Social Scientist. v 24, no. 282-83 (Nov-Dec 1996) p. 36.

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Coercive Corporatism:

The State in Indonesian Capitalism

The Indonesian economy is currently cited as one of the 'success stories' of developing Asia, and represented as part of a Southeast Asian economic boom that is forcing a restructuring of the international division of labour. While this in itself would be sufficient justification for an attempt to analyse the nature of this "success", a focus on Indonesia is of interest for an additional reason. It is an illuminating example of a particular model of capitalist state-directed industrialization that can be found in varying forms across Asia. The behaviour of the Indonesian state (under Suharto) has been very much a part of an identifiable pattern of authoritarian regime that has been associated with several of the more economically dynamic Asian countries. This paper seeks to address two questions relating to the Indonesian experience after 1966: (1) What was the nature of the Indonesian state, and how did it affect or determine the pattern of economic growth and industrialization? (2) To what extent can this pattern of development be judged a success, even in purely economic terms of growth and distribution?


The regime that came to power in Indonesia in 1966 gave early evidence of its repressive character. Originating in a period of social instability and insurrection after the coup that toppled Sukarno, this military group was closely involved in the mass executions of Communists and leftist sympathisers that decimated several hundreds of thousands of Indonesians. Since then, the country has been formally ruled by the military, which has progressively entrenched itself and centralised power. Various government-controlled or sponsored organizations, such as the state political party Golkar, and state organizations for business, labour, bureaucrats and so on, replace any more representative political institutions which a democratic process could have thrown up. Dissent of any sort is summarily dealt with, there is little pretence at democracy, and the regime actually justifies its authoritarian control on the grounds that it is necessary to achieve rapid economic development and to preserve a fragile social 'harmony' during the complex transition to

* Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.

Social Scientist, Vol. 24, Nos. 11-12, November-December 1996

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