Fifty Years of Indonesian Development: "One Nation," Under Capitalism ..

In Indonesia much uncertainty remains in the wake of the dramatic changes that unfolded in the latter half of the l990's. By the end of the 20th century, the Indonesian economy was in ruins. The concept of democracy remained contested. The transportation and communication system that once at lea'lt minimall y linked the diverse and at times disparate area'l and peoples of the Indonesian archipelago into an Andcrsonian imagined national community collapsed, making more likely movcmcnt'l for regional autonomy, in turn, making the status of an Indonesian nation itself uncertain. One thing that is certain, however, is that Socharto, the "Father of Development," is history. As political and economic policy makers in Indonesia, the United States, and around the world, and more importantly, Indonesia's men, women, and children pick up the pieces, it is our responsibility to look back and consider the past fifty years.

This basic theoretical framework has been supplemented (Wallcrstcin, Arrighi, and Hopkins 1986) with the notion of a transformed historical ground, which has thre e dimensions.First, there has been both a widening and deepening of stateness.Additionally, the activities of a number of regional international organizations (such as OECD, OPEC, ASEAN, CO!vIECON, NATO, OAU etc.) further increase the "relational networks" :1. between states as well as the tasks of the individual states themsel ves.Second, Wallerstcin locates "organizing centers" of the "core of socialization of production" (p.202), otherwise known as transnational (multinational) corporations.Their "reconstruction of the world-scale division and integration oflabor processes fundamentally alters the historical possibilities of what still arc referred to, and not yet even nostalgically, as 'national economics" ' (p. 203).The third dimension of a "transformed historical ground" is what Wallcrstcin secs as a replacement mcchani sm of colonial empires."Massive centralizations of capital... has as its agencies quite small ad hoc steering committees of consortia, each composed of several hundred banks" (p.204).
These include such international agencies as the World Bank and the In tcrnational Monetary Fund (IMF).Wallcrstcin recognizes the difficulty this "transformed historical ground" creates for the "managers of the status quo," (p.206) but he also secs that "it creates dilemmas for the antisystcmic movements almost a.., grave" (p.206).These dimensions must be addressed in the ca..,c of Indonesia, a state that entered the worldsystcm as a state only after the departure of Dutch colonialists and the Japanese following World War II.This, then, is the ba..,ic global theoretical framework of World-System Theory.A.., I sec it, the case of Indonesia requires further theoretical consideration to account for th e course of its development strategics.Friedman (1989) posits a broad model of th e uses of "culture" which can be useful in explaining Indonesia's development strategics.On one hand, Indonesian development, at times, follows a pattern commensurate with a capitalist orientation.On the other hand, "nationalism" might be seen a.., an effective ideological tool for nation-building.According to Friedman: In periods of expansion ... there is a tendency for local self-reproductive systems to .. .become integrated into the larger colonial and international systems ... Ultimately there is a strong tendency toward a ... similation, toward the identification ... with the model of the center, with a modernism that appears a ... sociatcd with success ... This proc ess is reversed in times of contraction.As modernism collapses in the center, there is an exponential increase in cultural identity both at home and abroad.At home there is a search for that which ha.., been lost, and in the periphery for a cultural or even national autonomy previously repressed by the center.Cultural identity , from ethnicity to a "way oflifc" flourishes at the expense of the system.(pp. 66-68) Prior to World War II, the world~systcm wa.., undergoing expansion.Dutch colonialism wa..,, in fact, commensurate with integration into the "the larger colonial and international systems ... [with] a strong tendency toward a..,similation, toward the identification ... with the model of the center, with a modernism that appears a ... sociatcd with success."Since World War II, the world~systcm underwent a period of contraction.A.., a result, one would expect an incrca..,c in a search for an Indonesian cultural identity .This wa..,, in fact, the ca..,c with Indonesia.The Indonesian search for identity during both the Sukarno and Socharto periods wa.., reflected in the ongoing struggle between forces of nationalism and forces of capitalism.How this played out, however, differed under Sukarno and Socharto.Whcrca.., the Sukarno regime searched for an Indonesian identity that continued with the notion of an Indon esian nation opposed to colonialism and global capitalism, the Socharto regime sought an Indonesian na tional identity that would contribute to the system of global capitalism.The language of nationalism appeared in both development strategics but with different purposes.
[Page 51] Journa I of World-Systems Researc h Hcryanto (1988) examines the changing meaning of "development" in Indonesia from the beginning of the nationalist movement through the Suharto years.Hcryanto's linguistic analysis can be seen a.., consistent with World-System Theory in the following way .Besides the unequal political and economic relationships that exist between core and periphery, there is also an unequal linguistic relationship."Weaker states arc requir ed to use the languagc--mcaning that they must follow the logic and the methods of understanding which arc part of this languagc--that belongs to the states which arc stronger" (p.13)."Development" (in Indonesian, "pembangun an ") wa.., initially connected with the early idea.., of nationalism, primarily during the late l930 's, the period of the "Cultural Polemics.""The meaning of pembangunan and membangukan [the verb form of the word] at that time can perhaps best be understood a.., equivalent to 'building' in 'nation-building' and 'character-building' which became popular expressions in subsequent periods" (p.9).
The argument a.., it relates to my own can be summarized in Hcryanto's observation of the effect of "development" in the period under investigation here.During Sukarno's reign, "development," understood a.., "nation-building," wa.., related to "the older sense of 'membangun mmah' ('building a house)" (p.22).It follows that ''Pembangunan nasional (national development) ha.., shown its most impressive achievement.., in the creati on of a number of physical buildings" (p.22).These include monum ents, government buildings, sports complexes, and so on.On the other hand, under Socharto, "The Pembangunan led by the New Order focused primarily on the creation and improv ement of th e infra..,tructurc for industrialization" (pp. 22-23)."Building " under Sukarno wa.., primarily a symbolic gesture meant to consolidate a nation-state against the external forces of the world-system."Building" under Socharto meant economic development in line with the external forces of the world-system.
