Sunday, July 09, 2006


The Mass Media, Rumours, Economic Structural Transformation and
De-legitimization of Suharto’s New Order

Dedy N. Hidayat

Abstract / This study explores the political significance of rumours – as public resistance to a repressive authoritarian communication structure – in the changing structure of the global economy,which is characterized by a high degree of capital mobility and an increasing separation of the entire financial sector from underlying, real economic activity. This study proposes that rumours – within a specific time period – may gain political significance in contributing to the delegitimization of a ruling regime. In Indonesia’s case, rumours played a part at a specific historical juncture of the development of global capitalism – into which Indonesia became integrated in the 1970s – where human agencies’ perceptions, fear, greed and sudden changes of heart are fundamental for capital mobility and the ruling regime’s structural stability or change.

Keywords / delegitimization / Indonesia / New Order / political power / subversive role of rumours

Indonesia’s ‘May 1998 Revolution’, that ended Suharto’s 32 years of authoritarian rule, will go down in history as the first revolution largely fought on the Internet. While Tiananmen Square students fought the Chinese government with fax machines, Indonesian students, NGOs and journalists ushered in a new era when they brought about the downfall of a corrupt regime through their use of the Internet. For a particular information-rich segment of Indonesian public, i.e. university students and the urban and educated middle class, various Internet-based media developed into ‘public spheres’ that were relatively untouched by state repression and market intervention. Within such ‘public spheres’ those who had access to ‘the technology of freedom’ found alternative information sources and developed a counterhegemonic discourse structure that circumvented and challenged the hegemony of government-manufactured political discourses. But not only were intense discussions about democracy and human rights held in cyberspace and then disseminated through photocopies of downloaded materials, many of the militant actions aimed against Suharto were coordinated on the Net (see, for example, Winters, in Hidayat et al., 2000; Tedjabayu, 2000).

Much has been said of the contribution of Internet-based media during Indonesia’s ‘May 1998 Revolution’. However, analyses on the subversive role of high-tech media tended to overlook the existence of the oldest of all alternative media: rumours. The ‘May 1998 Revolution’ itself, and also the delegitimization of Suharto’s regime that paved the way to the ‘revolution’ definitely cannot be considered as a middle-class driven political process (after all, only about 3 percent of the Indonesian population used the Internet in 1998). This involved a majority of the Indonesian population: citizens and consumers for whom word-of-mouth – and therefore misinformation and disinformation – remains the main vehicle for their daily intake of information.

This article explores the political significance of rumours in the delegitimization of a specific political regime. The first part of the article describes some salient features of economic and political conditions during Suharto’s New Order period that might have helped to develop the culture of rumours. This part also explores some characteristics of rumours that were collected during a period leading to the downfall of Suharto in May 1998. The next part focuses on the political significance of rumours during a specific period of economic crisis and political turmoil, one that ended with Suharto’s resignation in May 1998. Finally, some theoretical implications are drawn from the preceding analysis.

This study describes rumours as public resistance to a repressive communication structure, and suggests that the political significance of rumours in the delegitimization of a particular ruling regime depends on the real and specific context within which they are produced and circulated. In the Indonesian case, this hinges on a specific historical juncture: the development of global capitalism – into which Indonesia become integrated in the 1970s – where human agencies’ perceptions, fear and greed are becoming one of the driving forces for political and economic structural change.

This article, however, is based on a recollection of unstructured and accidental observations, a series of impromptu conversations and interviews with various individuals across socioeconomic classes, which were conducted between 1996 – when the downfall of Suharto’s New Order regime was unthinkable – and May 1998, when the unthinkable happened. Some data have been established as a reconstruction of the author’s observations as participant in some events that took place during the period under study. The question of ‘objectivity’, therefore, is secondary to questions of authenticity and reflectivity, that is the extent to which the observations could be judged as authentic reflections of subjects being observed. Also, this article could not be taken to exhibit a nomothetic study, to establish ‘the truth’, i.e. by offering general law-like conclusions that can be deemed to hold irrespective of time and place. Instead, due to the fact that this article is based on an unstructured and event-driven qualitative study, which is very much exploratory in nature, the analysis follows the ideographic approach that aims to reveal ‘a’ truth, therefore limiting its conclusion for a specific socioeconomic context, time frame and locale.

New Order Capitalism and the Rise of the Media Industry
Suharto’s New Order regime emerged in 1966 after the ousting of Sukarno, a left-leaning nationalist president who left the country with a negative growth rate, 600 percent inflation, no foreign reserves to speak of and a national debt of over $US 2 billion (see, for example, Vatikiotis, 1994). The new regime tended to favour a free market oriented economic policy, anxious to open the door to international trade and investment; and it also succeeded in obtaining support from multinational financial institutions as well as the advanced industrial countries of the free market system. The New Order economic development had actually been implemented through a series of import-substitution and export-led or outward-looking policies.1 However, the end results have pushed the country towards a deeper integration into the world capitalist economy, and have also led to a growing dependence on the capital, technology and markets of the advanced industrial capitalist countries.

