AN OVERVIEW

Much of this book emphasizes the discontinuities in Indonesian economic development before and after 1966. The late 1960s was indeed a watershed in the country's history: macroeconomic stability, rapid growth, and greater reliance on the price mechanism replaced accelerating inflation, economic stagnation, and a chaotic system of price incentives. But how far-reaching have the changes been after 1966? Has there been an equally profound transformation in national ideology, economic policy-making processes, and the system and structure of public administration? The purpose of this chapter is to address these questions. In the process, and unlike other chapters, it maintains that significant continuities remain between the two eras. It argues that the changes in structures and ideologies have been a good deal less pronounced than that of economic performance.

It is therefore a mistake to view the change in regime in 1966 as a switch from a “socialist” to a “capitalist” or “free market” regime. There remains a deep-seated mistrust of market forces, economic liberalism, and private (especially Chinese) ownership in many influential quarters in Indonesia. Such sentiment has been subdued during the most decisive periods of liberal economic reform—1967 – 72 and 1985–92. But since 1966 the policy pendulum has swung back and forth, between periods of more and less economic intervention. Indonesia in the mid-1960s may have been “the most laissez-faire socialist economy in the world”, a remark attributed to a prominent economist and businessman, the late Dr J. Panglaykim.