The Indon esian language, a.., a key clement of culture, which became the lingua franca (literally the language of commerce) in Indon esia, depended upon the degree to which Indonesia wa.., a ... sociatcd with the capitalist world-systcm.-2.As such, the concept of "development " in Indon esia, in both periods, wa.., constructed by "moderni st" notion s of "development." However, whcrca.., the "Great Leader of the Revolution" (Sukarno) used development a.., part of a nationa l resistance to the system, the "Father of Development" (Socharto) used development to integrate Indonesia into the system.
In principle, the rhetoric of nationalism remained under Socharto a.., part of the struggle to locate an Indonesian identity, but in pract ice this search for identity proc eeded within a dominatin g culture of capitalist economic development.In other words, under Socharto, there continued to be a search for an Indonesian identity in the struggl e between development strateg ics, but this search for identity became part of an effort t o seek identification 1vith the global capitalist system.I turn now to an examination of the development strategics under Sukarno and Socharto.
[Page 52] Journal of World-Systems Research

Development Under Sukarno
The colonial history of the Indonesian archipelago is a series of periods of domination and rcsistancc.Q Independence in 1949 wa.., preceded by Portuguese and then Dutch colonialism, until 1942, when Japan occupied the region.Between 1945 and 1949, the Dutch again ruled Indonesia.Sukarno became the "Great Leader of the Revolution" upon independence.The path of "development" under Sukarno is complex and tortuous , and can only be given brief attention here.(Pitt 1991;Arndt 1984;Feith and Castles 1970;Devan 1987;Drake 1989;Gla..,sburncr 1971;Papanck 1980;Wilson 1989.)The period between 1949 and 1959 eventuated in a reaction to global capitalism, which Indonesians a ... sociatcd generally with imperialism and in particular with the memory of Dutch colonialism.Initially, Indonesian policy makers responded to economi c domination by attempting to copy multi-party democracy, and by attempting, to some degree, to play by the rules of global capitalism.Three attempt s to liberali ze the economy, in 1950-51, 1955, and 1957 (which were, in effect, attempts to integrat e th e Indonesian economy into the world economy) all failed becaus e of an inabili ty to coordinate political wills.The impa..,sc between gestures toward s liberali zation and continuing efforts to build an Indon esian nation wa.., finally settled in 1958-1959 by which time Sukarno had supplemented the ba..,ic form of his "Guided Democracy" by instituting "Guided Economy." 2 Even at this point the developm ent plans generat ed under the rubric of "Guided Economy" were to be financed through relianc e on foreign aid, particularly from the United States.How ever, throughout the 1950's, ther e is evidence of Indon esia's reticence to accept America's terms of a..,s istan cc.Essentiall y, assistanc e from the United States wa.., an attempt to define Indon esia's developm e nt strategics, a definition that the Indon esians were generally not willing to accept.Moon (1998) describes a conflict of development strategics between the United States and Indon esia over agricul tural production during the 1950's that illustrat es the incomm cnsurabili ty between them, and meant the eventual move away from relian ce upon the United States by the Sukarno regim e. Whcrca.., Indon esia hoped to incrca.., c rice productivity through incrca.., cd use of mechanization, the United States had in mind a development of Indon esian agriculture through technical trainin g and education.As Moon notes: Howard Jones, ambassador to Indonesia ... called this cmpha..,is on training "the struggl e for the Indon esian mind ."B y trainin g Indonesians in American best practice for agricul ture and extension, the [International Cooperation Administration] hop ed to create a set of institutions that would foster the "proper" sort of economic development and thus to pre-empt any slide toward communism.(p.203) £ In general, the Indonesians were more interested in procurement of machinery than in technical training.For the United States, this wa.., one instance of a global ideological battle between communism and capitalism.Moon continues: "As American officials discovered, Indonesian actors, even those with U.S. training, did not necessarily use their knowledge in predictably American ways, nor wholly adopt American interpretations of the goals of development.The struggle to control development wa.., at the same time a struggle to deflne it" (p.211 ).

[Page 53] Journal of World-Systems Research
The Sukarno regime, suspicious of the motives of aid from the West, turned away from the West and toward socialist states, particularly the People's Republic of China (Simon 1969), and the Soviet Union and the Ea..,tcrn Bloc for development a ... sistancc.Sukarno made clear his disdain for Western idea.., about Indonesian development.Near the end of his rule, he referred to the idea.., of "bald-headed professors, from Oxford, from Cornell University or elsewhere" 2. a.., "inapplicable to the peculiar circumstances of Indonesia" (Tan 1967:33).His primary concern, perhaps even paranoia, wa.., with the loss of control that W cstcrn development aid might mean to his rule and his interpr etation of the idea of an Indonesian nation.By the latter part of his career, his rhetoric highlighted his claims to nationalism: We do not want help from anyone at all, and we arc not going to beg for it.We arc a Great Nation; we arc not an insignificant nation.We arc not going to beg, not going to a..,k for this and a..,k for that, especially if aid ha.., this condition and that tic tacked onto it!Better to cat poverty rations of ca..,sava and be independent than cat bccfatcak and be JO enslaved!-Of course, the Indonesian poor were lucky to get poverty rations, a.., starvation wa.., a common effect of Sukarno's misguided "Guided Economy." The Sukarno regime rejected Western foreign a ... sistancc, and withdrew from the worldcconomy, by separating itself from the United Nations and its affiliated organizations, the IMF and the World Bank.This move wa.., bound to fail, primaril y because of th e existing cata..,trophic condition of the economy."Socialism" for Sukarno wa..,, a.., ha.., so often been the ca..,c, mistransla ted into authoritarianism geared toward creating a unifi ed nation-stat e. Cha..,c-Dunn's (1990) observation helps explain the failure of "Indonesian Socialism": Socialist movements which take place in the periphery arc soon beset by pow erful external forces which either overt hrow them or force them to abandon most of their socialist program .Anti-systemic movements in the periphery arc most usuall y antiimpcrialis t cla..,s alliances which succeed in establishing at lca..,t the trappings of national sovereignty, but not socialism.The low level of the development of the producti ve forces also makes it harder to establish socialist forms of accumulation (p.26).
