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Southeast Asia

Indonesia’s Economics Democracy Turns into Oligarchy

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Three years before John Maynard Keynes published his Magnum Opus, “General Theory,” in 1933 two economists shared their views on the imperfections of free market competition. Whether coincidentally or not, Joan Robinson (an English woman, wife of a professor who was ever rejected to continue her studies in economics) and Edward Chamberlin (US) both published books with the same tone that year. Economists call them the Cambridge duo. Joan from Cambridge University, follower of Keynes and Alfred Marshal, while Edward from Cambridge, Massachusetts, Harvard University. Joan published the book “Economics of Imperfect Competition” and Chamberlin published the book “Theory of Monopolistic Competition.

The tone of the two books is the same, although the approach is different. Both of them see the phenomenon of monopoly that occurs in a free market where big companies try to produce almost all goods in one field, regardless of whether the competition is healthy or monopolistic, such as the Cocacola company which produces very many brands in the beverage sector or Unilever in the United States in the field of daily necessities (durable goods).

Joan Robinson did not emphasize the use of a mathematical approach in the economics that she applied, while Edward Chamberlin was the opposite. This is very understandable because both are oriented to two different characters. John Stuar Mill brought Adam Smith-style economics to political economy, while William Stanley Jevon took it to Newtonian economics (mathematics). The two figures distinguish the approaches of the two economists. Until now, these two approaches still exist (previously economics was called Political Economy, Alfred Marshal standardized it into Economics)

So before John Maynard Keynes officially matured his flow, there had been several objections to the concept of perfect competition (Pareto’s Curve/Vilfredo Pareto) which started from the “Natural Liberty” hypothesis of Adam Smith and John Locke’s “Property Right”. In America, Alexander Hamilton was an accomplished critic of Adam Smith’s concepts. He criticized the minimal role of government which was introduced by Adam Smith in the book “Wealth of Nation” in 1776 and proposed the proper roles of government to be taken to help advance the economy. And US at the beginning of its birth was not a “Champion of Globalization” and “free trade,” but instead was very protectionist, which was one of the causes of the civil war (Donald Gibson, 2011).

North America at that time was just starting the industrialization process where the manufacturing industry (which was still vulnerable/infant industry) needed protection via imposition of import tariffs on products from the UK, while South America was based on agriculture, the results of which were exported to England. South America refused to impose tariffs on imports, because of the risk that Britain would retaliate against the same tariffs on agricultural products from South America. And because it is based on agriculture, South America is also pro against slavery (slaves working in the agricultural sector), which is another cause of the civil war.

Besides Alexander Hamilton, there are economists John Rae, Friederick List, and Hendry C Carey, who even gave another name to Adam Smith’s version of “free trade” as “imprealism free trade” aka free trade is economic colonialism, by proving British behavior during the Mercantilism era . Britain pressured Ireland and India not to produce products that were already manufactured by Britain. The King of England forbade the sale of machinery abroad which would cause other countries to produce the same goods as England.

In short, even in a free market, competition is never perfect. Free market proponents such as Milton Friedman admit that the free market cannot fully reach the level of “Full Employment.” For that, Friedman introduced the term “Natural Unemployment” as a justification.  While followers of John Maynard Keynes (Keynesian) argue, if the market can only absorb seven thousand workers from the existing 10,000 workers, then there is nothing wrong with the government trying to find a way so that 3000 (natural unemployment) can get jobs, or at least 1000-2000 scattered workforce. With that idea, the New Dealer (the initiator and supporter of the New Deal policy) in the Franklin Delano Rosevel (FDR) era initiated many public employment projects to absorb 25 percent of unemployment in US due to the Great Depression.

In Indonesia, no different with Russia, the absence of free competition in the economic field and the high costs of contesting have given rise to its own economic pathology, namely oligarchy. The post-New Order Indonesian government, as written by Jeffrey Winter (Oligarch, 2011), has indeed experienced a transition from the oligarchic model from the “sultanic oligarch” that Suharto had successfully tamed to the “ruling oligarch” model that roams at will in the national political economy system. This transition actually endangers the democratization process in Indonesia because, as Jefrey Winter wrote, it plunges Indonesia into a “criminal democracy,” aka not a transition to democracy as understood in liberal-electoral democracies in the west.

