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How to write about Indonesia: economic and business history on the move

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In the footsteps of Thomas Lindblad, this collection of essays provides an overview of the diverse research on economics and business in the Dutch East Indies and Indonesia. The book is divided into three sections which cover, first, the longue durée effects, second, case studies in entrepreneurship, and third, the relation of political and economic regimes. All sections include quantitative and qualitative approaches, raise questions of methodology, and alternate between the perspectives of established as well as young authors from the Netherlands, Indonesia, Vietnam, Great Britain and Australia. The decolonisation of Indonesia lies at the core, and the book introduces terms and definitions to better analyse and understand the underlying processes, for example, Lindblad’s concept of indonesianisi.
Indonesia, note the editors, is “one of the fastest growing economies in Southeast Asia”. They “aim to analyse economic development as a result of the interplay between foreign trade, new forms of entrepreneurship and the political economy.” The collection asks questions about the traditional units of analysis such as state or nation and discusses traditional notions of place, space, and periodisation as they have been established during the 20th century. “Colonial Indonesia and independent Indonesia are no longer viewed as separate entities but rather as two halves of a continuing historical narrative.” The question of how historians find and define the sources for their analysis or how they construct their narrative is already problematised within the title. Therefore the papers draw on a wide array of sources from statistics to policy outlines to court cases and methodologically, they cover the range from local case studies to comparisons from a bird’s eye view with development trajectories and the usefulness of historical analysis in mind. Changes in Indonesia are contextualised within Southeast Asia and compared to sub-Saharan Africa after political decolonisation.
In the first section about “Economic and Socio-cultural Effects of Trade”, long-term development is a key term, and aggregated data, as expressed in figures and tables, a key component of analysis. For purposes of measurability, colonial and independent Indonesia are considered to be the same “country” with Java at the centre. Anne Booth focuses on the economic balance between Java and the other islands and links the issue of export revenues with questions of poverty and decentralisation. Hal Hill analyses various patterns in Southeast Asia’s “development dynamics and its drivers” in a “positive, not normative” analysis. He criticises the “direction of causality” from shares of the industrial sector to higher levels of per capital income by policy makers. Pim de Zwart, Daan Marks, Alexandra de Pleijt, and Jan Luiten van Zanden concentrate on “the connection between openness and economic development”. They conclude that the “existence of a relationship between waves of globalization and productivity growth in some periods [...] clearly dependent on the broader institutional and economic context. Trade did not always lead to growth and poverty reduction.”  Moving from international to local trade in the section’s last paper, Alexander Claver highlights the role of the copper coinage system for the peasant economy, concluding that “the available data even suggest a large unsatisfied indigenous demand for money, which meant that the stock of coins could be increased greatly without having an inflationary impact – a clear indication of the underestimated level of commercialization and monetization of indigenous society.” While the voices of “colonial (wholesale) traders” are recorded in written sources, those of the Javanese population are not.
The problems of colonial binaries such as traditional and modern economies, and orientalist narratives, for example about corruption, are hard to escape, as are other colonial categories, for example of race. The second section on “Entrepreneurship in the Colonial and Post-colonial Economies” transcends these by drawing more on non-quantitative types of sources, for example visual evidence. Leonard Blussé uses a drawing of Chinese sailors in the service of the Dutch East India Company (VOC) by Jacob de Vos to analyse the division of labour and the role of gangs of Chinese sailors. He explains the “dearth of original, reliable sources on the Asian perception of the colonial world” and concludes that “the idyllic picture of the Chinese sailors in Amsterdam was not representative of the harsh conditions under which they worked on the ships”. Freek Colombijn refers to documents of lawsuits that have been archived in Medan to introduce his concept of complimentarisasi. He states that “ethnicity was not all decisive in determining the economic role that a builder or craftsperson could play in the construction sector” and defines complimentarisasi as “economic relationship between independent actors from different ethnic groups working in the same economic sector, in which each side occupied a niche and complemented the work of the other, sometimes having no choice other than to co-operate”. Arguing against divisions that have been put forward in Boeke’s idea of a dual economy and Furnivall’s notion of plural society, Colombijn advocates the concept of social capital instead. Roger Knight also discusses the “degree of economic ‘complimentarity’” in regard to Java sugar and moves the concept from the local to a regional level by tracing the commodity’s role in the “Japanese ‘sugar empire’ in East Asia” from the 1880s to World War II. Within the space of “international commerce between Asian countries”, Knight finds ‘complimentarity’ as important as ‘conflict’ and takes note of the “remarkable continuities across the notional divide that separated independent Indonesia of the 1950s and 1960s from the Dutch colonial state of the interwar decades”. On the other hand, the following paper by Bambang Purwanto focuses on the discontinuity in economic elites, with “‘military-run industry’ and ‘business run by military’” as newly formed agents. Purwanto analyses activities from “unclassified or informal business activities in capital accumulation” to “business of lower commanders and soldiers”. The more immediate positive effects in daily life, for example job creation, are set off against a problematic structural legacy as “the military became increasingly powerful in relation to capital formation as well as political authority”.