It is significant not only that during the Sukarno era "development" failed miserably, but also that the meaning of "development" wa<; connected more with nation-building, and less with economic growth.The change in empha<;is in the meaning of "development," that is, from development a<; nation-building to the economic development of the nation, serves a<; a bridge between the Sukarno and Socharto regimes.In effect, a culture of nationalism gave way to a culture of capitalism, and the resulting change in cmpha<;is in developm ent strategics reflected this cultural shift.What is puzzling is that during the Socharto period, Indonesian officials did not abandon nationalism."Development " retained the trappings of nationalistic ideology.However, whcrea<; Sukarno's Guided Democracy and Guided Economy framed development in a culture of nationalism, Soeharto's references to nationalism were themselves framed within a culture of global capitalism, and were used in the service of the capitalist world-system.

[Page 54] Journa I of World-Systems Research
Indonesian Development Under Soeharto Liddle (1991) argues that Socharto wa<; the primary decidin g force in Indonesian development during the period of the New Order, and that "the pcrsua<;ivcncss of the theories of his economists ha<; interfaced with political cultur e and ideology and with the patrimonial base of the political system to produce an enduring formula that combines liberal economics with illiberal, but not entirely unpopular, politics" (p.423).Notwithstanding the lack of "endurance" of this formula, Liddle's argument is convincing to the extent that these contending forces might go unquestioncd. 11A more fundamental issue is the underlying cultural ba<;is of the "theories of his economist<;," created out of the modern world-s ystem.The choices that N ew Order Indonesia made were necessarily driven by th e forces that constituted that system.On the one hand, a decision to move toward liberalization wa<; prompted by economic necessity, riding on the heels of Sukarno's economic cata<;trophc.On the other hand, a decision to move in a "nationalist " direction, that is, "illib eral politics," migh t be constru ed a<; part of a continuing reaction to the capitalist global economy.However, despite a few pauses in lib eralization policies, the general tendency in the overall Indonesian development policy under Soeharto wa<; toward inte gration into the world-system.One indication of thi s wa<; the continuance of state-led economic policies that served the interests of the center (in Java and particularly in Jakarta)--a center which wa<; content to trade and do business with a globalizing market, but which persisted in denying the "advantages" oflibcralization to the business interests and sectors of the economy that existed on the outer islands.n.In the end, the success of Socharto's policy wa<; mea<;ured in relation to the system.
The following analysis of development in lndonesia under Soeharto will take into account the ba..:;ic clements of World-System Theory, supplemented by the three dimensions ofWallcrstcin's "transformed historical ground."The overwhelming power of this transformed historical ground incorporated the lndonesian economy and mad e possible the acceptance and reliance upon the theories oflndonesia's Western -educated economists in development strategies that were ba..:;cd upon the culture of global capitalism.
Sukarno's "Guided Economy" wa..:;, in the end, a dissociation away from th e world market.The general trend under Soeharto wa..:; towards integration into the world market.The question that I want to a..:;k now is whether development under Soeharto retained the language of nationalism, and, if it did, whether that language wa..:; primarily a way to serve the interests of capitalism.
The period 1966-71 saw sweeping changes ...There wa..:; a dramatic shift from th e direct control of almost all a..:;pccts of the modern economy toward hea vy reliance on mark et signals and price incentives.This period saw the end of most direct allocations of foreign exchange, the elimination of most price controls, an opening to foreign investm ent, and the acceptance of the private sector a..:; the primary sourc e of economic growth.The important distinction betwe en this liberalization attempt and its num erous predecessors is that it encompa..:;sed not merely liberalizing acts but also the destruction of important antilibcral forces --replacing a strongly antilibcral state ideolo gy with one that wa..:; nominall y liberal, virtually eliminating powerful antiliberal political parties, and dismantling some important institutions of stat e control (Pitt 1991 :78).
[Page 55] Journal of World-Systems Research Development wa..:; also institution alized in a series of "Five Year Development Plans," known a..:; "Repelita."These plans arc important for a numb er of reasons.First, the bureaucrats responsible for wr itin g and promoting the policies contained within them were a group of Western-educated economists, often refe rred to a..:; the "Berkel ey Mafia."Second, the genesis and formulation of these development plans were carri ed out under the influence of the IMF .Third, the chan ging cmpha..:;cs in lndon csian economic development policy can be trace d in them.Fourth, the discours e of nationalism is a feature of each of the plans.Finally, the importance given to the concept of development in lndon csia during this period is symbolized in the relati onship between these Development Plans and the Development Cabinets, a..:; they ha ve been called since 1968.
Development in lndonesia under Soeharto proceeded within the world-system both in terms of the cultural ba..:;is required for integrat ion into the system, and in terms of th e economic and political structure and dynamics of the system.During the New Order under Soeharto there is evidence of an increasing capitalist orientation both within the government, and in society in general.A glance at the brief resumes of these people suggests a diversity of educational backgrounds (though all Western educated).What is more interesting is that many of th e people who held (and in some ca..,cs still hold) influential government positions were also professors at leading universities in lndoncsia.This suggests that a capitalist culture likely became diffused throughout the economic and political centers, throu gh education, to young scholars who arc likely to represent the next generation of policy mak ers and bureaucrats.The diffusion of this culture support ed the creation of th e sort of Gramscian "political wills" that were commensurate with the formation of a global hegemonic bloc of capitalism.
Again, these bureaucrats and scholars were the people responsible for policy formulation (writing development plans) and policy implementation (carr ying out development plans).Their capitalist orientation derived in part from their educational background.However, there wa.., another, mor e direct influence on these people.Several of the people in the list above were involved in World Bank discussions and education programs.Needless to say, the World Bank and the IMF arc in the business of the capitalist development of places like lndon csia.Very simply, a.., far a.., the core is concerned, a semi-p eripheral lndon csia would be preferable to a peripheral lndon csia becaus e of its potential a.., a market for core commodities, and a.., a source of industrial labor.This is the bottom line a.., to why the IMF wa.., (and is still) willing to inject the lndoncsian economy with its billions.

Journa I of World-Systems Research
One of the first mca~urcs of the New Order regime wa~ to apply for readmission to the IMF, the World Bank, and the United Nations.Missions from the IMF and the World Bank visited Indonesia in mid-1966 to a~sist in formulating economic policy.They were instrumental in arranging a meeting of representatives of the non-Communist creditor nations at a conference in Tokyo in September 196 6 to discuss proposal~ for a moratorium on Indonesia's debt commitments (Pitt 1991: I 15).
