The Indonesian Middle Classes & the New Order

The Indonesian New Order period saw the country witnessing phenomenal economic growth at 7.8% in 1996, which was slightly more than the annual average since Suharto took power some thirty years ago. In addition, exports had reached US$50 billion, double the volume in 1966.[1] It was no surprise therefore, that the surge in economic growth was attributed to the rise of Indonesia’s rapidly growing middle class, as a strong middle class serves as the engine for a growing economy. However, despite the rapid growth of the middle class at about 15-18% per year,[2] it remained an agent of political change more in theory than in practice.[3] This paper analyses the main reasons for the lack of political power among the middle classes, arguing that tight state control, a state-dependent middle class and the lack of coherence within the middle class, accounted for this lack of political autonomy.

Firstly, the tight state control of the New Order regime can be seen from both the political and economic dimensions. Economically, the state exerted tight control over the banking system until the late 1980s and maintained a grip on the economy through corporate enterprises like Pertamina for oil and Krakatan for steel.[4] Moreover, the heads of these state enterprises had little control over the determination of Indonesia’s overall strategies and policies, and exerted influence only in terms of their personal connections.[5]

In addition to the tight state control over economic policies, there was also tight political control of the country, as can be seen from the entrenchment and centralisation of authoritarian rule by the military, as well as the appropriation of the state by its officials, and the exclusion of political parties from effective participation in the decision-making process.[6] These political restraints resulted in a climate of fear and concerns over free speech and the rule of law.[7] This was especially because of the “culture of corruption” which permeated the state’s judicial institutions, and subjected these institutions to the control of the political elite.

Tight state control over political autonomy and economic policies was cemented by the New Order ideology of “state above politics”, with ideology serving as the justification for the legitimacy of state policies, argued to be in the “national interests” of the country.[8] Hence, the “national interest” was conceived to be something over and above individual private interests, not the sum total of these individual interests.[9] As can be seen, the authoritarian ideology of the New Order government played an important role towards influencing the economic policies and political autonomy of Indonesia, which were enforced by tight state control over the country.

A second reason for the lack of autonomy among the middle classes can be explained through their strong dependence on the state. Although the mid-1980s’ fall in oil prices and the corresponding increase in private sector reliance resulted in some erosion of state power, the middle classes remained dependent on the state largely due to the economic resources and opportunities made available by the state, as well as the need for social order to be preserved.[10]

In terms of economic opportunities, the New Order state protected domestic capital interests by requiring foreigners to take indigenous joint-venture partners and secured contracts for domestic private capitalists to the limit of their capacity.[11] It also allowed domestic groups the prospect of forming monopolies and securing concessions, licenses and credit in the midst of a highly regulated economic system.[12] As for economic resources, these were controlled by the state through the accumulation of investment capital derived largely from oil taxes and foreign loans channelled via the state.[13] Consequently, the state provided the political conditions for capitalist development, the fiscal framework and also the investment capital. This resulted in the development of a strong patron-client relationship between the state and corporate groups, which were integrated into the state’s broad industrial strategies and became what many would term “another arm of the state”.[14] Hence, this system of patronage developed a high comfort level for many in the middle class, who would be hesitant to sacrifice their comfort for political change.[15]

The middle classes were also dependent on the state for the preservation of social order. This can be seen in the traditional role of authoritarian regimes to protect the middle class from the peasant-based reformist and revolutionary forces.[16] As Samuel Huntington argues, the military, and by extension the state, serves as the “guardian” of the existing middle class as it opens the door to the middle class and closes it on the lower class.[17] Indeed Indonesia’s historical background provides an insight into the weakness of the middle class as can be seen from the traditional strong state dominance in the pre-colonial and colonial eras. In addition, the strength of the revolutionary left and the potential rise of Islamic fundamentalism drove the middle class into the arms of the authoritarian Sukarno regime.[18]

As can be seen, the power of the capital-owning middle classes was not in the formal sense, but only through their significance as keys to investment, production and economic growth, thereby ensuring the economic survival of the state. This resulted in the state being forced to intervene towards the resolution of political and economic crises that threatened the health of the system, and therefore creating a “pact of domination” between the middle class and the state in order to preserve social order.[19] Consequently, the lack of autonomy among the middle class can be explained by its dependence on the coercive powers of the state to maintain the prevailing societal balance of power and to preserve social order.

