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Sunday, January 6, 2008 |
| Economy in the shadows of corporatocracy
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Opinion News - Thursday, January 03, 2008
B. Herry-Priyono, Jakarta
If you are a reader of The Jakarta Post, the probability is very high you do not make up a part of the population the World Bank in 2006 referred to as "108.78 million Indonesians who live on less than US$2 per person/day".
And if you think about economic issues, the chance is high you think in terms of corporate niches, commercial skyscrapers, exchange rates, stock markets, shares, securities, as well as other features of a modern economy.
Indonesia is blessed with a sophisticated and suave economy. And it is indeed a blessing -- if only this modern economy could be harnessed to help modernize the Indonesian economy.
But things are not as neat as a textbook or a recipe.
And the reasons have nothing to do with the presence of a modern and suave economy - which should be greeted with applause -- but with the way this type of economy connects to what the World Bank refers to as 108.78 million Indonesians who eke out with less than US$2 a day.
This warrants us to entertain some dangerous thoughts.
Year after year we have concerned ourselves with the stagnancy of the real sector economy -- and 2007 is no different from preceding years.
If anything, our concerns are even more poignant in 2007, regardless of the exuberant growth of the financial sector.
The reason the inertia around the real sector economy has become a source of our concern, belongs to the realm of supposition.
As is well known, the inertia around the real sector becomes a source of economic angst -- precisely because we assume too readily its growth will be the panacea for colossal poverty and employment in Indonesia.
But why is the growth of the modern real sector economy supposed to be the solution to poverty and unemployment? Here we usually cite graphs and statistics to show how the growth of the real sector (say, manufacturing) goes hand-in-hand with the declining unemployment rates. But poverty is a more elusive problem.
And on closer inspection, the question remains unanswered. The fact that many textbooks tell us so, is no argument this assumed relationship is beyond doubt.
To claim the problems of poverty and unemployment in Indonesia can be solved by the growth of the modern real sector economy is to assume too much for what is absent in the modern real sector itself -- as much as for the poor and unemployed.
In the former, we assume its rates of job absorption are high. This is laughable for two reasons.
First, the yearly rate of job absorption per 1 percentage of economic growth has been constantly plummeting, from about 400.000 before 1994 to less than 50.000 in 2006 and 2007.
Second, we cannot ignore the fact the corporate drive for job cuts, streamlining, and easy layoffs in a flexible labor market is inconsequential to the rates of corporate job absorption.
Economics has a penchant for using a term borrowed from classic logic, ceteris paribus (assuming other things being the same/constant).
The problem is, there is no ceteris paribus in the order of reality.
We simply cannot claim the prevalence of poverty and unemployment can be solved by the buoyant growth of the real sector through its high rates of job absorption -- because such high rates of absorption are void.
This is also true with regard to the characteristics of the poor and unemployed. Why on earth do we assume the technologically advanced and streamlined real sector industry would willingly employ a colossal number of the poor and unemployed with low technological skills?
To argue the imperative is to improve the technological skills of the poor and unemployed, is simply stating the obvious. But this could only be done on a long-term basis.
As for now, the textbook is confined to reality.
All this may bring us to our senses. We may have to entertain the dangerous thought the current policy hype around conducive climates for big global investment is nice.
But it is nice only if it is not seen as the solution to the prevalence of poverty and unemployment.
In fact, it is hard to suppress the thought the hype may just be a form of corporatocracy (a rule by modern big corporations), rather than an economic policy.
To put it bluntly, it is a form of policy in which we assign the task of solving poverty and unemployment problems to big corporations whose raison d'etre has never been to solve poverty and unemployment problems.
Or, at best, the link between the two is so indirect that, faced with the colossus of 108.78 Indonesians living on less than $2 a day, any seed of a link is bound to get lost in the morass of indirectness.
This simple yet easily forgotten point may sound too stark, but only if we have lost the ability to recognize this familiar point. What is urgently needed is the following: if the corporatocratic policy does not correspond to the reality of poverty and unemployment, it is not the reality that is faulty, but the policy that is not providing a solution to the reality of poverty and unemployment.
The act of faulting the reality of colossal poverty and unemployment is what seems to have besieged us these years. Instead of scrutinizing the corporatocratic policy that does not connect to the reality of colossal poverty and unemployment, we are wasting too much time quarreling over the number of the poor and unemployed, which is too obvious anyway, whether we start from the $1 or $1.55 or $2 benchmark.
It is no accident the quarrels then keep us all too busy to notice even the most obvious fallacy under our noses.
All this is suggested not to discount the issue of investment -- not even a fool would see it this way.
Rather, we may have to employ some imagination to re-orient our economic policy. Although re-orientation will never take place if we refuse to see the uncomfortable facts and policy fallacies in all their starkness.
First, after several years relying too much on the corporatocratic approaches to be the backbone of economic policy, it is sufficient to conclude corporatocracy will hardly solve colossal poverty and unemployment.
As noted, the reason is not that it is bad, but that it assumes too many factors are absent. To think it must benefit everyone is to mistake normative legitimacy for corporatocratic convenience.
Second, if the prevalence of poverty and unemployment includes almost half the Indonesian population, then no amount of corporatocratic doses will address the problem, for big corporations are not here to solve colossal poverty and unemployment.
This may compel us to accept the unpleasant truth that Indonesia is perhaps really characterized by a dual economy, even almost 60 years after the term was coined by a Dutch economist, JH. Boeke, to describe Indonesia's economic problems.
Third, in practical terms, this points us to an imperative to shift the direction of our economy policy away from the reigning corporatocratic approaches.
In its place is a focus on public infrastructure reconstructions and genuine promotion of micro and small entrepreneurship.
Of course, this last point has been a slogan in the air for some time. The problem is, promotion of micro or small entrepreneurship has so far been understood almost exclusively as a problem of the provision of financial capital. That is why the failure of micro and small entrepreneurship has been narrowly explained in terms of the failure of the intermediary function of the banking system.
It is unfortunate even the way we explain it has been captive to corporatocracy.
Let us admit in bad times the poor or unemployed will not go to modern banks. They are a continent away in terms of world views.
The former are driven by a survival economy and the latter by an accumulation economy.
So, the puzzle of economic policy in the 2008 is plain: how not to stick stubbornly to the corporatocratic approaches which have hardly solved the colossal nature of poverty and unemployment -- and how to respond to the poignant fact that with or without the blessings of government or corporatocrats, the poor and unemployed have to survive.
Or, we simply continue in the same old sterile way, mistaking corporatocracy for economic policy.
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* The writer is a postgraduate program lecturer at the Driyarkara School of Philosophy, Jakarta and holds a PhD from the London School of Economics.
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