Indonesia ha~ since relied on the IMF and the World Bank to oversee and help finance the programs recommended in the development plans.After decades of involvement with these organizations, of having these centers of global capital influence the course of Indonesian development, of having been acculturated into a system that recommends a capitalist orientation of its members, Indonesians, and importantly, the key figures in the Indonesian government, became incrca~ingly willing to seek integration into the worldsystcm.Indonesia's reliance on the core, in a period of a "transformed historical ground," ha~ also incrca~cd in the form of ongoing consultation and negotiation with the World Bank and the IMF.In fact, Indonesia's reliance on the IMF for its very economic existence is a stark contra~t with the random token a~sistancc of the I 950's and early 1960's.I shall now examine more closely the development plans (Repelita), and the actual patterns (and results) of"dcvelopmcnt," which further indicate the capitalist orientation of Indonesian development under Socharto.
A number of clements arc common to all of the five-year plans.Each begins with an introduction of the "targets of development," and a chapter concerning the financing of the plan.Consideration is given to each of the following, in one form or another: agriculture, irrigation, food, industry, mining and energy, manpower, transmigration, housing, science and technology, health, population and family planning, regional development, the law and justice, communication and tourism, national defense and security, information, the press, and the government apparatus/administration of the plan.Empha~is changed through the course of the plans.For example, a~ the economy expanded, manpower became important due to an incrca~ing urban workforce.Repelita I docs not consider technology, whcrca~ research and development became important in the later plans.Repe/ita Vis notable for its consideration of the "role of women," though in terms almost solely of "family welfare" and health issues.
What is most notable, at lea~t in terms of a rhetoric of nationalism cultural continuity with the Sukarno period, is the section in Repe/ita Von "National Culture and Belief in the One and Only God."Notice the wording of the following key pa~sagcs: The national culture which is founded on Panca~ila is directed towards giving an insight into and meaning to national development in all a~pccts oflifc so that in this way national development is development which is culture oriented ... Efforts towards national a~similation need to be continued in all sectors oflifc within the framework of strengthening national unity and oneness and fortifying national resilience.
Tradition and historical values need to be maintained and guided in order to cultivate historical awareness, fighting spirit and love of the country along with maintaining the preservation of culture and the continuity of development .The promotion of the national culture under REPELITA Vin principle is an effort to create a socio-cultural condition that is in line with the value of the nation 's identity that is based on Panca.:;ila(Indonesia, Republic of, 1991: l 07 -108).

Journa I of World-Systems Research
Pancasila is the government's national ideology, designed to universalize an Indon esian identity.Its five principlcs--belicf in one Almighty God, a ju st and civilized humanity, the unity of Indonesia, democracy guided by the wisdom of representative deliberation , and social justice for all Indoncsians--arc the ba.:;is of "national development."It is promulgated a.:; a form of control over the diverse regions and cultur es of th e Indon esian "nation-state."Both Sukarno and Socharto invoked it in order to attempt to instill in the people of Indonesia a drive for development.It ha.:; been, in effect, a tool of development .
Recalling what Wallcrstcin says about culture, "Cultures arc precisely arena.:;where resistance to hegemony occurs, where appeals arc made to historical values of establish ed 'civilizations' against the temporary superiorities of the market" (1980:65), Pancasila is a synthetic culture ( drawn from ancient tradition) that can be invoked to resist the hegemony of global capitalism by appealing to a national ideal.Under Sukarno, nationalism appeared in an anti-systemic strategy of development in the sense of "nationbuilding" a.:; the remnants of anti-colonial resistance to the core.However, und er Socharto, while reference to the "values of the nation's identit y" remained, nati onali sm became a rhetorical tool of economic development in opposition, ironi cally, to the sort of anti-capitalsit movement of Sukarno, and in support of the widening and deepening of "statcncss, " a.:; part of the rise of the global transformed historical ground.
Under Socharto, regional resistanc e within the Indonesian "nation-state" becam e an enemy to dcvelopmcnt. 12This is apparent in the regional disparities that I shall examin e later.However, it is important to consider again the nature of the "nati on-state ."Returning to Wallcrstcin's "transformed historical ground," there wa.:;, during Socharto's New Order, a "widening" and a "deepening" of "statcncss."Just a.:; there is an incrca.:;c in the "relational networks " between states, so there is within them.Wallcrstcin ha.:; also argued that nation-stat es arc "created " by the world-system (1991 ).!. §.For example, a.:; a colony, India wa.:; created by the British, and the Indians themselv es construct ed their state out of an understa nding of their own historicity .Wallcrstcin's proposition is that any given "nation-stat e" is the result of its historicity.Similarly , Indon esia can be considered a nation-state because the world-system fostered its creation, first a.:; an effect of colonial domination, and then a.:; an effect of the claim.:; to nationalism of the Indonesian government.More than this, I suggest, the Indonesian nation-state, a.:; a creation of the world-system wa.:;, in turn, used to help create the system .The regional, cultural, lin guistic, and ethnic divisions that constitute the archipelago explain the attempt to build an Indon esian nation under Socharto.Whcrca.:;Sukarno understood the nation in opposition to the global capitalist system, Soeharto understood the nation as a product of the world-system of capitalism, as integral to development within that system.Wallerstein continues: "There is no question that, at the present time, nationali sm in general, certainly including India, is a remarkably strong world cultural force.It seems stronger today than any other mode of social expression or collective mentality .. .Nationalism, in historical terms, is a very new concept.It is clearly the product ... of the modern world-system" (pp.133-34).And, as a product of that system, the success of Indonesian development would need to be measured in te nns that the system prescribes, that is, in terms of "a-;cent" within the system.

[Page 59] Journa I of World-Systems Research
The Problems of Integration: Indonesia "A.:;cends"While the Five Year Development Plans include appeals to nationalist ideology, the plans do not emphasize nationalism.The central concern of devlopment und er Soeharto wa.:; economic success--"a-;cent" in the system of global capitalism.
