Neoliberalism vs Democratic Economy

VIVAnews - Susilo Bambang Yudhoyono's decision to appoint Boediono as his running mate has produced intense polemic on Indonesian economic outlook.

The supporters of Megawati-Prabowo and Jusuf Kalla-Wiranto believe that SBY-Boediono are honoring “neo-liberalism” while claiming their economic approach as the “democratic economy”.

In the purpose of understanding the definition of democratic economy and neo-liberalism, Freedom Institute, Liberal Society, Café Salemba, and Friedrich Naumann Stiftung held a discussion on the particular issue together with M. Ikhsan Modjo (INDEF) and Arinto A. Patunru (LPEM UI) on Tuesday, May 26, 2009 at the office of Freedom Institute on Jalan Irian no. 8 Menteng, Jakarta. The discussion was hosted by Luthfi Assyakaunie. The results of the discussion are as follows.

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For the first time, unlike in the previous presidential elections, the economy has become an important issue.

During the past times, the issues arisen were on Islam and nationalism.

Neo-liberalism is a nomenclature derived from abroad. The more commonly known term is liberalism. It is rooted in philosophy during the European enlightenment era in forms of individual freedom and autonomous market.

The term neo-liberalism appeared for the first time in 1960s together with the theology liberation movement in Latin America. The term was coming from those who did not like the term liberalism.

Meanwhile, the term democratic economy has been known since before the independence era. It was Muhammad Hatta who firstly introduced it. In 1930s, Hatta called it the “democratic economy”.

What was defined as democratic economy was the indigenous economy. Hatta’s goal is to defend the importance of indigenous economy.

Hatta was not the only one who wrote about democratic economy. HOS Tjokroaminoto also did the same thing. According to his perspective, there are two kinds of capitalism, which are the good capitalism and the bad capitalism.

The good one is the indigenous economy while the bad one is the power of colonialist economy.

Therefore, the definition of democratic economy prior to the independence era was the indigenous economy versus the colonialist economy.

Meanwhile, in the beginning of the independence era, democratic economy was interpreted as the economy of the poor against the economy of giant entrepreneurs.

During the 1960s, there was also a democratic economy program. The program was trying to involve the people in the economy. With the presence of particular kind of economy, the capital was expected to be ruled by the people and was used entirely to fulfill their needs.

In the 1980s, democratic economy was changed into the economy of Pancasila. However, the spirit was still the same.

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The debate on neo-liberalism and democratic economy during the presidential elections shows how politics and democracy in Indonesia have been developed.

Politics are no longer being associated with narrow ideological and sectarian issues. Now it is associated with pragmatic and economic issues. This is a good sign.

Meanwhile, the emergence of neo-liberalism in the 1960s was triggered by various failures in technocratic and interventionism economic policy.

Neo-liberalism implied two things. The first one is minimizing country intervention and the second one is recognizing individual freedom.

Neo-liberalism was a term derived from various contemporary anti-intervention theories which were developed in historical, political, and particular institution context.

It was also a combination of neo-classic economic ideology, which believed in market freedom, and Libertarian-Austrian political sect that honored individual freedom and independence.

There are a few models known in neo-liberalism. The models are monetary model, rejection of centered planning, the rigidity of the institutions, principal agent model of bureaucracy, interest hunting, and rejection of public institutions and privatization.

For the last model, the neo-liberalists assume that public corporations are one of the main sources of economic inefficiency and stagnation experienced by developing countries.

In the context of developing countries like Indonesia, where inefficiency of public corporations often happen, privatization policy gains a lot of support.

Later, with the success of policy implementation in developed countries, World Bank, IMF, and the US Financial Department agreed to generalize the theory with what is now known as the Washington Consensus. There are at least 10 core policies in the Consensus.

The 10 polices are: fiscal policy discipline; the diversion of subsidies, except for the direct subsidy of education, health, infrastructure, and tax reform; enhancing tax basis and lowering tax level; interest rates which are determined by the market and positively real; competitive exchange rates, trade liberalization, especially license revocation and the application of single tariff; liberalization of direct foreign investment; state corporations privatization; deregulation; property rights protection.

However, the Washington Consensus also spurred criticism. The left wing group accused the subsidy removal was aimed to accelerate payment of debt to the developed countries.

George Stiglitz also criticized liberalism without sufficient stages and preparation. He assumed that the failure of Washington Consensus was proven by the countries which implemented it and failed, such as Argentina and Indonesia.

Stiglitz suggested liberalism to be started from the real sectors, trade, and then finance. While in Indonesia, it was the other way around. The financial sector was the first one deliberated through Pakto 88, the trade sector, and finally the real sector.