A third reason for the lack of middle class political autonomy can be seen in the makeup of the middle class itself. This is because there was no one coherent middle class in Indonesia, but in actuality a group of individual subclasses seeking to obtain their own political and economic interests. In order to understand the divergent interests of these individual subclasses, it is important to understand the political and economic interests of each of the three subdivisions, as classified as the “indigenous petty bourgeoisie”, the “big bourgeoisie” and the “indigenous bourgeoisie”.[20]

  The “indigenous petty bourgeoisie”, comprising medium and small local businesses, exhibited generally nationalist, populist and xenophobic characteristics because it considered itself to be the primary victim of the Chinese and international capitalists. They were also closely associated with Islam and politically active only as an appeal for government protection.[21] The “big bourgeoisie”, or Chinese conglomerates, were generally not able to challenge the state because they were not accorded a legitimate role in Indonesian politics.[22] This made them vulnerable in Indonesian society, resulting in them keeping a low profile and developing their political influence through personal links with officials and political figures.[23] The “indigenous bourgeoisie”, or large local capitalists, were not as politically constrained as the Chinese due to the presence of business associations like the Indonesian Chamber of Commerce (KADIN), which served as vehicles for political and ideological debate. However, these groups were dependent on the state economically due to the state’s assistance in their development.[24] Moreover, the most important of these “indigenous bourgeoisie” were associated with the Suharto family, and relied heavily on bestowed monopolies and state credit.[25]

Although it can be argued that these three subdivisions possessed a common interest in establishing a regulatory framework against those in power, the political role of its composite elements differed according to the relationships formed with other social forces. For instance, the “indigenous petty bourgeoisie” sought an alliance with the rural middle classes while the “big bourgeoisie” allied with the urban corporate managers, both groups seeking a different political role within the Indonesian system.[26]

In addition to the complex relationships and alliances, there were also reformist upper middle class groups like Forum Demokrasi and Petisi 50, which attempted to change the prevailing societal order. However, these groups attained limited political effectiveness because of internal divisions and a popular fear of social and economic chaos. In addition, these reformist organisations failed because of the efficient process of institution-building, which forced all political and ideological activity into structures defined and controlled by the state.[27] Hence, in examining the political and economic interests of these different middle class constituents, it can be argued that the lack of political autonomy stemmed from their internal division as a “class”, which cast doubts on their political coherence, and prevented them from pursuing a more confrontational role with the state.

In conclusion, the phenomenal growth of the Indonesian New Order economy had resulted in a simultaneous expansion of the country’s middle classes. However, unlike many countries whose middle classes enlarged their political roles in the wake of a growing economy, Indonesia’s middle classes continued to function as political extensions of the state. This lack of political autonomy can be attributed to the desires of both the state and the middle classes to co-exist under a “pact of domination”, with the middle classes exchanging their political independence for the economic and political power of the state. Consequently, the Indonesian middle classes gave up their political power in order to attain economic success and political stability under an authoritarian regime with its strict ideological domination.

The above essay was written by Mark Lim Shan-Loong on 13 March 2001.

Bibliography

Booth, Anne, The Indonesian Economy in the Nineteenth and Twentieth Centuries:  A History of Missed Opportunities, Macmillan: London, 1998. 

“Indonesia's fast-growing big-spending middle class”, East Asian Executive Reports, Vol. 17, No. 9, 15 September 1995, Online, ProQuest Information Service, 2 Mar 2001.

 Mackie, J. A. C., “Property and Power in Indonesia”, The Politics of Middle Class Indonesia, Eds., Richard Tanter and Kenneth Young, Centre of Southeast Asian Studies: Victoria, 1990, 71-95.

 Robison, Richard, “Authoritarian States, Capital-Owning Classes, and the Politics of Newly Industrialising Countries:  The Case of Indonesia”, World Politics, Vol. 41, No. 1, Oct 1988, 52-74. 

 ---, Indonesia:  The Rise of Capital, Asian Studies Association of Australia: Sydney, 1986.

 Robison, Richard and David S. G. Goodman, The New Rich in Asia:  Mobile Phones, McDonalds and Middle-Class Revolution, Routledge: London and New York, 1996.

 Schwarz, Adam, “Indonesia after Suharto”, Foreign Affairs, Vol. 86, No. 4, Jul/Aug 1997, 119-34, Online, ProQuest Information Service, 2 Mar 2001.

 Vatikiotis, Michael, “Caught in the middle”, Far Eastern Economic Review, Vol. 161, No. 15, 9 April 1998, 14-5, Online, ProQuest Information Service, 2 Mar 2001.