Indonesia's economic "success" during this period ha-; been well-do cumented. 11ln 1965, Indonesia's Gross Domestic Product (GDP) wa-; about $3.8 billion; in 1989 it wa-; about $94 billion.For Indonesia to a-;cend, it would need to engage in core -like activities, that is, there would need to be a shift from agricultural to non-agricultural production.Th e following comparisons show this to be the case.The percentage of GDP in agriculture went down from 56% in 1965 to 23% in 1989, while industrial GDP went up from l3% in 1965 to 37% in 1989.Manufacturing and services also increa-;ed a-; a percentage of GDP.Manufacturing increa-,ed from 8% to 17%; services rose from 3 1% to 39% (World Bank 1991: 208).Furthermore, energy consumption per capita, a-; an indic ation of industrialization, increa-,ed from 91 to 263 kilograms of oil equivalent between 1965to 1989(World Bank 1991: 212).These figures describe an indrntriali zing Indones ia that wa-; poised to a-;cend in the world-system.As a peripheral nati on-stat e it had signs of having semi-p eripheral status.
Despite such evidence (that Indonesia appeared poised for a-;cent), Indon esia's external national debt increa-,ed significantly from around $20 billion in 1980 to nearly $70 billion in 1990 (World Bank : 1990).The growth in debt is even more stri king over the 20 year period beginning in 1970, when total externa l debt wa-; only $2.5 billion (World Bank 1991: 244 ).Because the IMF ha-, become the leading referee of "Third World" debt, the effect on Indonesia, thro ugh increa-,ing reliance on IMF regulated loans, is that it ha-; become increasingly --in fact, exponent ially increa-,i ngly--reli ant on the IMF.The relationship that began in 1966 mushroomed into one of dependence on the IMF for guidance in dealing with debt.Robison (1986) explains, "While the prospect of being caught in a debt trap a-; consumin g a-; those of Brazil, Argentina or Mexico is remote, Indonesia's reliance on loans makes it incrca-;ingly susceptible to pressures from the World Bank for structural adjustment" (p.381). 18(Of course, the economic collaps e a-;sociatcd with the fall of Socharto ha-; resulted in tremendous reliance on the IMF, and a resumption of a significant servicing of debt to the institutions of a "transformed historic ground.")Although the national statistics of growth arc impressive, three important points should be considered.First, the Indonesian economy, while growing at high rates, averaging 5.1 % between 1984 and 1991, 19 wa.:; still plagued by the problem-; a.:;sociatcd with its integration into the capitalist global market.Second, although Indonesia ranked ninth on the Human Development Index in terms of a positive change, rising from 0.316 in 1970 to 0.491 in 1990 (World Bank 1990), its ovcral position remained "low" (a-; opposed to medium or high), ranking Indonesia at 98th of the world's countries.Third, for all the rhetorical attention (to the extent that it appears) to "regional development" in R epelita U-V, there continued to be serious regional economic disparity by the early l990's.
The force of development under Socharto wa-; to attempt to effect the building of an Indonesian nation that wa.:; to be developed economically--in other word-,, a nation whose development could be mca-;urcd in terms understandable in the language of a culture of capitalism.To do this, the strategy of development relied heavily on the institutions and mechanism.:; of a "transformed historical ground," to use (and, in turn, to be used by) th e techniques of development recommended by Western-oriented officials, and provided by an expanded system of banking and financial institutions.In short, Socharto literally bought into the capitalist world-system, making Indonesia reliant upon it a-; a culture of development.In this way, the nation he wa-; building wa-; actually being built by the system, becoming, as Wallcrstcin expresses it (and the choice of word-, here is te lling), a "product of the world-system."

[Page 60] Journa I of World-Systems Research
A-; such, success of this proj ect would necessaril y be in terms prescribed by that system; that is, development was measured primarily in the aggregate terms of national economic development.Under these terms, Socharto wa-; successful in building an economically developed, aggr egate "nation."How ever, in other terms, this sort of nation-building was a failur e. Inequity remain ed a charact eristic feature of Socharto's "nation."In the final section, I wish to draw attention to this failure not only to point out inequity, but also to point out that the measurement of success ( a-; wa-; the concept itself of "development") wa-; ba.:;cd in the language of the institutions of the "transformed historical ground" of the capitalist world-system.

Poverty in Indonesia
By the 1990's, capital derived from the development of Indonesia as a "nation-stat e" had yet to make its way to a significant portion of Indonesia's people.(By the turn of th e century, with the end of the "A<;ian economic miracle," poverty and hunger became pervasive.)The problem wa<; that capital formation, where it happened, took place at the economic and political centers of Indonesia, leaving the rest of the country outside the system .In effect, Socharto's "nation" wa<; exclusive to the pockets of Indonesia that became integrated into the global capitalist system.
I shall now consider the two most extensive a<;scssmcnts of economic growth and poverty in Indonesia for the years that complete the period .;N The first is a report prepared by the World Bank (1990); the second is the work of the Indon esia Project at the Australian National University (Hill 1989).Part of the work of the World Bank is to promote it<;elfby focusing on its success .Association with the culture of capitalism is enhanced when developing states arc made to believe in the success of that culture .Th e effect of the World Bank report is a replication of a myth of success in the face of continuing problems a<;sociatcd with development.It is an interesting ca<;c of marketing at the highest altars of capitalism.
According to the World Bank report, Indones ia: Strategy for a Sustained Red uction in Poverty (World Bank 1990), in Indonesia, "The percentage of the population in poverty and the absolute number of the poor declined during the 1980s.Income inequality ha<; also declined during the 1980s" (p. 1).There arc three important points about the report's findings.First, the report concentrates on aggregate data, making distincti ons betw een urban and rural sectors, but offering only very sketchy regional statistics (sec Tabl e 1).In fact, the only finding the report explicitly makes about regional inequity is a<; follows: "In 1987, the incid ence of poverty .. .remained substantial in the ca<;tc rn area<; (25%)" (p.15).Second, recommendations for dealing with the problem of poverty were foremost aimed at pursuing macroeconomic growth.Third, the source and nature of the data used in this study belie a suspect relationship between Indonesian policy makers and the World Bank.
[Page 61] Journal of World-Systems Research Winters (1995) reveals a "special relationship" that the World Bank had with Indonesian officials that places in question not only the veracity of such reports, but also the practices of capitalist development.