Expanding on the topic of institutional history, David Henley points out that “the economic importance of transaction cost was also understood at an early date by anthropologists, not on the basis of speculation regarding the function of modern capitalist institutions, but on the basis of observations regarding the behaviour of individuals in pre-modern economic systems”. Henley concludes that his two case studies, the lives and works of Roy Franklin Barton and Alice Dewey, show “their insights into the amenability of institutions to deliberate and rapid modification”. Throughout the second section, localisation and blurring of boundaries provide the antidotes to eurocentric narratives of modernisation and institution-building.
In the third section “Trade and Economic Growth under Changing Regimes” questions of borders and boundaries are intertwined with those of hunger and poverty. In sources and analyses, “rice” functions as a metaphor for the well-being of people (food) and state (commodity) alike. Robert Cribb inspects how “the republican lands were isolated from the normal channels of international trade” in 1946/47 and how this “unprecedented political frontier within the country” changed patterns of rice trade on Java, in the end redirecting resources via the army which “proved increasingly adept at creating and managing internal barriers to free trade”. Within the wider framework of the Cold War, the late Thee Kian Wie investigated how economic concerns of the “new nation” in the early 1960s were aggravated by Indonesia’s place between competing systems. While the United States offered economic aid as a “last effort”, for Sukarno “self-reliance and forging close relations with the socialist countries came first”, so that food aid did not materialise. If they were political actors, economists were also caught in between systems, as Farabi Fakih shows by analysing the “the discourse surrounding Indonesianisasi in management and social sciences”. Extending beyond the space of the national economy, “Indonesianisasi represented an effort to move away from colonial forms and relations towards Indonesian ones” that was internationalised and “intermixed with Americanization” – a finding that might situate Indonesia in a single analytical field together with post-war Western European countries.
Contemplating economic alternatives and shadow actors, Pham van Thuy contrasts Indonesianisasi with Indonesian economic nationalism by focussing on the “fundamental dilemma […] between the demand of having an independent national economy corresponding to the political independence, and the necessity of retaining Dutch and other foreign capital in the country for the purpose of economic stability and development”. By the end of the 1950s, doors were closed. The law about the nationalisation of Dutch-owned enterprises from 27 December 1957 as well as the official declaration of guided democracy and guided economy in July 1959 “affirmed the entrenched position of the state in the Indonesian economy”. This argument is supported by Pierre van der Eng’s study of the “political economy of bilateral food aid”. In the case of Indonesia, “the rapid development of food aid is also related to the fact that potential donor countries had food surpluses for the purpose of food aid, at a time when the institutional arrangements for international food aid started to crystallize”. In bilateral North-South relations the focus moved from rice to wheat in 1970s to “secure market share”. In Indonesia itself, the foundation of the Board for Logistical Affairs (Bulog) in May 1967 privileged yet another state actor, this time in food markets. Ewout Frankema takes the year 1967 as turning point for the “agrarian transition” and investigates if aspects like “speed and depth” need to “be attributed to historical and ecological conditions that are too context-specific to be replicate elsewhere”. Frankema isolates the “adoption of new rice varieties that were released since the mid-1960s” as one of the success factors, leading him to the conclusion that “state co-ordination is crucial”, while “smallholders, with very little education and small investment potential, can become central agents of change”.
As the process of decolonization poses a practical problem for quantitative research, Howard Dick probes “the relationship between policy regimes and statistics” and demonstrates how data sets are produced. He points out that “[t]he national economy no less than the nation itself had to be invented and imagined as an act of faith. These two constructs then become self-enforcing. It is hardly coincidence that the decolonization that gave rise to new nations was accompanied by the application of national income accounting under the umbrella of the United Nations, International Monetary Fund, World Bank and other multilateral agencies.” In conclusion, then, the collection illustrates how decolonisation as analytical category can be fruitful for the analysis of globalisation and debt crises since the 1960s.
Promises and predicaments is a very readable volume that provides a valuable overview not only for specialists in Indonesian history, but also for those interested in the economic history of decolonization in general. The carefully edited collection concludes with an extensive bibliography, information on the contributors, and a useful index. It contributes to the “literacy” of historians working at the intersection of colonial, economic, and global history, an addition that indicates the function of research institutions in Leiden as a node in the network of scholars working on Indonesia.

Reviewed by Esther Helena Arens, Institute of Dutch Language and Literature, University of Cologne (

Arens, E.H. 2016. A review of Schrikker, A. & J. Touwen (eds.) 2015. Promises and Predicaments. Trade and Entrepreneurship in Colonial and Independent Indonesia in the 19th and 20th Centuries, posted online on 3 June 2016:

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