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 weak state into a was basically symbolic. Rex Mortimer edited strong one. a book with the telling title Showcase State The Parliamentary Democracy period that showed the hollowness of the New Order supported a state that was, in large part, development (Mortimer, 1973). More damaging similar in its neo-classical, almost laissez-faire was the study by Yoshihara in the 1980s, who policy to the colonial state as a result of the contends that economic growth in Southeast Round Table Conference (RTC) agreement. Asia was the result of renter capitalism instead As Hans Schmitt notes, ‘the Indonesian of advancements in productivity (Yoshihara,

1988). The New Order developmental state 2 There is some controversy about the numbers. Pierre was an example of Ersatz capitalism in which van der Eng(2010) estimates Total Factor Productivity (TFP) to have been negative over the period 1975-1997, growth depended on foreign direct investment whereasArmidaAlisjahbana(2009) finds that TFP growth accounted for 30 per cent of total growth during the entire period 1971-2005. Farabi Fakih 99 Institutional Reforms of the Guided Democracy (1957-1965) political leadership was virtually restricted to measly 1.7 per cent on average per year between performing administrative and police functions’ 1901 and1928 before actually falling during the (cited in Chalmers & Hadiz, 1997: 10). That depression of the 1930s (Booth: 1998: 34-5). state effectively ended in March 1957, when Considering that annual average economic Prime Minister Ali Sastroamidjojo returned growth during the New Order period amounted his mandate and Soekarno proclaimed the to some 5 per cent during three decades, one State of War and Siege thirty minutes later. may safely infer that the developmental state Karl Jackson contends that since 1957 the delivered better results than the neo-classical basic form of government was the same state. and although the actors and policies have Douglass North contends that ideology - the changed, Indonesia had then embarked on its way people perceive how the world around them ‘bureaucratic polity’ project (Jackson, 1978: 5). works - was essential for the development of In December 1957, labour unions, followed by institutions (North, 1991: 97-111). Institutions the military, took over Dutch enterprises. The were a kind of connecting surface whereby the colonial economy had been retained a result of inherently faulty way humans perceived reality the RTC agreement, but also because policy- was tested on the capricious and unknowable makers maintained a largely neo-classical real world out there. Institutions grew out of a approach in which the state was supposed to learning process that tried out various forms, intervene as little as possible in the economy. rewarding those that minimized uncertainty The Indonesian colonial state was a neo- because of a reduction in transaction costs. classical one. It had an almost seventy-year Transaction costs or efficiency can only be strong history of open and free trade, although gauged in relationship to the ideological the early twentieth century did bring about context. In this regard, both the colonial state efforts at welfare intervention (Booth, 1998: and the developmental state were efficient 135-137). The colonial government only based on their bounded rationality. briefly toyed with measures of protection and The ideology of the Netherlands Indies state industrialization in the 1930s as a means was summed by the Dutch economist Boeke and of combatting depression and countering the legal specialist Van Vollenhoven as well the increasing threat of Japanese economic as the British historian Furnivall in the term predominance. There were few reasons for plural society. The perception was of a race- the state to undertake social intervention, based division within society that was culturally although the Ethical Policy was the first deep, between the white, Western and modern sustained attempt by a colonial power to section of society and the indigenous, traditional implement policies that later would be termed section. Modernity was a sideshow of the small developmental (Booth, 1998: 105). Investment White/Eurasian settler colony that gained some in capital goods mostly focused on the transport power within decentralized municipalities and infrastructure, although there was some provinces. The colonial state was conservative; social investment in Java such as agricultural its goal the maintenance of rust en orde. extension, irrigation, health care and credit The new ideological project of Guided service. Social investment in education and Democracy was thus a learning process with health remained piecemeal. Peter Boomgaard the elites knowing very little about what concludes that only a small part of the relatively the transaction costs were. This ideological well-to-do peasants enjoyed the services shift is central for us in understanding the rendered by the government (Boomgaard, 1987: travails of Indonesia during both the period 79). Gross Domestic Product (GDP) grew by a of parliamentary democracy and the Guided 100 Lembaran Sejarah, Vol. 10, No. 1, April 2013

Democracy. The shift towards an ideology result of the amalgamation of the colonial glorifying unity under the direction of the and the Republican states. Trust between state incorporating everyone was not just the departments and ministries and within the result of the failure of the colonial experience, center and the regions was very low. Because of but also caused by the failure of parliamentary the multiplicity of vertical forms during the pre- democracy. RI period, there was some confusion as to the proper vertical authority channels during much Parliamentary democracy (1950-1957) of the period. Much of the focus of the period has been on creating effective coordination processes The perceived problem with parliamentary within the central government. Less attention democracy amongst a wide variety of observers was paid to the problems of coordination on a has been the weakness of the state to vertical, central-regional level. The discussion coordinate. Internally, the state’s organization on the center-region focused more on the was fragmented along party lines and patron- problems associated with decentralization. client relationships, whereas externally the The effort for coordination was conducted presence of strong