The problem of counting the poor prompted an illuminating controversy in 1989, when the World Bank wa<; drafting the 1990 World Development Rep ort that would showca<;c Indonesian development.When the Bank, a<; is its custom in Indonesia, circulated the report to Indonesian officials for their approval, conflict arose because the Bank used a definition of poverty that yielded a significantly higher number than the 30 million announced publicly by Soeharto.This led to several rounds of negotiations between the Bank and Indonesia's ministers to settle on an acceptable numb er that would not cmbarra<;s Suharto, who had apparently picked his number out of thin air.Without even so much a<; a footnote to alert trusting leaders to these negotiations, the Bank ended up relying completely on Indonesian data and definitions, so that the figur e published in th e 1990 report wa<; exactly 30 million.(p.422) Winters also points out that the government's definition of pov erty in Indon esia (upon which the World Bank has relied), even by 1994, wa<; (equivalent to) $9.30 per month for people who lived in rural area<; and $13 per month in cities, and wa<; "barely enough to buy the cheapest brand of instant noodles three times a day ... [meaning] that no mon ey [wa<;] left over for shelter, clothing, health expenses, or transport" (p.422).The mca<;urc of a<;ccnt wa<; a<; illusory a<; a<;ccn t itself.In this account, one can read a complici ty betwe en the institutions of the "transformed historical ground" and a corrupt cadre of Indonesian officials--officials who were determined to sec to it that a<;cent would be a<;sur cd by bending the statistics to prove "success." 2 1 The other work, Unity and Div ersity: R egional Economic Dev elopment in Indones ia since 1970 (Hill 1989), surveys each region (and considers the further dimension of development in the provinces).The work's editors summarize the findings of th ese surveys: [M]any crucial issues in regional development remain unsolved.They might have remained submcrgcd--a..:; they have for most of the post-independence cra--had there not been a dramatic decline in Indonesia's terms of trade in the mid-l980s.Now, however, a financially constrained central government no longer ha..:; the capacity to fund major development project..:; throughout the country.Jakarta must look more to the regions for idea..:;, money, and initiative.Reforms arc required in regional finance, in the delegation of administrative authority, and in national programmcs--from rice to trade policy and transmigration--which have a regional impact.The "unity" of the la..:;t 20 years of strong central government ha..:; to be complemented more effectively by the "diversity" which flows from a greater cmpha..:;is on regional initiative and self-reliance (p.53).
In effect, the recommendations in this report point to an Indonesian nation divided between a purportedly "successful" and integrated Indonesia located in the centers of capitalist economic activity and another Indonesia that remained outside the system and, by any mca..:;urc, in poverty.
[Page 63] Journal of World-Systems Research

Conclusion
In the late 19th and early 20th centuries, the Dutch implemented what wa..:; called the "Ethical Policy" in the Dutch Ea..:;t Indies (Saunders 1984).In many ways, this wa..:; a precursor to development in postcolonial Indonesia.Whether or not the effect of this policy wa..:; in fact "ethical," it contributed to the rise of Indonesian nationalism, which wa..:; later to become the foundation for claims to an Indonesian nation-stat e .Th e "Ethical Policy" of concerned Dutch colonialists bears a resemblance to the recent apparent concerns of the repres entatives of the World Bank for development in Indonesia.The resemblance suggests what ha..:; been a common characteristic of the world-system: wherever there is capitalism, there also is exploitation and a concern to conceal it.
To summarize , World-S ystem Theory is a plausible :framework of explanation of the development strategics of Indonesia during the period of the l950's through the l990's.Sukarno's development strategics, moving from a brief period of integration into the world-system early in his rule to dissocia tion by the late l950's, came to be organized according to an understanding of nationalism that drew upon the nationalist period of th e colonial period.The meaning of "development" changed under Socharto to pay homage to the global market, eschewing in practice Sukarno's "nation-building" in favor of economic development .Economic activity during the New Order under Socharto moved Indonesia towards integration into the system by working within a capitalist cultural orientation, implementing policies commensurate with that orientation.Indon esian development strategics under Socharto included clements of nationalism in the rhetoric of the plans written by Indon esian policy makers .However, in practice, the rhetoric of national self-reliance took a back scat to economic reliance on the institutions of the "transformed historical ground" of the global capitalist system in an attempt to a ... cend within the system.As a mca..,urc of a ... ccnt, economic "success" is identifiable only in the centers of Indonesian society where a ... similation wa.., most likely to occur.Despit e the (questionable) findings of the World Bank, for the rest of society, the effects of a ... similation and "a..,ccnt" were a perpetuation of economic inequity and poverty.Just a.., Sukarno's "development" of the Indonesian economy wa.., a dismal failure, Soeharto's economic "nation" wa.., a dismal failure ina..,much a.., its (relatively few) members wer e members of a nation built of, by, and for the capitalist world-system, leaving most of society on the side of the road to "a..,ccnt."In short, the economic struggle of a ... ccnt involved a cultural struggle between capitalism and nationalism, a.., uneven in it.., results a.., in the process.
One cannot a ... sumc that the Berkeley Mafia, their descendants, or their benefactors, the IMF and the World Bank, can have all the answers to the social, political, and economic problems of Indonesia.When huge and powerful groups such a.., these fail--and arguably fail miserably--perhaps it is time to a..,k the people for whom any system is anathema to making ends meet what ought to be done.The answer could well be a.., illuminating a.., any concocted by any of those who, for the pa.[and] put an end to any remaining chances that the community ever had of at lea..,t catalyzing the growth of a domes tic bourgeoisie" (p.75).These events demonstrat e the extent to which a hegemonic power can go to retain ownership of the means of production, and is relevant to the present discLL..,sion a.., an explanation of the historical constraints of 20th century Indon esian deve lopment.See also Kema..,ang (1982) for an analysis of similar effect s of colonialism cl..,cwhcre in A..,i a.