Jeffrey Winter wrote his views in the book “Oligarch” published in 2011, by referring to the development of the Indonesian political economy from Suharto, Gus Dur, Habibie, Megawati, and SBY. However, in 2018 when John West published the book “Asian Century on the Knife Edge,” he actually saw the development of the oligarchy in Indonesia getting worse. Today, said John West, Indonesian democracy remains only as “a democracy of the few, for some, and by some, not of the people, for the people, and by the people, as is the general adjunct of democracy.

On the one hand, the rulers (or potential rulers) increasingly need alternative sources of funds to win the increasingly expensive democratic contestation. On the other hand, the dilemma is that political power over the dynamics of the economy is relatively constant, sometimes even decreasing, but on the other hand, economic actors (entrepreneurs, conglomerates, oligarchs) enter the political arena to offer alternative sources of funds to finance democratic contestations (political financing) which is increasingly expensive. It is in this kind of symbiotic mutualistic relationship that barter and political economy concessions are born (Stein Ringen, Journal of Democratization, vol.11, April 2004).

Furthermore, under such an agenda setting, in the end, capital agglomeration will only be centered in the circle of a few economic elites (conglomerates/oligarchs) who are able to guarantee the availability of funds to cover the super expensive cost of democratic contestation. It is certain that such corrupt political economic relations will be the cause of the slowdown in development and increase the disparity between the haves and the have no, aka the lack of equity. And now, in Jokowi’s second term, oligarchs are no longer providers of political funds, but have invaded the political world by occupying many ministerial seats.

In other side, thepainful income disparity is certainly not a figment. More and more, the list of Indonesia’s 50 richest people is competing to increase their wealth to pursue the highest ranking according to Forbes magazine, for example. The rate of increase in their wealth is more than the increase in the salary of workers or the standard of living of the common people. It is as if they are competing to occupy land after plot of Indonesia’s national wealth in the name of prestige and pride, including for conspicuous consumption (to borrow a term from Thorstein Veblen) along with the government which is increasingly inclined to position itself as guardian of the growth of the wealth of the oligarchs for the smooth financing of politics in one side and contribution to state revenue on the other.

Even the government tends to have a “socialist” character when business magnates begin to experience “market failure,” but is very “liberal capitalist” to the people at the same time, by releasing protection valves in fields and products that should be protected in the name of the public interest. The BLBI scandal is one example of how “socialist” the government is to business leaders, or the state’s investment in SOEs from year to year whose nominal is almost always greater than the direct contribution of SOEs to state revenues, or the allocation of economic recovery funds which is much larger for entrepreneurs (oligarchs) rather than for the people, allocating hundreds of trillions for the megalomaniac ambitions of a new capital rather than dealing with the stomachs of the people, plus new laws (omnibus bill) that tend to increase the confidence of business magnates rather than the confidence of the common people.

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Southeast Asia

Reclaiming our future

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The Asia-Pacific region is at a crossroads today – to further breakdown or breakthrough to a greener, better, safer future.

Since the Economic and Social Commission for Asia and the Pacific (ESCAP) was established in 1947, the region has made extraordinary progress, emerging as a pacesetter of global economic growth that has lifted millions out of poverty.

Yet, as ESCAP celebrates its 75th anniversary this year, we find ourselves facing our biggest shared test on the back of cascading and overlapping impacts from the COVID-19 pandemic, raging conflicts and the climate crisis.  

Few have escaped the effects of the pandemic, with 85 million people pushed back into extreme poverty, millions more losing their jobs or livelihoods, and a generation of children and young people missing precious time for education and training.

As the pandemic surges and ebbs across countries, the world continues to face the grim implications of failing to keep the temperature increase below 1.5°C – and of continuing to degrade the natural environment. Throughout 2021 and 2022, countries across Asia and the Pacific were again battered by a relentless sequence of natural disasters, with climate change increasing their frequency and intensity.

More recently, the rapidly evolving crisis in Ukraine will have wide-ranging socioeconomic impacts, with higher prices for fuel and food increasing food insecurity and hunger across the region.

Rapid economic growth in Asia and the Pacific has come at a heavy price, and the convergence of these three crises have exposed the fault lines in a very short time. Unfortunately, those hardest hit are those with the fewest resources to endure the hardship. This disproportionate pressure on the poor and most vulnerable is deepening and widening inequalities in both income and opportunities.

The situation is critical. Many communities are close to tipping points beyond which it will be impossible to recover. But it is not too late.

The region is dynamic and adaptable.

