Edanomic: The “Edan” Economy with a “Zombie” Face Full of Bribery

By: Eko B. Supriyanto, Chairman of Infobank Media Group

Jakarta – These days there is a fever of Soemitronomic. Discussions about Soemitronomic are rife in various forums. I wonder if this is because Soemitro Djojohadikusumo is the father of President Prabowo Subianto, so his thoughts deserve to be revived.

Soemitro Djojohadikusumo is a great economist who has great thoughts about Indonesia. In short, Soemitronomic – traced from his thoughts – is the father of Indonesian industrialization. His thoughts are clear about nationalism.

In fact, Infobank Institute noted in many interviews in the 1980s and 1990s drew a conclusion, Soemitro Djojohadikusumo is remembered as the visionary but controversial “Father of Indonesian Industrialization”. His ideas on natural resource-based industrialization, the active role of the state, and economic nationalism continue to be referenced in policy debates, especially when issues of commodity dependency, downstreaming, or the role of state-owned enterprises come up.

The media often invoke his name to ask the question: “To what extent has Indonesia realized its dream of becoming an independent industrial country?” and ”How to balance economic nationalism with the demands of a complex globalized world?”

In short, Soemitronomic represents the spirit of “self-reliance”, an ambitious blueprint whose implementation on the ground is full of challenges and often deviates from the thinking of the “Begawan” of economics. Is Soemitro Djojohadikusumo’s thinking in line with Indonesia’s current economic vision?

The answer is no. Just look at the last 10 years of the Indonesian economy in “crazy-edanan” conditions. In fact, the Indonesian economy over the past 10 years can be called “edanomic”. What is edanomic? It is not a school of economics, but an economic pattern without a pattern, or a particular school.

According to the Infobank Institute, “edanomic” is a crazy economy. An economy that trades sovereignty for debt, justice for bribes, and the future for chunks of coal, nickel and mineral products. It is not the fault of the system, but the fruit of a system betrayed by greedy elites.

Not that 4.87 percent growth is low. Not kufr nikmat. But, it is the quality of growth that is the problem. Growth is unable to lift the number of workers. In fact, economic growth is highly dependent on debt and commodity prices.

“Edanomic”: A crazy economy in the land of mines and bribes. That’s probably the best way to describe the economy over the past 10 years. Imagine an economic machine that is running on a skewed path: debt-driven, propped up by commodities, controlled by oligarchs, and leaking everywhere. The provision of social assistance (bansos) is only for solace to be collected during the democratic party.

Here, politicians are cloaked as businessmen, businessmen cheer to be politicians. Meanwhile, mining erodes the earth, and social assistance becomes election bait. This is “edanomic”. It is not a theory, but an economic parody – combining the most “rotten” sides of capitalism, corruption, collusion and nepotism, and political greed. It is a system that pursues artificial growth, while poisoning democracy and the environment and undermining governance.

Meanwhile, the “edanomic” face of wild capitalism in the body of the fragile state. This can be seen from several characteristics;

One, oligarchic capitalism. The fake free market. The face is capitalist, but the soul is mafia. Look at it, businessmen become politicians, politicians become conglomerates. They create rules that benefit their inner circle. That means competition dies before birth and innovation is buried. And, what lives is monopoly, protection and collusion. The rise of Politician-Businessman (Pol-Peng) & Businessman-Politician (Peng-Pol). In fact, ministerial and parliamentary seats have become “branch offices” of private businesses. This is clearly a conflict of interest. Moreover, the goal is to control policies to monopolize the market.

Two, the fertile practice of corruption, collusion and nepotism (KKN) is everywhere in every ministerial room and even on the green table. Also, the Incremental Capital Output Ratio (ICOR) is high (6.4). That means, when compared to ASEAN countries, Indonesia is inefficient, wasteful of budget, as Soemitro Djojohadikusumo once revealed in the early 1990s. 

A high ICOR means that the state is wasteful – and corruption, collusion and nepotism are its blood. Official and unofficial “thuggery” practices are rife. In fact, the state budget is leaked through fictitious projects, mark-ups, and project sharing with relatives. There is zero efficiency. It is strongly suspected that public money is evaporating in the pockets of the elite.