The weakness of neo-liberalism was also emerged as the result of the combination of importance between the neo-classic ideology, which legitimates academic-intellectuals, and the Libertarian-Austrian tradition as the source of political rhetoric.

Based on the discussions above, it is fair to say that neo-liberalism is not more than a compilation of various anti-government intervention thoughts concerning the economy which could be different than the neo-classic root of thoughts.

However, despite the weaknesses and intellectual bias, it also showed us some of the fundamental weaknesses from the technocratic views in economic systems.

Democratic economy itself is a collection of views on a policy orientation which sides with the people from the consumption side in term of basic needs fulfillment, to the production side by favoring small-medium level industry.

The inventor of the term democratic economy is Emil Salim. He wrote the term on a newspaper article on 30 June 1966. While the one who popularized the term by introducing the economy of Pancasila term in 1980s was Mubyarto.

But, the definition of democratic economy is merely semantic because it has not seriously answered the roles of the countries, market, and individuals, just like typical economic theories.

The striking difference between democratic economy and neo-liberalism lies on the roles of the government. In democratic economy, the government is expected to interfere and side with the people while in liberal economy, the government is expected to be neutral and not interfering.

Eventually, how about SBY’s current administration? It could be said that SBY’s administration is based on democratic neo-liberalist economy.

It is democratic because the government interferes. One of the forms of intervention is establishing an empowerment program for the small-medium level industry (UMKM). The government also created the national people empowerment program (PNPM).

But, it is also neo-liberalist because on the other side, the government liberates foreign investors.

Despite the issue on foreign capital liberalization and privatization, the agenda of democratic economy is not much different than neo-liberalism views.

The government is even combining the two ideologies. The democratic economy jargon seems indeed prioritizes agricultural sector and UMKM. Thus, democratic economy is not the right jargon to compete against liberalization and privatization.

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Translated by: Nataya Ermanti

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Yudhoyono's Middle Way Economics

VIVAnews - The first speech of the incumbent president Susilo Bambang Yudhoyono in his campaign prior to the 2009 presidential elections emphasized the implementation of the middle way economics, equal growth, and rejection over absolute capitalism.

Chairman of Democratic Party Central Board Anas Urbaningrum said on Friday, June 5, the speech highlighted that state keeps on practicing economic intervention. However, it will be carried out by prioritizing the principle of justice.

The said intervention does not include full state authority because the market must still develop in line with its mechanism to boost growth.

Simple view on the economic principle, said Urbaningrum, is that growth and equity collaborates hand-in-hand with market power as well as state intervention.

"Therefore, the policies which side with the people are improved in scale," he said.

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Translated by: Bonardo Maulana Wahono

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Second Swiss bank loses billions

Switzerland's Credit Suisse has joined the list of banks revealing disastrous results for 2008 after it reported losses of $7.1 billion (8.2 billion Swiss francs).

The country's second largest bank lost 6 billion Swiss francs in the last quarter of the year alone, the bank said Wednesday. The figures compare with a $6.7 billion profit for 2007.

The bank's losses were revealed a day after UBS posted a worse than expected loss of nearly $17 billion -- the largest ever by a Swiss group -- and announced 1,600 new job cuts.

Credit Suisse's chief executive Brady Dougan said the firm was working hard to remove risk from the business and had made a strong start to this year.

"While our full-year results are clearly disappointing, we entered 2009 with a very strong capital position, a robust business model, a clear strategy and well-positioned businesses," Dougan said.

"We have positioned our businesses to be less susceptible to negative market trends if they persist in the coming months and to prosper when markets recover."

Last year Credit Suisse cut more than 7,000 jobs, mainly from its investment banking division.

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• UBS posts record loss, cuts 1,600 jobs

The Swiss government said it would pour 6 billion francs into banking giant UBS in October. UBS announced at the time that it would transfer up to $60 billion of illiquid assets off its books and onto those of the Swiss National Bank. Illiquid assets are ones that cannot be sold easily, or without substantial loss.

But Credit Suisse declined to take government money, instead raising approximately 10 billion francs ($8.26 billion) from from a group of international investors led by the Qatar Investment Authority.

The bank said it decided not to participate in the government's bailout plan because it had a low level of affected assets in its portfolio and good access to capital markets

BI Says Bank Crimes Hard to Handle

Bank Indonesia (BI) stated that it has modified its monitoring method to improve bank controlling system. However, it is difficult to put the brakes on the criminal methods that are rapidly altering.

According to BI Deputy Governor Siti Fadjriah, BI is now developing risk-based approach. With the approach, both domestic and global changes will affect banks' risk. "It includes detecting quite unexpected characters of owners and bank management," she said on Tuesday, Feb 10.