In this richer yet riskier world, we need more crisis-prepared policies to protect our most vulnerable populations and shift the Asia-Pacific region back on course to achieve the Sustainable Development Goals as the target year of 2030 comes closer — our analysis shows that we are already 35 years behind and will only attain the Goals in 2065.

To do so, we must protect people and the planet, exploit digital opportunities, trade and invest together, raise financial resources and manage our debt.

The first task for governments must be to defend the most vulnerable groups – by strengthening health and universal social protection systems. At the same time, governments, civil society and the private sector should be acting to conserve our precious planet and mitigate and adapt to climate change while defending people from the devastation of natural disasters.

For many measures, governments can exploit technological innovations. Human activities are steadily becoming “digital by default.” To turn the digital divide into a digital dividend, governments should encourage more robust and extensive digital infrastructure and improve access along with the necessary education and training to enhance knowledge-intensive internet use.

Much of the investment for services will rely on sustainable economic growth, fueled by equitable international trade and foreign direct investment (FDI). The region is now the largest source and recipient of global FDI flows, which is especially important in a pandemic recovery environment of fiscal tightness.

While trade links have evolved into a complex noodle bowl of bilateral and regional agreements, there is ample scope to further lower trade and investment transaction costs through simplified procedures, digitalization and climate-smart strategies. Such changes are proving to be profitable business strategies. For example, full digital facilitation could cut average trade costs by more than 13 per cent.

Governments can create sufficient fiscal space to allow for greater investment in sustainable development. Additional financial resources can be raised through progressive tax reforms, innovative financing instruments and more effective debt management. Instruments such as green bonds or sustainability bonds, and arranging debt swaps for development, could have the highest impacts on inclusivity and sustainability.

Significant efforts need to be made to anticipate what lies ahead. In everything we do, we must listen to and work with both young and old, fostering intergenerational solidarity. And women must be at the centre of crisis-prepared policy action.

This week the Commission is expected to agree on a common agenda for sustainable development in Asia and the Pacific, pinning the aspirations of the region on moving forward together by learning from and working with each other.

In the past seven-and-a-half decades, ESCAP has been a vital source of know-how and support for the governments and peoples of Asia and the Pacific. We remain ready to serve in the implementation of this common agenda.

To quote United Nations Secretary-General Antonio Guterres, “the choices we make, or fail to make today, will shape our future. We will not have this chance again.”

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Southeast Asia

Return of the Marcos and Great-Power Competition

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PNA photo by Joey O. Razon

Ferdinand Marcos Jr., more commonly known as “Bongbong,” won an outright majority in the recent presidential election in the Philippines. Son and name-bearer of former Philippine dictator Ferdinand Marcos paved the way for the country’s most notorious political dynasty’s shocking return to power. In the words of Filipino columnist Benjamin Pimentel, “It’s as if Kylo Ren emerged and the Empire is back in power.”

In announcing his desire to work for all people, Ferdinand Marcos Jr. said the world should judge him based on his presidency, not his family’s past.

“To those who voted for Bongbong, and those who did not, it is his promise to be a president for all Filipinos. To seek common ground across political divides, and to work together to unite the nation.” saidVictor Rodriguez, spokesperson for Marcos, in a statement.

However, the pragmatic words seem to have failed to sway the opposition as he faces countless accusations of election irregularities. Their opponents are horrified by Marcos’ brazen attempt to reinvent historical narratives from his family’s era in power. A protest against Marcos was staged by approximately 400 people outside the election commission on 10th May, primarily by students.

Human rights group Karapatan urged Filipinos to reject Marcos’ new presidency, which it sees as a product of lies and disinformation designed “to deodorise the Marcoses’ detestable image”.

HISTORY OF MARCOS: People Power” Uprising

Ferdinand Marcos Jr is not a new name in the Philippines’ political scenario. The “bloodless revolution” of 1986 in the Philippines that ousted the infamous dictator Ferdinand Marcos, was none other than Ferdinand Marcos Jr.’s father.

The world leaders at the time praised the mass demonstration after hundreds of thousands marched along EDSA streets to protest a fraudulent election. Through the People Power” Uprising, Filipinos proved that a peaceful uprising can challenge a ruthless dictatorship and overthrow military rule.

