argument here is that economists and the newly developing science because institutional development is path- of public and business management. The 1960s dependent, these institutional reforms became brought forth the idea of development aid the foundation for the development of the New (Easterly, 2006: 33-49). Order state that came after. As a transition, In this modernist view, the problems some characteristics and institutional aspects of development were reduced to technical of the New Order developmental state was matters. The answers were to be obtained developed, while others were not. Guided by application of scientific management and Democracy itself was thus not a developmental developmental economics. The role of the people state. Because developmental states arise out was supplementary to the role of the scientific of institutionally-determined ‘path dependency’, planners. This modernist fetish for a scientific understanding Guided Democracy is central answer to the problems of the state and state- to understanding the New Order. This article society relations was different from the older, begins by positioning the developmental state political economy of liberal democracy, with its against the historical legacy of the colonial neo-classical outlook that constrained the role state. The periods of parliamentary democracy of the state to implementing the law. The shift and Guided Democracy are briefly surveyed thus represented a shift away from a law-based in two subsequent sections. Separate sections state controlled by the elite of legal experts to are devoted to corporatist and technocratic one a technocratic state in which control was planning during the Guided Democracy. A final increasingly exerted by the technocratic-inclined section deals with reform in Indonesian civil military. The form of government that insulated service management. decision-making from the social and political forces of society was coined bureaucratic polity Developmental state versus colonial by political scientist Karl Jackson. ‘Like islands state cut off from the social sea surrounding them, The New Order State was proud to be bureaucratic polities are largely impervious to included in the 1993 World Bank publication on currents in their own societies and may be more the East Asian miracle. It was grouped together responsive to external pressures emanating with far more successful countries such as from the international community’, he wrote South Korea, Taiwan and Malaysia, together (Jackson, 1978: 4). constituting the High-Performing Asian Why is it at all important to study a regime Economies (HPAEs). The HPAEs implemented that had a brief life and died a violent death? a state-led development model that resulted There was a fundamental lack of connection in sustained economic growth accompanied between the reforms of the planning and by increasing equity (World Bank, 1993: management institutions of the state and 27-77). Traditionally, developmental states were accorded to East Asian economies that and experienced during my first wave of visits to the USA, had successfully implemented such state- Canada, Italy, West Germany and Switzerland and what I learned and experienced during my second wave of visits led development. White and Wade wrote: to socialist countries, I say firmly, once again firmly that I ‘a politically and economically pervasive gained more experience and knowledge during the second state regulates industrial and agricultural wave of visits.’ 98 Lembaran Sejarah, Vol. 10, No. 1, April 2013 accumulation, production and exchanges (FDI) with little actual control of the economy through a network of political supervisory (Jomo, 2004: 59-63). agencies, administrative bureaus and Yet, it cannot be dismissed that a measure subordinated productive units.’ (White & of poverty alleviation and social development Wade, 1988: 15). Developmental states had was achieved. The Green Revolution, family specific governmental and political-economy planning, the expansion of rural education characteristics, including a developmental elite and health care all had tremendous effects with relative autonomy, a powerful, insulated in overall human development. Total factor and competent economic bureaucracy, a weak productivity growth in Indonesia was considered and subordinated civil society, a capacity for to be limited, but not insignificant (Van der effective management of private economic Eng, 2010: 294-309, Alisjahbana, 2009)2. interests and an uneasy mix of repression, poor Suffice it to say that although growth was human rights, legitimacy and performance sometimes accompanied by excesses that were (Low, 2004: 10-11). damaging, it was relatively broadly based. It The state conducted rational planning was also based on the development of specific through a highly competent bureaucracy, usually institutions or agencies in charge of, amongst within a pilot agency and institutionalized others, national planning, family planning, and effective relationships with the domestic the implementation of the Green Revolution. business class in which the bureaucracy was The core of these agencies had experts educated both close and distant from the business class in Western countries and were linked with it influenced and nurtured (Beeson, 2004: 30- university institutions. Such an incorporation of 3). All of these were possible because the tiny the intellectual class as a technocratic workforce state elite monopolized both national public for state-led development has been called the discourse and policy-making. Centralization and bureaucratization of Indonesian social science repression and selective, incorporated access of (Hadiz & Dhakidae, 2005: 5). civil society to the state were institutionalized. Suharto was successful in reforming the Most importantly, a developmental state bureaucracy by reducing its size, strengthening needed a purposive state fuelled by an ideology its loyalty through a military exoskeleton and focusing on economic growth and development improved the activity and performance through (Kohli: 2004: 20-4). pay boosts (Emerson, 1978: 82-3). Military The New Order has a controversial track control of the executive and its support of the record in development. In the 1970s there was technocrats in policy choices created a united, criticism that the state’s modernization process incorporated state, turning a