social organization impinged through the formation of new institutions, upon its ability to implement policies. One usually directly under the Prime Minister, important instance was the failure to rein the that gathered the few experts available in inflationary rise of civil service ranks. In the the country. These new organizations were early 1950s, Vice President Hatta proclaimed politically protected by their central position the need to reduce the number of the 420,000 in government and worked in a discrete 3 amalgamated Civil Service staff by half . manner. The proliferation of councils and Protests by labour organizations had the committees was another effort at coordination, Minister of Public Personnel quickly squashing although they tend to bog down the decision- this as a mere rumour. Differing calculations making (Panglaykim & Palmer, 1969: 29)5. show different numbers of civil servants Efforts to change the structural problems of the working for the Indonesian government, but at state went nowhere. The problem of the absence least one of the calculations put the aggregate of expertise was acute. Efforts to import foreign at a huge 1.7 million in 1953 (Emmerson, workers through the creation of a Foreign 4 1978; Biro Perantjang Negara, 1956: 271) .The Workers Office (Pusat Tenaga Bangsa Asing, weak coordination of the state happened on an PUTABA) in 1951 met with disappointment. inter-departmental and on a vertical level. The Numerous vacancies were not filled although Republic of Indonesia (RI) was created through the office tried a wide range of European the amalgamation of several states of the United countries to obtain workers. Help came through States of the Republic of Indonesia (Republik the international aid structure. The United Indonesia Serikat, RIS), which itself was the Nations and the United States government provided help, initially in the form of a contract

3 The number of civil servants in the Netherlands Indies in with an engineering consultancy group, then the early 1940s was hovering around 40,000 individuals. by providing expertise for the Planning Bureau The Civil Service of the United States of the Republic of Indonesia, created in 1949, was the result of the created in 1951(Biro Perantjang Negara, 1956: amalgamation of the Republic of Indonesia and the various 271). Planning was seen as the main answer to pre-federal states brought together under the label BFO the problem of coordination, as such much of the (BijeenkomstFederaalOverleg). 4 By 1968, the number of civil servants ballooned at 2.5 million people. Emmerson believes that much of the statistics on the 5 Committees were important to minimize the risk that Civil Service in the 1950s and early 1960s underestimated a decision made by a government agency would not be the true numbers. The five-year plan for 1956/60 put the recognized by others. In addition a committee appeared more total number at 1,727,548. ‘competent’ Farabi Fakih 101 Institutional Reforms of the Guided Democracy (1957-1965) international economics expertise was within revolutionary. It was an extension of the the Planning Bureau. Indonesian revolution of the late 1940s, which Aside from recruiting overseas expertise, implied that the period after the Round Table Indonesia also began sending people to study Conference agreement in 1949 and throughout outside the country. This required forging much of the 1950s had been a period in which institutional linkages between Indonesian the revolution went on suspension. Yet, government organizations with both an Soekarno was never clear as to what the end Indonesian university and a foreign, usually of the revolution would look like. American university. There was at the same time a major expansion of tertiary education in Guided Democracy Indonesia resulting in the founding of various The regime of the Guided Democracy new universities throughout the country. It emerged as a reaction to the failure of was a general social experiment of the 1950s parliamentary democracy. Therefore, it was facilitating the implementation of ideas from intensely preoccupied with trying to solve the West into various developing nations. the problems that had plagued that period, Guided Democracy had some of its roots in notably civil service inefficiency and a lack of this scientific expansion. The development was planning and coordination. Many of the new succinct in the sense that it was very new. Many state organizations now developed were created of the organizations and institutions created for the purpose of fixing such problems. Castles represented a caesura with colonial institutions has called the regime a bureaucratic ‘great leap and organizations (Russell, 1967: 29). forward’ (Castles, no date). I will look purely The shift towards Guided Democracy within the institutional development of the required an increasing participation by the state, not considering the economic and social military in the institutional development of conditions on the ground. There was a profound the state. The origin lay in the military’s role lack of connection between the implementation in solving problems of regional rebellion and of new institutional experiments and the corruption. The only anti-corruption law to be situation on the ground. In fact, the economy implemented in Indonesia during the 1950s was was subsumed under political ideals during issued by General A.H. Nasution as Head of the the entire Guided Democracy. Soekarno Army after the military emergency had been ‘compressed brute economic facts into the exact installed in 1957. The anti-corruption effort shape which would have fitted his ideology’ strengthened the legitimacy of the military. It (Tan, 1967: 29). I chose to periodize Guided also glaringly exposed the inefficiency of the Democracy roughly into two parts. The first parliamentary system. one is a corporatist period, extending from There was an increasing tendency in the 1957 to 1962, represented by the Depernas and public discourse towards the view that major its efforts to open up participation by modern problems were rooted in the political forms organizations in the state. The second part is a of the state. The party system was attacked technocratic period, running from 1962 to 1965, repeatedly by the President, Nasution and represented by the rise of Bappenas, where many others. Parliament was seen as a ambitious planning was conducted in order to complicit