Marcos Jr and his family escaped to Hawaii following the rebellion and after his return to the Philippines in 1991, Marcos Jr served in congress and the senate. With his return to the Malacañang Palace in 2022, the world anxiously watches whether history will repeat itself or democracy will prevail as Marcos Jr. relentlessly defends his father’s legacy, refusing to apologise or acknowledge the atrocities, plunder, cronyism, and extravagant living, which resulted in billions of dollars of state wealth disappearing during the dictatorship.

MARCOS JR’S FOREIGN POLICY: Continuity or Change?

Considering his political alignment with Rodrigo Duterte, the outgoing President, who has been exceedingly vocal about his anti-Washington, pro-China stance, it is no secret Marcos Jr. favours Beijing. According to Richard Heydarian, a South China Sea observer and professor of political science, “Ferdinand ‘Bongbong’ Marcos Jr. is the only candidate who has signalled almost perfect continuity with the incumbent populist pro-China president in Malacañang.”

However, Marcos Jr seems to be a President that might play the game more strategically compared to his successor. Among Marcos’s many accolades for his father, one was maintaining a strong security alliance with Washington. Even though, he is politically aligned with Duterte who sought to pivot away from the United States and towards China, Marcos will seek a balancing act. Philippines under Marcos will continue engaging with China, in-line with Duterte’s Pro-China Policy but at the same time will engage, and even bolster a closer tie with the USA, to safeguard Philippines’ sovereignty amidst an aggressively rising China.

When asked if he would ask the American’s help in dealing with China, Marcos Jr said, “No. The problem is between China and us. If the Americans come in, it’s bound to fail because you are putting the two protagonists together.” This statement shows a sense of maturity and solid understanding of the ground realties of the region. Marcos Jr. seems to be the President that keeps his country’s national interest at the very core of all his decisions. He understands how easy it is for a small country to be stuck in the middle of a great-power competition, and that more often and not, it harms the small country’s interests. He envisions Manila as neither heavily dependent on Washington for its security needs nor become a pawn in China’s greater geopolitical ambitions. He wants to have an independent foreign policy, regardless of deepening U.S.-Chinese competition. One that predominantly benefits his country, Philippines.

In contrast to Duterte, Marcos Jr has a very warm and embracing approach towards the USA. Being treaty allies, Marcos Jr refers to their alliance as “a very important one.” He maintained that the alliance “has stood us in good stead for over a hundred years and that will never disappear from the Philippine psyche, the idea and the memory of what the United States did for us and fought with us in the last war.”

Marcos Jr seems to be a realist who understands that in International Politics, states must “engage whenever possible, and contain wherever necessary.” On asked about Chinese assertiveness in the South China Sea, he argued that “Philippines will not cede any one square inch to any country, particularly China, but will continue to engage and work on our national interest.”

To summarise, Marcos will, in all probability, modify Duterte’s foreign policy in a way that maximizes the strategic benefits for the Philippines and avoids confrontation with the USA and China.

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Southeast Asia

President Ho Chi Minh’s reflections about international peace

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President Ho Chi Minh had a dissimilar way of approaching international peace, and he held a view that the way western nations look into revolution and resurgence, particularly in colonial era, was different from what the people aspired. He took note of developments in colonial societies particularly when Turkish women were protesting against the invasion of Western nations and imperialism, and referred to Indian women protests against British domination way back in 1912. In fact, writing way back in 1918, he stated that the defence of India act was the suppression of genuine domestic grievances because it provided the right to arrest and detain suspected Indians. He was always very supportive of the workers and peasants’ movement across the world.

While congratulating the first Prime Minister of India Jawaharlal Nehru on organising the Asian relations conference, he stated that China and India were the big brothers of Vietnam and the most ancient civilizations.  Writing way back in March 25th 1947, he opined that solidarity will make the three countries the mightiest defenders forwards peace and democracy. He argued that Vietnam was aspiring for unification and independence, and hoped that the Asian countries will come to their support. He stated that it is pertinent for the neighbours to have friendly relations, and alluding to the five principles (Panchsheela) of Nehru-Chau Enlai joint statement, he added that the five major principles which were enlisted in the joint statement between China and India, and Myanmar and China need to be replicated in the larger Asian context.

After the conclusion of the war with French in 1954, he clearly stated that the major challenges for Vietnam was proper implementation of the Geneva accords and sustaining the economy to upgrade the living standards of the people of Vietnam. Responding to a question asked by a journalist related to Geneva accords implementation in Vietnam, he stated that France being a major country and a colonial power, it is pertinent that the ceasefire agreement is implemented fully and this will ensure trust between the signatories. It is also important that scrupulousness in such kind of agreement so as to bring about peace and tranquillity.