2. Needless to say, what "culture" is ha-.been the issue of considerable debate.Notice that I begin this paragraph with the phra-.c:"'Culture' might be seen ... " I carefully choose this wording because, if culture is anything, it is certainly a matter of interprctation--of what people make of it.In this ca-.e,culture can be seen to be th e foundation of either nationalism or capitalism.This division is also apparent in tcm1S of the way culture is used a-. a tool of political and economic strategy.The analysis that follows also suggests this a-.an indication of what culture might be.In fact, "culture" run s the gamut of epistemological and ontological meaning a-.well a-.economic and political strategy.Wallcrstein (l990a) proposes that "[t]hc 'culture', that is the idea-system , of this capitalist world-economy is the outcome of our collective historical attempts to come to tem1s with the contradictions, the ambiguities, the complexities of the socio-political realities of this particular system" (p.38).He continues by arguing that the dualism between nationalism and capitalism ( or, a-. he puts it, between universalism and racisim/sexism), is synthetic, that "the two ideologies arc a symbiotic pair " (p.42), because the two separate ideologies, to the extent that they can be separated, reinforc e one another, and, upon closer inspection, undem1ine one another.In the end, however, Wallerstcin secs anti-systemic opposition to universalism (a-. it is presently enacted) to be generally futile, to the extent that it buys into the division and replicat es the perpetuation of the myth that present vocabularies of change arc appopriatc to future transformati on.This is evident in the failure of both Sukarno and Socharto, both of whom sought th e development of Indon esia in the terms recommended by the systcm--that is, that an Indonesian identity needed developing, using the model of the modern Western state .See also Boyne (1990) and Wallcrstein (l990b).In any ca-.c,"culture" is made to be an important factor in Indon esia's dvelopment strategies by the agents of development, which makes it an important issue in understanding the "developm ent" of Indon esia.
4. Gramsci's view of ideology is relevant to these clement-.of Wallcrstein's "transforn1ed historical ground" (sec note 2), since it is manifested in "institutions and apparatuses" with "collective wills."An important clement of this essay is, I believe, to demonstrate how this works : the integration of the "nation-state" of Indon esia into the "collective wills" embodied in the "institutions and apparatuses" of the llvIF and the World Bank , and the global division of labor.
[Page 65] Journa I of World-Systems Researc h 2.,.Bergeson (1990) makes a similar point: A state act-.and communica tes through a diplomatic languag e independent of the local vernacular, at first Latin and later French, and diplomatic repres entativ es (amba-.sadors,cmmisarics, couriers, etc.) and in earlier centuries through linked dyna-.ticfamilies.The point here is that the presence of these linkages precedes state interactions, and furth er, makes it possible in the first place.From this point of view the int ernational system, in the form of its culture ( diplomatic language and systems of representation) docs not follow the interaction of states, but makes that possible (p.76).
6. Kuitcnbrouwcr (1991) explains that the colonial period wa.., a period of great human suffering."Between 1873 and 1909, 60-70,000 Achcncsc and 2,000 members of the colonial army were killed in Achch; 10,500 members of the colonial army, 25,000 Javanese forced labourers and an unknown number of Achcncsc died of illness, exhaustion or hunger.Starting with Lombok in 1894, the military actions in other parts of the Outer Regions caused the additional deaths of 10-15,000 local inhabitants and about 500 members of the colonial army" (pp.367-68).The government of postcolonial Indonesia ha.., itself been quite capable of similar--cvcn more horrific--violcncc.In 1965, just prior to the installment of the New Order under Suharto, a.., many as 500,000 Indonesians, due to their alleged tics to Communism or due to their Chinese ethnicity, were killed.And in mid-l970's Ea..,t Timor 200,000 people lost their lives in their struggle for independence during the inva..,ion and occupation by Socharto's forces .Since then, there have been numerous ma..,sacrcs, including the killing of thousands of people in Irian Jaya and Acch, a.., well a.., Ea..,t Timor.
L According to Tan (1967: 30): On 5 July 1959, President Sukarno issued a decree which had three important effects: it abruptly ended both the country's W cstcrn type of parliamentary democracy and its liberal economy; it dissolved the Indonesian Constituent A ... .l.!1.This excerpt is from "The President's Independence Day Address," 17 August 1963, reprinted in Feith andCa..,tles (1970).
lL. Liddle (1991) sorts out the economic policy makers of the New Order a.., being either "nationalists," "patrimonialist..,," or "economist .... " Soeharto a..,sociated himself with the nationalists and patrimonialist.., to the extent that they supported Soeharto's deferenc e to nationalism.However, as Liddle points out, the economists (the group that are identifi ed a.., being, or being in league with, the "Berkeley Mafia") received Socharto's enduring favor because of the "success" of their liberal economic polici es .Liddle also propos es an alternative argument to the one presented here.He entertains several factors that might have contributed to an incrca..,c in liberal economic policy in Indonesia, including international economic forces, domestic culture, patrimonialism, and economic crisis.He contends that all of these contributed to the choice ofliberal policy, but argues that it wa.., primarily a matter of Socharto's own "voluntary" and "autonomous" choice.This certainly wa.., an important factor.Soeharto's own personal interest.., were no doubt at stake in the choice of development strategics.However, the question of the agency of a single individual cannot account for the overwhelming power of the forces of nationalism and/or capitalism that made the choices available to him, nor can it account for th e multiplicity of historical and structural forces that he faced.
12. On a visit to Sulawesi in 1995, residents there indicated to me that the issue of free trade in cloves and copra wa.., of great concern to the people who lived there, a.., th e central government wa.., tightening it.., control on that trade.Because of a continuance of tight controls by the central government, the region wa.., experiencing severe economic hardship--at a time when the center wa.., expe riencing sharp economic growth.Similar instances of unequal development were taking place throughout the archipela go.
ll The biographical informa tion which follows on government officials, educators, and so on, were taken primarily from two sources : Ro eder, Who's Who in Indonesia (1980);and International Forum Indonesia, International Fomm Indonesia (1990).Sec also National Development Office, Republic of Indon esia (1988); Finch and Lev (1965);and England (1987).