in retarding the anti-corruption recreate the nation’s political economy. effort. This required a change in the democratic I choose to let the period begin in 1957 system, but what kind of change and, even rather than the formal and conventional 1959 more importantly, what were the aims of because of the major developments in that year, such a change? Soekarno called the change including formal participation by the military 102 Lembaran Sejarah, Vol. 10, No. 1, April 2013 in civilian life, the effective termination of the Guided Democracy experiment. They include last vestige of the colonial economy through the the Bapekan (Badan Pengawas Kegiatan takeover of Dutch corporations. The rise of both Aparatur Negara, Surveillance Body for State the kabinet karya under Djuanda and Depernas Personnel), the Paran (Pengawas dan Retooling was much more pertinent as cues for the rise Aparatur Negara, Surveillance and Retooling of the new ideology. The rise of the military of State Personnel), the LAN (Lembaga provincial governors allowed for a gradual Administrasi Negara, State Administrative transfer of regional control from civilian to Body) and the Institute for Social and Economics military authorities. The period of the Guided Research (Leknas) of the Indonesian Science Democracy in fact showed a gradual expansion Council (MIPI). These organizations were of the military in civilian government posts created for the purpose of increasing the and business management. The year 1957 also capability of Indonesia’s civil service and to witnessed a large arrest of former ministers and look into bottlenecks and problems within important government persons in relationship the government apparatus and create a to the military anti-corruption effort. Several scientifically and politically correct cadre. These of them, including Sumitro Djojohadikusumo, efforts stemmed from the belief that as a result Sjafruddin Prawiranegara, Jusuf Wibisono of the fragmented ideology of political parties and Ong Eng Die, had been key economic and their infiltration in the civil service, the policy-makers in the period of parliamentary creation of good governance required both the democracy. The field was, as it were, open to application of scientific public management and new ideas. a rigorous and institutionalized indoctrination Many institutions were developed during campaign. Many new universities were the period of the Guided Democracy, but I will created, some offering both public and business mainly deal with those related to matters of management. The FEUI became the foremost coordination, planning and management. There source of economics expertise during this are two reasons for this. First, the problems of period, whereas Gadjah Mada University’s coordination, planning and management Macro Planning State had been central Coordination in the discussion among government officials during Revolution Socialism a la Indonesia the parliamentary democracy period. Second, these were Bureaucracy the kinds of problems Micro Management that were central Private Companies to the creation of the Indonesian developmental state. Figure 1. The Guided Democracy revolution for the government The solutions combined political repression and technical application. Administration Development Institute (Balai Pembinaan Administrasi) worked alongside Aside from the planning institutions of various other corporate, university and military Depernas and Bappenas, there were several administration courses and programs. other important organizations important to the Farabi Fakih 103 Institutional Reforms of the Guided Democracy (1957-1965)

Pertinent institutional changes discussed Java, Sumatra or the Celebes cannot be here may be repreented graphically as follows: developed if each island does its own thing … We will devise coordination within the National Corporatist planning Planning Bureau. The Bureau will determine the coordination effort, coordination between The initial development of Guided regions and among different ethnicities.’ (Duta Democracy came as an effort to meet the Masjarakat, 28 September 1957). demands of the regions outside Jakarta voiced The Planning Bureau was renamed at a series of congresses. The first one was the Financial and Economics Bureau (Finek) creation of a National Council (Dewan Nasional, but remained under the office of the Prime DN), functioning as a parliament of the karya Minister. Although Depernas was furnished groups. The DN was an effort to move away with the right to create an overall national from the party-based society considered to have plan, economic decision-making was still within inflicted such tremendous damage to state and the confines of the central government. At the society during the preceding period. The idea top of the coordinating body was the Economic was to incorporate every modern organization and Development Council headed by the Prime and create a consensus about the policy of Minister. It had fourteen members, including the state. The idea of karya was essential: it the chairman of Depernas (with ministerial represented people or organizations in society rank, the Governor of Bank Indonesia and grouped by function. Within this organic view the President-Director of the Development of society, everyone and every organization Bank. Finek provided the staff working for had a specific contribution to the revolution of the Council. Another important body was society. Western-influenced groups, for instance the Monetary Council headed by the Finance relatively liberal, pro-American parties like the Minister and responsible for the use of foreign PSI (Partai Sosialis Indonesia) and Masyumi, exchange, the formulation of policies and were banned, as were organizations considered supervision of the central bank. In addition, to be in conflict with the Indonesian character the Development Council formulated general such as the Freemasonry, once popular among policies for the State Development Bank leaing intellectuals in Indonesia, but banned (Humphrey et al., 1962: 77-9). in 1961. The development of Depernas was deferred Since Soekarno’s trip to various Communist to the National Development Congress (Munap) and Western countries in 1956, he had been held on 25-27 November 1957 in Jakarta. adamant about the urgency of an Overall Munap was organized by the Planning Bureau National Plan. On 7 October 1956, the DN and supposed to lay the foundation for