Yet, the New Order political-economic structure cannot at all be analysed as a final, solid and static entity. Rather, it was a dynamic formation which was constantly reproduced and altered in response to the logic and demands of global neoliberalism on one hand and the political-economic interests of the New Order capitalism on the other. As a dynamic reality, the New Order economic development had actually been implemented through a series of policies that represents an ambivalence towards economic liberalization.

For example, in the days when Indonesia had sufficient oil revenues to pay for its development, Suharto gave support to the import-substitution and protectionist policies, and he did not seem to care about what the foreign investors and donors thought of the Indonesian ‘high-cost economy’.
But following the dramatic decrease in oil and liquified natural gas, the decrease of export revenues between fiscal year 1985 and 1986 and the increase in foreign debt in 1987, Suharto seemed to listen more to the advice of the ‘economists’ whose liberalization policies offer the continued support from international creditors wanting to see the country reform and open its vast market. in return for their money (see, for example, Rowley, 1987).
Suharto’s willingness to liberalize the economy has been reflected through a series of deregulation or reform packages that abolished many import monopolies, simplified export licences, liberalized the stockmarket and eliminated red tape affecting foreign investment. One of the most salient points in the reform was that the country moved towards a deeper integration with the world capitalist economy, and that a secondary market has been established, allowing domestic companies to raise capital by selling bond and equity shares, and also allowing foreign investors to buy shares in this market through over-the-counter trading. These reform packages has been praised by the World Bank and the IMF (see, for example, Borsuk, in Emmerson, 1999: 159) – the two international lending institutions that perform their role as a ‘built-in systemic mechanism of economic liberalization, opposing not only socialism but national capitalism as well, in favor of the progressive extension of international market forces’ (Wood, in MacEwan and Tabb, 1989: 300).

However, the reform packages were just necessary adjustments to a combination of internal and external pressures, not acquired principles towards becoming a fully liberalized economy. The crucial question at that time was whether Suharto and his regime could implement further liberalization that would end business privileges and monopolies which surrounded the president’s family and cronies. Some business privileges and monopolies of Suharto’s children and cronies were still off-limits to deregulation until the end of his era.

In Bali, in 1994, during the summit meeting of the Asia Pacific Economic Cooperation, Suharto gave his commitment to take a greater role for Indonesia in achieving the regional economic liberalization and free trade zone by 2020. But, in 1996, the government issued a highly controversial decree allowing Suharto’s son Hutomo ‘Tommy’ Mandala Putra to import from South Korea 45,000 units of Indonesia’s so-called ‘national car’, which bestowed overwhelming tariff and tax advantages on his newly established company.

Nonetheless, there is no doubt that until the economic crisis of 1997–8, the New Order regime had succeeded in transforming the country from what has been described by Higgins as ‘the number one economic failure among the major underdeveloped countries’ (Higgins, 1968: 678), to a whole new country that was held up as a model of Third World development. Over the span of the New Order’s first five five-year plans (from 1969 to 1994), GDP expanded on average 6.8 percent annually; even in the aftermath of declining hydrocarbon prices in the early 1980s, annual average GDP growth accelerated from 6.1 percent (from 1980 to 1990) to 7.6 percent (from 1990 to 1995), while the annual average population growth fell further to 1.8 percent (Booth, in Emmerson, 1999: 113).

Such achievements led the World Bank in 1993 to place Indonesia in the same category as South Korea, Singapore, Malaysia, Hong Kong, Taiwan and Thailand, as high-performing economies responsible for the ‘East Asian miracle of rapid growth and declining inequality’ (World Bank, 1993: 1–3). The Indonesian media industry was largely shaped by the dynamics of economic development, and therefore by the logic, operation and evolution of the New Order market economy.

The dual process that accompanied the expansion of the New Order market economy – the evolution of an audience and the expansion of the advertising industry – allowed the Indonesian press to develop into a lucrative industry. Rapid economic growth during the New Order period brought into being a new middle class with relatively higher education and income levels. This meant greater opportunities for the media to reach large audiences with real purchasing power as a result of the country’s growing economic and cultural sophistication. 2 The economic expansion also led to the growth of the advertising industry and of advertising expenditures. This in turn created a greater opportunity for the Indonesian media industry to become a most profitable business by selling access to audiences for producers in various industrial sectors.3


1 comment:

Ferdi Zebua said...

Waduh Mas Dedi, lanjutin dong plis; udah seru nih baca-baca sampai ujung (karena kebetulan lagi ada waktu luang)...

Eh tapi udah ketemu ding versi komplitnya, di Sage Journals Online:

Sayangnya, musti bayar sekitar Rp 230.000 buat baca satu hari...

Ferdi Zebua