scmbly install ed in 1956 to draft a replacement for the interim Constitution of 1950; finally, it resurr ected the original Constitution of 1945 (Undang-Undang Dasar or UUD 1945) a.., the nation's organic law.Its preamble contained Pan(ia Si/a, the five principles which formed the philosophical ba..,is of independent Indoncsi a ... A. .. source of guidance ... wa.., klanipol-Usde k ... President Sukarno explained that A1anipol-Usdek consist ed of five essential clements: l) The Constitution of 1945, being the original constitution upon the proclamation of Indep endenc e, wa.., the true and proper fundamental law of th e state.2)A consequence of that Constitution wa.., Indonesian socialism.3)Indonesian socialism entailed guided democracy.4) Guid ed democracy in turn entailed guided economy.5) The whole doctrine embodying these point.., gave rise to the concept of Indon esian Identity, the moral and intellectual characteristics which informed the Indonesian nation.Hence came the acronym Usdek which ... wa.., used to name and populari ze the fresh exeges is of the philosophy of the state: U --Undang-Undang Dasar 1945: the Constitution of 1945 S --Socialisme a la Indonesia: Indonesian socialism D --Demokrasi Terpimpin: Guided democracy E --Ekonomi Terpimpin: Guided economy K --Kepribadian Indonesia : Indon esian Identity.[Page 66] Journal of World-Systems Research _& Moon cites Jones' statement: "American Emba..,sy in Jakarta to U.S. Department of State, Foreign Service Despatch 445, 12/ 12/60, p. 13, RG 469, 0 /FE, Indonesian Subject Files, 1953-1961, Box 69, U.S. National Archives, wa..,hington, D.C. 9. Sukarno made this reference in his Presidential Address on the 20th Anniversary of Independence, 17 August 1965: "Reach for the Stars!A Year of Self-Reliance."See Tan(1967:22)  .
To begin, what has often been called the "Berkeley Mafia" was a group of economic bureaucrats in the Development Cabinets ..U Perhaps the central figure among the "capitalist bureaucrats" was Widjojo Nitisastro, who became Minister of State for National Development in 1968, and was named Minister of State for Economic, Financial and Industrial Affairs in 1973.In 1979, he also held the position of Chairman of the National Planning Board (BAPPENAS).In 1983, Johannes Sumarlin assumed the roles of Minister of State for National Development Planning, and of Chairman ofBAPPENAS.He had previously been Minister of State for Administrative Reforms from 1968.Ali Wardhana was Minister ofFinancc from 1968-1982.Then, from 1983 to 1987, he was Minister Co-ordinator for the Economy, Finance, Industry and Development Supervision.Emil Salim began in 1968 as Minister of State for the Reorganization of the State Apparatus and Minister of Communication from 1972 to 1979.Salim also became Minster of State for Supervision of Developm ent and the Environment in 1981, a title which changed in 1984 to Minister of State for Population and the Environment.All of these men received Ph.D.'s in economics from the University of California at Berkeley, hence, the "Berkeley Mafia."There were also a number of other key officials who were educated elsewhere in the West.Among these is Radius Prawiro, a graduate of the Nederlandschc Economischc Hogeschool, and a Doctor of Economics at the University of Indonesia.Praw iro began as Minister of Trade in 1973 (changed to Minister of Trade and Cooperatives in 1979), and was Minister of Finance until he was replaced by Sumarlin.Rachmat Saleh, also a Ph.D. in Economics from the University of Indonesia, took Prawiro's position as Minist er of Trade in 1983.Bucharaddin Jusuf (Ben) Habibie (Socharto's successor), who graduated with a doctorate from the Technical University in Aachen, West Germany, was first Minister of State for Research and Technology in 1973, and also became Chairman of the Board for the Study and Application of Technology 1984.In 1976, Socbroto, a Ph.D. from Harvard, became Minister of Manpower, Transmigration and Cooperatives.Arifin Siregar was Minister of Trade beginning in 1989, and served as the Governor of the Bank of Indonesia in 1987 and 1988.His Ph.D. is from the University of Muenster.Ph.D., Corne ll University) Coordinator of Economic and Social Research and Assistant Dean, Faculty of Economics, University of Indoncsia.Alwi Muhammad Dahlan (Ph.D ., University of Illinois) Assistant to Minister of State for Developm ent and the Environment, Lecturer of Faculties of Social Politic s, Hasanuddin University and University of lndonesia.Dono lksandear Djojosubroto (Ph.D., Uni versity of .Illinois) Directorate-General of Foreign Monetary, Finance Department.Hariri Hady (Ph.D., Berkeley) Lecturer at Faculty of Economics, University of lndoncsia, Head of Regional Social Economic Bureau, BAPPENAS.Daoed Jocsocf (Ph.D., University de Paris I Pathcon-Sorbonnc) Minister of Education and Culture, Chairman of th e Department of General Economics, University oflndonesia.Mub yarto (Ph.D., Iowa State University) Lecturer, Faculty of Economics, Gacljah Mada Uni versity, Yogyakarta.Anwar Nasution (Ph.D., Tufts University) Member of Macroeconomic Study Group, The World Bank, Lecturer in Economics, University of lndoncsia.Halim Shahab (Ph.D., Berkeley and University of lndoncsia) President of PT Jakarta lndustrial Estate Pulogadung, Member of lndoncsian Delegation to the World Bank for credit ncgotiations.Juwono Sudarsono (Ph.D., Berkeley) Chairman of the Department of lntcrnational Relations, University of lndonesia.Zainul Y asni (Ph.D., Vanderbilt University) Head of Development Center for the marketing of agricultural commodities /National Export Development Agency, Trade Dcpartment.Buchari Zainun (Ph.D., lndiana Universit y) Director of Staff School for Civil Servants.
Wallcrstein docs not develop this argument to any great extent in the context of Dutch hegemony vis-a-vis the peripheral area of the Dutch Ea..,t Indies.Dutch colonialism in the Indonesian archipelago flourished a century later.Its effects were dcva..,tat ing on the local economy.According to Kema..,ang, "Dutch 'mercantilism' destro yed the chances of Indonesia's domestic bourgeoisie and set back its growth for over 200 years" (1985:57).Kema..,ang shows how the Dutch, specifically the Dutch Ea..,t India Company (VOC), first gained access to, and then supplant ed, the indigenous (priyayi ) monopol y in the spice trade by using the Chinese a.., trading liaisons and later a.., tax collectors.When the Chinese thc1rnelvcs gained access to capital they became a perceived threat to the Dutch, first a.., a capitalist cla..,s themselves, and then a.., effecting the revival of an indi genous capitalist cla..,s.In 1740, the Dutch slaught ered "around 10,000 Chinese in and around Batavia [now central Jakarta] alone, about 10% of the region's total population,