a united decided in its fourth gathering to create a national development plan. In accordance to the Dewan Perantjang Nasional. The engineer corporatist nature of development, it gathered Johannes from Gadjah Mada University together 400 delegations from various sectors was invited to head a 19-man committee to of society (Keng Po, 26 November 1957).6 In discuss the formation of the planning board (Duta Masjarakat, 19 September 1957). At 6 All civilian and military leadership in regions or provinces a public meeting in Makassar, Soekarno came along with advisors, members of central government, once again reiterated the importance of Parliament, the Constitutional Assembly, the National Council and representatives of traders, industrialists, banks, development coordination. ‘Development labour, farmers, youths, women, reporters, veterans, artists, must be coordinated, and development that religious leaders and so forth, all of whom represented is based on the separate action of each man in their modern organizational forms. The organizations included, amongst others, SOBSI, KBKI and RKS for labour, is not correct. Do not develop on our own. Madjelis Perniagaan dan Perindustrian, DEIP, MII, KENSI 104 Lembaran Sejarah, Vol. 10, No. 1, April 2013

July 1958, the first Depernas meeting was the data problem through meetings. ‘More held, headed by Prime Minister Djuanda. The often than not, the numbers do not conform to meeting appointed Muhammad Yamin for the other data, or were not in accordance to reality. position of as chairman with ministerial rank. Such a condition had forced the Depernas to The members of Depernas were selected during calculate their own numbers in important fields a meeting in June 1959. Each province was through the creation of Special Committees, represented by prominent individuals, usually such as: Population Committee and National the Governor. The military, police, national Income Committee.’ (Bappenas, 1963: 8-9). The businessmen and minority groups were also plan was derided as being unworkable by both invited. people from outside of the country and those Guided Democracy only incorporated modern in government.8 When Soekarno visited the organization, many of which representing United States in April 1961, he gave a copy of ‘modern movements’ contribution to the the plan to President Kennedy. A team from creation of a new and modern society. Many Yale University was sent for a 24-day trip to also had a relationship with political parties, Indonesia. It concluded that, unless Indonesia especially progressive ones such as the PKI expanded its capacity to absorb capital for new (Partai Komunis Indonesia). It was also very projects, the plans would go nowhere without much an affair that left out participation by adequate skilled personnel, only adding to economists. The early 1950s had seen policy- inflationary pressures (Humphrey, 1962: viii- making by prominent Indonesian and a large xi). concentration of Indonesian and foreign Corporatist planning failed because the economists working together in the Planning philosophy behind it was deeply flawed. On Bureau to formulate the 1956/60 five-year the one hand, this stemmed from the idea that plan. Depernas, by contrast, was created with democracy and participation in democracy, minimal intervention from development experts hence the creation of unity, would be enough (Harian Rakjat, 31 June 1959). 7 to push forth development. It was an obvious Depernas was a less strictly organized answer to the chaos in which parliamentary version of the Planning Bureau, with far wider democracy had indulged. By incorporating development plans that included also the political and social organizations in government military and the nation’s cultural life. Involving and letting them participate in the planning very few development experts and facing severe process, it would automatically smooth the problems with the statistical data, Depernas process of development. To an extent it worked. produced an eight-year national plan in just In nationalized and government-owned ten months. In addition, development expert companies, the presence of labour unions on the committees were created with the task to solve company board did reduce strikes significantly (Sanusi, 1963: 423-4).9

and Perbana for the ‘economic sector’ in general, BTI, The reliance of expert foreigners for the STII and Petanu for agriculture, PWI, IPPKN and Ikatan design of the national development program Wartawan Ekonomi for journalists, Wakil Legiun Veteran and MUVI for veterans, and LEKRA and BKMN for writers was viewed with great suspicion. The and artists. corporatist period can perhaps be interpreted 7 Among the 80 members of Depernas, a special section was as a transitional period between a disappearing created for ‘intellectuals’ in order to allow that section of the karya society to participate. This group comprised six persons: Buntaran Martoatmodjo, a medical doctor and 8 Arsip Nasional Republik Indonesia (ANRI), Jakarta: BAPEKAN, no. former minister of Health, Sudarisman Purwokusumo, a 5. ‘The issue of financing overall development’, Depernas’ plan. legal expert, Djuneid Pusponegoro, another medical doctor, 9 Labour disputes went from 4,131 cases involving 5.1 million Djokosutono, a legal expert, Prof. Tjan Tjoe Som and Imam workers 1957 to 1,077 cases involving 800.000 workers in Sutikno. 1960. Farabi Fakih 105 Institutional Reforms of the Guided Democracy (1957-1965) generation of Dutch-educated expertise and Arta speech in which he outlined the country’s the rise of an American-educated expertise economic policy or Dekon, a terminology starting to occupy key positions in government that according to Castles was influenced by in 1964/65 (Sadli, 1965: 184). In the most management science (Castles, 1967: 79). By leftist circles, there was great suspicion against confining the Bappenas under the executive, it Dutch-trained experts, who were considered allowed for greater role of expertise within the to have forfeited the country’s independence body. The Bappenas had regional ambitions by agreeing to Dutch demands during the which would expand the scope of the planning, revolutionary war and the negotiations at monitoring and evaluating aspect of their work. the Round Table Conference. Men like Hatta, Studies of alternative national planning Sumitro Djojohadikusumo and Sjafruddin had been conducted in the early 1960s by