Demystifying the capitalist state: Political patronage, bureaucratic interests, and capitalists-in-formation in Soeharto's Indonesia

This study attempts to identify and characterize the new capitalists, who have merged during Soeharto's New Order era. Extensive documentary research and intensive interviews conducted throughout 1985 revealed the trend that the economically strong Chinese minority and many new indigenous businessmen, mostly of Javanese origin, have steadily consolidated into a big business class. Theoretical exploration starts with the question of why these capitalists, despite their economic entrenchment in the rapidly growing Indonesian economy, have failed to form a capitalist class.;The study closes with a discussion of the theoretical implications of this finding. For all the present indication that the new capitalists will eventually mature to form a capitalist class, they have thus far been subordinate to the state and its managers. The study demonstrates that most dominant theories of the state are too society-centered to come to grips with the case of Soeharto's Indonesia.;The hypothesis offered to answer the question is that factional politics and bureaucratic interests prevail upon the process of capital accumulation and class formation in postcolonial societies. My study showed that these political forces from within the New Order state allowed state managers to patronize the business sector and led the rising new capitalists to resort to noneconomic, primitive or premodern modes of accumulation. The state was capable of exercising dominance over and remained autonomous from the nascent capitalists largely because it was equipped with financial resources to provide for its bureaucracy and co-opt the upper and middle classes. It also maintained a monopoly on violence and symbolism to defy and preempt any societal challenges. As the ruling group--the "military-bureaucratic oligarchy"--sought their political constituencies in the various elements of the state itself, they left intact the corrupt, inefficient, and big bureaucracy and economic interventionism, which all contributed to appeasing and rewarding their political supporters.