In the past, she said, BI applied compliance approach. The method had only enabled the central bank to recognize past issues. As a result, it will be left behind if a manipulation is committed.

BI implements on-site and off-site supervision in monitoring banks. Inside supervision is carried out every year. BI can also penetrate into a bank if it detects risk-alleged matters. "The off-site supervision will be applied if we notice an odd activity. Every time we send out a supervisor, it can be done. We do not have to place a supervisor in a bank because we can be there at any time," she said.

To anticipate bank crimes, BI will duplicate supervision especially concerning supervisors' competency. The problem has been on the supervisors' unfamiliarity with the business. Supervisors' knowledge on the business should be improved.

The House of Representatives (DPR) had earlier commented on BI's monitoring system. Member of DPR Commission XI, Melchias Markus Mekeng, for instance, said BI has applied weak monitoring system.

Mengendalikan Inflasi, Ciptakan Stabilitas Upah

Setiap ada guncangan pada dunia usaha, buruh menjadi ”sasaran” pertama yang diutak-atik. Dua bulan terakhir, rencana mengendalikan upah minimum demi mencegah agar perusahaan berorientasi ekspor tidak kolaps telah memicu polemik. Upaya itu sulit diterima, apalagi jika inflasi terus membubung dan rupiah melemah.

Seharusnya, pemerintah menjadikan pengendalian tingkat inflasi sebagai kunci utama untuk memenuhi permintaan pengusaha agar upah buruh tidak naik setiap tahun.

Menurut Badan Pusat Statistik, Senin (1/12), inflasi Januari-November mencapai 11,1 persen. Adapun untuk periode November 2008 dibandingkan November 2007 sudah 11,6 persen.

Inflasi terutama didorong oleh naiknya harga kebutuhan pokok, seperti beras atau minyak goreng. Ini faktor yang memengaruhi kenaikan nilai kebutuhan hidup layak (KHL).

Peraturan Mennakertrans Nomor Per-17/Men/VIII/2005 tentang Komponen dan Pelaksanaan Tahapan Pencapaian Kebutuhan Hidup Layak, yang ditetapkan 26 Agustus 2005, KHL merupakan standar kebutuhan yang harus dipenuhi seorang pekerja atau buruh lajang untuk dapat hidup layak, baik fisik, nonfisik, dan sosial, selama satu bulan.

Seorang pekerja dianggap hidup layak jika upahnya mampu memenuhi kebutuhan 3.000 kalori per hari. Oleh karena itu, KHL menjadi salah satu pertimbangan dalam penetapan upah minimum, selain produktivitas dan pertumbuhan ekonomi.

Ada tujuh komponen KHL yang selalu dihitung, yaitu makanan dan minuman, sandang, perumahan, pendidikan, kesehatan, transportasi, serta rekreasi dan tabungan.

Makanan dan transportasi

Komponen utama yang selalu berubah dan menyebabkan nilai UMP selalu naik adalah makanan, minuman, dan transportasi. Inflasi menjadi penyebab ketiga faktor ini selalu berubah.

Apabila tingkat inflasi tetap, nilai KHL tentu relatif stabil dari tahun ke tahun. Dengan demikian, nilai KHL tahun berjalan yang dihitung dewan pengupahan sebelum menentukan upah minimum tahun berikutnya pun menjadi relatif stabil.

Menurut Presiden Organisasi Pekerja Seluruh Indonesia (OPSI) Yanuar Rizky, persoalan krusial saat ini adalah pemerintah tidak mampu mengendalikan inflasi. Harga kebutuhan pokok selalu naik.

”Pemerintah seharusnya menyentuh inti masalah, yaitu pengendalian inflasi. Upah hanyalah anak masalah, yang ditahan bagaimana pun kalau inflasi tinggi tak akan menyelesaikan konflik,” tutur Yanuar.

Inflasi yang terkendali akan membuat tujuh komponen penentu KHL menjadi lebih stabil.

Pemerintah sebenarnya memang sudah berupaya mengendalikan harga beras lewat operasi pasar dan instrumen pelayanan umum Perum Bulog. Namun, inflasi karena kenaikan ongkos transportasi telah membuat nilai KHL tetap tinggi.

Oleh karena itu, pemerintah sebaiknya terus mencari jalan mengendalikan KHL lewat harga pasar.

Upaya mengendalikan kenaikan upah minimum hanya akan membentur tembok. Bukan rahasia lagi kalau sejak krisis 1998 buruh belum pernah menikmati upah sesuai KHL.