Prawiranegara were sidelined, whereas others Leknas and the FEUI. Surveys of various such as Djuanda and Muh. Yamin had passed planning agencies in Communist countries were away by the early 1960s. Newly trained made by Panglaykim and others. There was American experts were graduating in the early special interest in the Soviet Planning model 1960s. Many of them formed networks within introduced by Khrushchev in the country’s sixth the new organizations and with prominent five-year plan (1956/60). The appeal of the plan universities. They were willing to look into the was its decentralized and regional character. problems associated with the implementation By 1962, much of Indonesia had been subdued of Soekarno’s socialism a la Indonesia. The by Jakarta. There was a large problem in creation of MIPI and Leknas meant that the trying to integrate an area known to have deep time was ripe for the experiment to try on secessionist feelings which could flare up any something else that was new. moment. The Economics and Social Research Institute of University of Indonesia sent J.E. The technocratic Bappenas Ismael for surveys in Sumatra between October 1961 and February 1962 in order to assess future Bappenas has become the iconic symbol of forms of state organization. Ismael found the the New Order regime, similar to MITI in Japan. state of coordination to be problematic (Ismael, It was widely regarded as the central policy- 1962: 125-36). The need to create a functioning making body of the New Order government since state organization that incorporated distant it conducted its own, arguably less impressive and problematic regions with the centre and to version of development. In many writings, coordinate developmental planning animated Bappenas is assumed to have come into being a discussion that would eventually be pursued after the fall of the Guided Democracy signaling in Bappenas. the rise of rational purpose in the Indonesian The Gosplan-Sovnarkhoze structure of the government. Yet, it was the Presidential Act Soviet Union was cited several times in the 12/1963 that reformed much of the planning discussion on Indonesian planning. The Gosplan process and state apparatus. The act integrated was the Soviet’s state planning commission, Depernas within Bappenas, which was founded similar to Depernas/BPN/Bappenas, while in December 1963. Depernas would also be Sovnarkhozies were regional economic councils. put under the office of the President. Thus, The Soviet Union was the technocratic state planning was demoted from a high government par excellence. It had the highest number of body to becoming part of the executive. This engineers on a per capita basis and its idea of implied scaling down the corporatist idea. planning was suffused with a deep belief in the Reintegration under the executive was again efficacy of science, rationality and mathematics mentioned in Soekarno’s 1963 Ambeg Parama 106 Lembaran Sejarah, Vol. 10, No. 1, April 2013 to replace both democracy and the market. the Malaysian confrontation, university and It was appealing in the fact that it left the intellectual relations remained in place. reins of policy-making mostly in the hands of One may say that Bappenas was the civilian experts. Instead of democratizing planning, the version of the military territorial doctrine in Bappenas model would ‘centralize’ regions by action. There were three separate organizations dispatching technocratic embassies. which would be part of Bappenas’s repertoire At the same time, the Bappenas model of new institutional relations: Baperdep, provided a level of independence to the regions Bakorda and Bamunas. The Baperdep (Badan in a way that was not threatening to Jakarta. Perencanaan dan Penelitian Departem, The establishment of regional planning offices Departemental Planning and Research Body) was opposed by the central government during was aimed to provide help for the coordination the Depernas period with the argument that and smooth running of government ministries the regions were given plenty of representation and department. It was created through the in the planning body. With the wars dying Government Decision 3/1964 in February of down, provisions of regional planning became the same year. It functioned to create annual more possible and less threatening to the and long-term development plans and to central government. In any case, control of conduct research for the purpose of planning. the regions by the central government was Its position in the ministries was as an aid to reasserted by military means. During the the respective ministers with the prerogative Guided Democracy, effective control of many to formulate proposals. The Bakopda (Badan provinces was maintained by the military. Koordinasi Daerah, Regional Coordination The creation of the doctrine of territorial Body) aimed at helping the regions coordinate management, as one of three important military their regional plan with the national plan of doctrines launched in 1962, coincided with Bappenas in a way similar to what had been civilian regional planning (Pauker, 1963: 28).10 available in the Eastern Bloc. Yet another Bappenas also continued the international important organization was Bamunas (Badan institutional linkages that had been developed Musyawarah Pengusaha Nasional, Indonesian in the 1950s. Bappenas Lectures held by Council of National Private Entrepreneurs), set foreign experts became a regular occurrence up for the cooperation of planning with private whereas the Asian Institute for Economic business. The head of the Bappenas was in turn Development Planning in Bangkok supported supported through the Muppenas (National Indonesians in pursuing foreign institutional Development Planning Congress), a committee relations. The gathering expertise could be of the heads and daily heads of Bappenas, witnessed in Baperdep’s national research Parliament and governors or regional leaders. group, which included various ministers that Bakopda was an important element in the dealt with government research as well as Prof. integration of regional and central government. Sadarjoen Siswomartojo, head of Leknas. The Based on Presidential Act 19/1964, it placed relationship between Bappenas and research governors as head with the task of creating a organizations such as Leknas and the FEUI complementary regional development plan. It was maintained throughout the period. Despite was also instructed to help the implementation the fact that political relations between Jakarta of the national plan and to coordinate and and Washington deteriorated as a result of supervise the implementation of regional development. The integration of governors