He had time and again alluded to the five Panchsheela principles whenever he was giving any interview to the journalists and scholars. He clearly stated that there is need to respect sovereignty and territorial integrity, refrain from violation of each other’s territorial borders, non-interference in internal affairs, equal treatment for mutual benefits and peaceful coexistence. He opined that taking inspiration from India-China agreement, Vietnam would be willing to implement a similar kind of five principles with other countries, primarily Cambodia and Laos. Related to the illegal occupation of Goa by Portugal, he criticized the illegal occupation of Goa by Portuguese and the support that the US has provided to Portugal for continuing illegal occupation.

He talked about solidarity among Asian and African people and stated that for peace to exist the Geneva agreement should be implemented in full. After the first Indochina war, he stated that it is important that the peace as per the provisions of Panchsheela should be implemented at all levels. He has always alluded to Buddha and Mahatma Gandhi while talking about peace, clearly demarcating the role of culture and religion in maintaining peace. He was clearly against western imperialism and occupation of territories by force by any major power. He was also very clear and in one of the letters written on the eve of an interview given to New Delhi people in India, he clearly specified that the situation of world development particularly after the independence of many developing countries was beneficial for the peace movement. He stated that more than 1200 million Asian African people were in the line of peaceful forces and these people were liberated including those in erstwhile Soviet Union and other socialist countries. He lauded the role played by Asian African countries in peace protection and always supported fight against colonialism and Asian people’s solidarity. He was completely against military race, prohibition against nuclear weapons and hydrogen bomb, dismissing aggressive military forces and demolishment of military bases in foreign countries.

His views with regard to arms reduction and working together to reduce the scourge of nuclear bomb were very specific. While responding to the welcome address during the banquet dinner hosted by president of India Rajendra Prasad in 1958, he stated that “the pugnacious forces has been conspiring to push the mankind to the destruction of war. They are ceaselessly fighting to keep and consoled at peace, India made a big contribution. Peaceful forces are more powerful able to prevent the war but the pugnacious forces do not give up their conspiracy to wage their war.” He was really appreciative of any of the peace initiatives undertaken by any country and he has repeatedly thanked international committee which was chaired by India for supervising and controlling Geneva accord implementation in Vietnam.

President Ho Chi Minh was appreciative of the fact that the essence of Buddhism and culture would strengthen the spirit of love towards the country, national solidarity, and bring about cultural essence which will bring closer the eastern and western cultures. He stated that in terms of Buddhism the core philosophy is peace and the construction of the country.

President Ho Chi Minh was specifically influenced by Buddhism and he had stated that the people should practice the life of holy learning and Buddhist simplicity. Even though president Ho Chi Minh did not write and reflected about Buddhism but his life and career were intertwined with the core philosophy of Buddhism. He was very much interested in implementing the idea of peaceful humanity under Buddhism and ushering in Buddhist consciousness in every society. Ho Chi Minh had an idea that the human affection would help in self-improving human ethics and closer bonding with a larger population. Ho Chi Minh’s ideology included mercy, non-egoism, altruism, self-improvement, exercise of moral ethics, and solidarity spirit among masses. The acknowledgement of Buddhism as the core fundamental of life was slowly acknowledged by the Vietnamese people too and as per Ho Chi Minh, he had acquired the Buddhist ideas from family, national tradition, and the Buddhist way for liberating the country.

Taken into cognizance President Ho Chi Minh objective of peace, he was very much concerned with regard to ethics, solidarity, guaranteeing supreme benefits of the nation, bestowing rights and benefits to the people and ingrained self-consciousness which would bring about sincere affectionate, straightforward introspection. This will help in self-criticizing and unifying characters for the larger benefit of the society. He stated that the national solidarity should be in Sync with the international solidarity. In this context it is important to reflect on the Russia Ukraine crisis and he has been very instrumental in referring to Mahatma Gandhi for his approach towards peace and self-suffering. However, Ho Chi Minh was very attached to this concept of abhorrence of repression of the people and was very critical of any kind of imperialism which would subdue people from realising their ambitions and goals. Ukraine crisis also shows a new kind of geopolitics which will define the world order but he was also critical of the fact that international solidarity should be progressive and aspire for a long-lasting peace.

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