Tahun 2008, baru tiga provinsi yang menetapkan upah minimum sesuai KHL, yakni Sumatera Utara (105 persen), Kalimantan Selatan (104 persen), dan Sulawesi Tenggara (109,3 persen). Masih banyak provinsi yang menetapkan upah minimum di bawah KHL, seperti Sumatera Selatan (67,5 persen) dan Jawa Timur (98,6 persen).

Kondisi ini membuat buruh selalu menantikan besaran kenaikan upah minimum provinsi setiap akhir tahun. Walau secara riil nilai upah mereka tidak naik, kenaikan nominal upah yang diterima sudah cukup melegakan hati kaum buruh.

Presiden Konfederasi Serikat Buruh Sejahtera Indonesia (K-SBSI) Rekson Silaban mengatakan, wakil serikat buruh di dewan pengupahan daerah selalu memperjuangkan agar upah minimum disetarakan dengan nilai KHL. Namun, kondisi perekonomian yang belum menggembirakan seperti sekarang menyebabkan kenaikan upah minimum yang disepakati belum sesuai harapan.

”Itu sebabnya kami minta agar jangan upah buruh yang dikurangi bila ada masalah ekonomi. Lebih baik pemerintah konsentrasi memperbaiki berbagai hal yang menyebabkan iklim investasi terganggu,” ujarnya.

Pengawasan

Kondisi itu membuat buruh sulit merelakan upah minimum mereka yang di bawah KHL dipotong lagi di saat krisis.

Kepercayaan buruh terhadap pengusaha pun rendah karena sebagian pengusaha tidak membayar utuh dan enggan menyertakan mereka dalam Jamsostek.

Menurut Rekson, lemahnya pengawasan ketenagakerjaan menyebabkan banyak praktik penyimpangan terhadap hak-hak buruh, terutama pembayaran upah dan kepesertaan Jamsostek. Padahal, dua hal itu diatur undang-undang. Pihak yang melanggar dapat dikenai sanksi pidana.>w 9738m<

”Jika selama ini buruh dikhianati hak-haknya, bagaimana mereka mau ikut berkorban di saat sulit seperti sekarang. Sekarang tinggal bagaimana sikap pemerintah saja,” kata Rekson.

Buruh melihat upah minimum sebagai harga mati karena implementasinya sering menyalahi aturan. Semestinya, upah minimum hanya untuk buruh lajang yang baru bekerja. Namun, ada pengusaha yang menjadikan upah minimum sebagai acuan penetapan gaji buruh.

Jika buruh tersebut berstatus karyawan tetap, tentu lambat laun sesuai masa kerja dia seharusnya mengalami kenaikan upah, mengikuti inflasi. Namun, bagaimana jika dia hanya buruh kontrak yang harus siap tak dipakai lagi tahun depan?

Lemahnya pengawasan menyebabkan buruh selalu menjadi bulan-bulanan. Meski demikian, buruh tak mampu berbuat banyak karena potensi menjadi penganggur baru selalu ”mengancam” setiap saat.

Menurut laporan ketenagakerjaan Organisasi Buruh Internasional (International Labour Organization/ILO), berjudul ”Tren Ketenagakerjaan dan Sosial di Indonesia 2008”, sedikitnya 52,1 juta orang dari 108 juta pekerja tak mampu keluar dari jurang kemiskinan.

Mereka menerima upah kurang dari 2 dollar AS per hari, atau hanya kurang dari Rp 20.000 per hari. Ini tentu jauh dari mencukupi untuk memenuhi kebutuhan hidup. Namun, mereka harus menerima keadaan itu karena tak ada pilihan pekerjaan lain yang lebih layak.

Akan tetapi, menurut Sekretaris Umum Asosiasi Pengusaha Indonesia (Apindo) Anton Supit, perusahaan yang masih memiliki kemampuan selama krisis global saat ini tetap memberikan upah yang layak kepada buruh.

Hanya saja, kata Anton, kondisi krisis sudah ada di depan mata. Semua orang harus segera mempersiapkan diri agar tidak menjadi korban.

Anton mengatakan, pengusaha industri berorientasi ekspor dengan bahan baku impor meminta sedikit kerelaan buruh agar bersedia menunda atau tidak menaikkan sama sekali upah minimum tahun 2009.

”Kalau industri yang kekurangan order pun dipaksa menaikkan upah minimum, bisa-bisa mereka kolaps dan terjadi PHK. Kondisi sekarang sudah demikian parah. Data resmi PHK memang belasan ribu, tetapi kami yakin yang riil di lapangan sudah ratusan ribu orang,” ujar Anton.

Kini, buruh bagai makan buah simalakama. ”Dimakan mati ayah, tak dimakan mati ibu”.