10 The military territorial management was developed with the within Bappenas meant that the delineation help of American-trained economists, such as Sadli, Widjojo Nitisastro and Subroto of the FEUI. Farabi Fakih 107 Institutional Reforms of the Guided Democracy (1957-1965) between the Department of Internal Affairs and OPS were under the regional Bamunas. This the planning body became abstruse. plan incorporated the entire Indonesian In April 1965, Soekarno proclaimed in business world within the socialist, state-led Parliament that Indonesia had just entered the development á la Indonesia.11 stage of Indonesian socialism. Many government Departments and regions were compelled by officials were very anti-capitalist, including law to submit annual plans to Bappenas, where aversion against indigenous capitalists or state- they would be assessed and corrected in light owned corporations (Castles, 1967; Panglaykim of the national plan. The task of formulating & Palmer, 1969: 52). They were probably quite the annual Presidential progress report was happy with the wide-ranging socialist plans of given to Bappenas. A series of conferences Bamunas. Its duty was to drive capital, power between Bappenas, Baperdep and Bakopda and experience of the private sector to arena was conducted in July and September 1964 in of national development. Its first congress order to ascertain the borders of authorities was held in February 1965, less than a year between each organization. Bappenas was an before the end of Guided Democracy, which, of effort to centralize and expand the executive’s course, could not have been foreseen at the time. capability in the coordination of the state’s Bamunas saw the need for a greater integration job. Although participation by modern of private sector planning with government- organizations continued in Bappenas, it was owned companies and cooperatives in order highly limited, mostly to the provincial level of to complement one another in reaching the Bakopda. The expansion of OPS was intended targets of overall national development. The to gradually replace all non-government national private corporate world was required business organizations, including the Chamber to tow in line with the state-created Ikrar Panca of Commerce and KENSI. Bakti ethics code. A Private Corporate Honour The Bappenas planning effort would have Committee was planned to punish companies created a truly technocratic state, in which that failed to follow the ethical code and root experts would play major executive roles and out reactionary and contra-revolutionary opposition was reduced through incorporation businessmen. or outright expulsion or sidelining in society. One task of Bamunas was to restructure This did not, though, reduce the massive the entire private economy with the aid of a economic hemorrhaging that coloured the new bureaucratic organization called OPS period. In fact, despite the intricate planning (Organisasi Perusahaan Sedjenis, Organization that went on in designing this next step in the of Homogenous Companies), an outgrowth of Guided Democracy experiment, Soekarno’s the nationalization of Dutch corporations in Dekon pushed Indonesia towards a greater 1959 (Sanusi, 1963: 410). Nationalized-Dutch militarization of the economy through the corporations that had been vertically integrated formation of the KOTOE (Komando Tertinggi within conglomerates were regrouped based Operasi Ekonomi, High Command of Economics on their business function. Thus agricultural Operation), which effectively reduced economic estates were taken out of the larger mother policy and planning to subsidiaries to the firm and collected into one government-owned war against Malaysia. Economic measures estate corporations. Apart from the central OPS aimed primarily at preventing the circulation in Jakarta, the regions would have their own of Malaysian dollars as currency in parts of regional OPS alongside a regional Bamunas. Sumatra, in particular Riau, and at boycotting The central OPS would be under the control of nine government departments; regional 11 Keputusan Musjawarah Bamunas ke-I, 19-20 February 1965, Jakarta. Bamunas: Jakarta, 1965. 108 Lembaran Sejarah, Vol. 10, No. 1, April 2013 of Singapore as a transit port for Indonesian surveillance of government apparatus) was goods. An increased effort was taken to expand created alongside Depernas in 1958 with only exports in order to pay for the war effort.12 a small outfit, consisting of a chairman, a The KOTOE was a short-term policy, while secretary and three members. The chairman Bappenas was a long-term policy. was the former minister of Defense Sri Sultan Hamengku Buwono IX. He brought his personal Civil service management secretary, Selo Soemardjan, a Cornell-trained sociologist, to become the secretary of the The development of organizations serving organization. The four members were the to change the capability of the Indonesian former governor of East Java, Samadikoen, civil servants was the result of both Guided the pre-War Communist Semaoen13 and colonel Democracy and the import of American ideas Soedirgo from the armed forces. True to the of public management. These organizations corporatist nature and the NASAKOM ideals, were instructed to monitor and to provide the members were chosen to represent different recommendations and conduct indoctrination. power blocks of the nation. State surveillance and control was to be meted Because of the modest dimensions of the out on an individual level. Theoretically, this organization, members were in close contact institutional structure envisaged the creation with one another. The organization had a very of a person who had different culture and large mandate: to conduct surveillance and behaved in a more modern and efficient fashion. study cases where the efficiency or effectiveness If the planning agency was meant to form a of a particular state organization was hampered. technocratic center, management was for the Cases were chosen from complaints either from rest of the government body. By this ideology, the general public or from above, sometimes nation-building was to be effectuated on an from the President. The cases handled were individual level; a person was perceived as varied indeed, including the successful staging free-standing in a social vacuum. This vacuum of the fourth Asian Games in Jakarta in 1962, was supposedly created after the process of the land reform program that had just started incorporation. This of course, was not the case. in 1960, problems surrounding the ports of The organizations failed to cut at the Tanjung Priok and Tanjung Perak and issues heart of the inefficiency: the patron-client associated with reforming Indonesia’s slow and clique culture that broke apart vertical judicial system. authority and impaired the ability of the Paran had a far greater ability to pursue organic government structure to discipline and actions in an executive fashion. While the reprimand civil servants. A modestly working Bapekan was an expression of the ideals of civil service only emerged after the rise of the NASAKOM, Paran was a military construction. New Order and its concomitant decimation of Its head was General A.H. Nasution and its opposition to the government. Yet, the New policies came from the philosophy of Nasution. Order learned about the experience of Guided Democracy in its indoctrination campaigns. 13 Semaoen had been exiled from the Netherlands Indies in This project is highlighted by looking at three 1923 as a result of his participation in the VSTP strikes. He had lived in the Netherlands and participated in the key organizations: Bapekan, Paran and LAN. Indonesian student movement where he met with Hatta and Bapekan (Badan Pengawas Kegiatan others. In the 1930s, he left for the Soviet Union to study economics. He also worked for the Soviet government. His Aparatur Negara, Organization for the alleged work for the Soviet Planning Board in Azerbaijan was a leverage that he put to good use after his return to Indonesia in December 1957. He was awarded an honorary 12 Laporan Tahunan Staf Komando Tertinggi Operasi Ekonomi tahun doctorate degree in economics by the Padjadjaran University 1964. Jakarta: Staf KOTOE, 1964, pp. 10-13. in Bandung, where he taught in the 1960s. Farabi Fakih 109 Institutional Reforms of the Guided Democracy (1957-1965)

Even so, the idea of retooling was an indelible some training for their Indonesian staff. The part of the Guided Democracy plan in order to first serious corporate training program was disseminate the revolutionary spirit in the civil provided by the American oil company Stanvac service. It was discussed briefly in the eight- in 1954. One of the largest programs was the year plan (Tedjaksumana, 1963: 55). Nasution business administration management course believed that the problem was the absence of that Harvard graduate school founded in 1956 unity and camaraderie within the civil service. in the Philippines. Many of the graduates there This was the result of the influence of political had held talks with Harvard University to help parties and their ideologies. Paran designed create an Indonesian management program. a number of indoctrination courses intended Nationalization of Dutch enterprises in to root out people who were not supportive of 1959 resulted in a flow of bureaucrats and the government, its policy and the revolution. army officers to the management offices. The The purpose lay in the belief of the essentially FEUI held a ‘management week’ and at least political nature of the problem of bureaucracy. one military division had a middle management The creation of a purposeful civil service was to training program in Bandung. The supervisory be moulded by both a political and a technical body of industrial and mining companies scientific approach. In 1964, with the general (Bappit) also organized a management seminar. shift of the Dekon, retooling was handed over Between 1955 and 1963, American aid on from Paran to a newly created agency called public administration reached a total of $ 187 Kotrar under the direction of Soekarno himself. million. From 1952 to 1963, some 6,000 persons LAN was firstly envisioned by the report from around the world were sent to the United written by the Cornell University Public States for in-field training through ICA. The Administration professors Litchfeld and Rankin, United Nations, Ford Foundation and the after their three-month sojourn in Indonesia in United States government helped to establish 1954. They advised on the need to build an about 70 public administration training educational and research center in order to craft institutions in various developing countries. an Indonesian version of public administration This included LAN in Indonesia (Siffin, 1976). and convey that concept as widely as possible Public administration was not merely a within the civil service. Groundwork for the purely technical application of a scientifically foundation of LAN was rather slow, but picked rigorous science. Its function somewhat up in 1957. The organization prided itself for mirrored Paran’s idea of retooling, that is its indigenous start. In 1959, however, relations ‘the effort to renovate the soul, arrangement, with the University of Indiana were initiated work procedures and personnel of all state and a special Indonesian Public Administration organizations in the legislative, executive and project was created there. LAN would send its other fields at the center and the regions so as to brightest members to pursue a master’s and conform to the Political Manifesto and USDEK, PhD degree in Bloomingont, Indiana, while at so as to efficiently reach the goals of the state the same time a team from Indiana was to help in the short and long term.’14 establishing a college in Indonesia. Aside from the more technical subjects In a wider context, Indonesia was expanding regarding financial management, office its capacity in administrative schooling in management and so on, LAN taught and both public and business administration. The researched various topics, including personnel Indonesianisasi policy of the government had relations and leadership. The idea that meant that from the early years of independence on, many corporations started providing 14 ANRI: Bapekan, no. 345. 110 Lembaran Sejarah, Vol. 10, No. 1, April 2013

Indonesian had the ‘wrong’ culture for modern Conclusion management was widely shared in the 1950s I am not saying that the Guided Democracy and 1960s. Fagg contends that the Javanese was a developmental state, for indeed, it was notion of authority required the creation of not. It had some characteristics that were very a useful fiction of unanimous support for a anti-developmental. Developmental states particular person in office. That his authority tend to have a relatively autonomous business was weak and the clique structure limited his sector, which is institutionally incorporated by ability to implement action stemming from his the state. This ‘embedded autonomy’ allowed authority was beside the point (Fagg, 1958: for a mutual, growth-oriented relationship 565-68). between private business and economic policy- Administration science sought to change makers. The Guided Democracy envisaged a the basic culture of the office, a culture that far more invasive relationship which would had been developed either as a long Javanese have eliminated the autonomy of the business tradition or something recent as part of the sector altogether. In addition, economic growth decolonization process, depending on who one was secondary to its political interests. Even reads. Books and courses concerning the proper so, Atul Kohli claims that ‘the creation of and scientific way to manage your schedule, effective states within the developing world table, paper work and personnel relations were has generally preceded the emergence of published and taught. New English words were industrializing economies.’ (Kohli, 2004: 2) bandied about in the management schools as Although a relatively effective state did appear were new books with discussions on time motion in the form of the New Order, could it have studies, paper work simplification, workplace developed the way it did without the Guided simplification, workplace commendation and Democracy state as precursor? Several aspects reprobation, and so on. of the developmental state were initiated by the The creation of ad hoc and new organizations Guided Democracy state. served to increase basic civil service capability First, developmental states are centralist but it did not result in anything groundbreaking. and corporatist. It was Guided Democracy Emmerson notes that ‘compared to what it was that won Indonesia’s late 1950s civil war, during the first two decades of Independence, destroyed the legitimacy of parliament and the bureaucracy of today [New Order] is less the political party system whilst incorporating inflationary in size, less dispersed loyally modern social organization. In its later phase, & more able to act. For the political context the state became increasingly centralized and of administration in Indonesia, 1965 was a militarized, with the creation of both a military watershed.’ (Emmerson, 1978: 90). Although exoskeleton and an increase in the number the New Order did some of the things that of civilian posts taken over by military men. Guided Democracy could not, most famously in Many new bodies like Bappenas and Kotrar efforts to reduce the number of civil servants, were under the personal direction of Soekarno there were things that the New Order inherited himself, which signaled an increasingly personal that helped it along in its quest to get a more rule of the state. efficacious bureaucracy. Whether this was ever Second, many developmental states have achieved remains an open question, but the a strong ideology that propels the state for experience with retooling, management and purposive economic growth. Soekarno’s incorporation surely offered ways to control the Revolusi was not economic in character. bureaucracy for the regime. He channeled much energy into nation- building; monuments were erected in Jakarta Farabi Fakih 111 Institutional Reforms of the Guided Democracy (1957-1965) in order to bolster creating national pride and Laporan Tahunan Staf Komando Tertinggi character military adventures in West Papua Operasi Ekonomi tahun 1964. Jakarta: Staf and Malaysia (Kusno, 2000). Is it possible to KOTOE, 1964. consider Soeharto’s Pembangunan ideology as having its roots in Soekarno’s Revolusi? The Newspapers mythologies of Pancasila and UUD 45, as well Duta Masyarakat, 19 and 28 September 1957.. as the Indonesian revolution (1945-1949) were the same. The indoctrination and retooling Harian Rakyat, 31 June 1959. campaigns were also similar. What Soeharto Keng Po, 26 November1957. learned from Soekarno’s mistakes was his neglect of the economy and of the technocrats. Published works Revolusi would create the just socialist society Alisjahbana, Armida, ‘Revisiting Indonesia’s á la Indonesia. Pembangunan had the same Sources of Growth and its Projection towards vision. 2030’, unpublished paper, Center for Economic A more detailed discussion on the and Development Studies, Padjadjaran institutional development of the Guided University, Bandung, 2009. Democracy is necessary in order to comprehend Bappenas [Badan Perentjanaan Pembangunan in a deeper and more meaningful manner the Nasional], Peraturan-peraturan. Jakarta: rise of Indonesia’s specific developmental state. Bappenas, 1963. Guided Democracy is important in our effort Beeson, Mark, Contemporary Southeast Asia: to understand Indonesian history in terms Regional Dynamics, National Differences. of political economy and as a nation-state. Basingstoke: Palgrave Macmillan, 2004. That a developmental state appeared at all in Boomgaard, Peter, ‘The Welfare Services in Indonesia, dubbed the perennial Third World Indonesia, 1900-1942,’ in: Leonard Blussé & basket case in the 1960s, is a sobering fact of Anne Booth et al. (eds), India and Indonesia unintended consequences and the agility of from the 1920s to the 1950s. The Origins of institutions to adapt to new uses. The question Planning. Leiden: Brill, 1987. of whether it would have appeared without the Booth, Anne, The Indonesian Economy in the initial Guided Democracy state is crucial and Nineteenth and Twentieth centuries. A History needs further elaboration. of Missed Opportunities. London: Macmillan, 1998. Bibliography BPN [Biro Perantjang Negara], Garis-garis Besar Rentjana Pembangunan Lima Tahun. 1956- Archival sources 1960. Jakarta: BPN, 1956. Castles, Lance. ‘The Fate of Entrepreneurs’, in: Arsip Nasional Republik Indonesia (ANRI), T.K. Tan (ed.), Sukarno’s Guided Indonesia. Jakarta Brisbane: Jacaranda Press, 1967, pp. 73-88. Bapekan, No. 5, 345. Chalmers, Ian. ‘Introduction’, in: Ian Chalmers & Vedi Hadiz (eds), The Politics of Economic Document sources Development in Indonesia. 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