Three, false growth. So far, economic growth has been driven by state and public consumption sourced from the State Budget (APBN) – and the APBN is sourced from debt. Also, the blessing of rising commodity prices. Indonesia is favored by God because its natural resources and commodities have not been exploited. The rise and fall of economic growth still depends on the rise and fall of commodity prices.

The question is; is the growth of 4.87 percent high? At first glance, growth is relatively high when compared to many countries today. However, don’t be fooled. This is because Indonesia needs higher growth to become a middle-income country. Imagine, if the quality of growth driven by exports and investment would certainly be much higher quality with a low leakage rate.

The source of growth is more of two things, namely the state budget which is more of the accumulated debt (government and private) and commodity prices happen to rise. It’s like drugs: it gives a momentary euphoria, but it’s addictive and fragile. When debts mature or commodity prices plummet, the economy collapses – it’s the small people who suffer. Budget efficiency has killed the economy of the small people. Purchasing power has collapsed.

Four, mines are everywhere. That means, the earth is dredged, the people are scooped up in the name of investment. Currently, mining is a fast money machine for oligarchs. Forests are cleared, mountains are stripped, rivers are polluted. Profits flow to a handful of people, while environmental damage becomes a bitter legacy for posterity. The most egregious example is nickel mining in Raja Ampat, which has become a “paradise on earth”. Honestly. Currently, there has been no transition to a knowledge-based economy – living from selling natural resources like the legacy of the Prophet Solomon.

Four, one side has a social face, but on the other hand social assistance becomes a political weapon. In fact, social assistance is a tool to “buy” votes during elections and regional elections (dawn attacks). Democracy is reduced to transactions. Money is exchanged for votes. Things that seem obvious, but seem to be “just fine”.

“Edanomic” Vs Economic Theory

“Edanomic” is not an economic theory, but a pattern. When compared to economic theory, “edanomic” is actually an economy of horrors. A “zombie” economy full of bribes and pseudo. Classical capitalism (Adam Smith) – believes in the “invisible hand” of the market and fair competition. “Edanomic” is its antithesis: the “iron hand of oligarchy” that kills competition. The market is controlled by cartels, not innovators.

While socialist economics (Karl Marx) – wants equalization through the state. Edanomic wears “socialist clothes” (social assistance, cooperatives that come from above), but the content is the accumulation of elite wealth. Instead of equality, the rich-poor gap is yawning – getting wider.

If Keynesianism (John Maynard Keynes) agrees with state intervention and debt for short-term stimulation, “edanomic” twists it: debt becomes the main breath of the economy. In fact, it is used for inefficient and corrupt projects. Not productive investment, but waste.

In development economics thinking (Joseph Stiglitz) – Stiglitz emphasizes equity, clean governance, and the environment. “Edanomic” is a description of failure. Like, acute inequality, dilapidated governance, and a damaged environment for elite rents.

That was when compared to economic theory. Now, if you compare it with other “nomic-nomics” for example with Soemitronomic (Soemitro Djojohadikusumo) – which focuses on local resource-based industrialization. Edanomic? Sell raw materials (mines), industry hampered by corruption. Resources drained, minimal added value.

Compared to Wijoyonomic (Wijoyo Nitisastro) – emphasizing macro stability, balanced growth, and human resources. Edanomic? Speculative growth through debt & rising commodity prices. Also, fictitious stability, human capital neglected. Human development lost to lighthouse projects.

Habibienomic (B.J. Habibie) – based on Science and Technology (Science & Technology) and superior human resources. Edanomic? Instead, anti-scientific. In fact, it relies crazily on exploitation of natural resources and transactional politics. Science and technology become a display, while the “mine coolie” mentality is nurtured. Environmental destruction occurs everywhere. Wealth flies overseas and is only enjoyed by cronies and a handful of people.

Another Habibienomic, another Reaganomic (Ronald Reagan, USA) – which cut corporate taxes, deregulated, reduced social assistance. Although it caused inequality, Reaganomic was still within the corridors of competitive capitalism and the rule of law. But “edanomic” could be called “thug” capitalism. Deregulation to facilitate collusion, “tax cuts” occur through corruption and bribery. Even social assistance becomes a political tool.

So, “edanomic” is a dead end that must be closed. Although, “edanomic” is not an economic flow, but a chronic disease of Indonesia’s political-economic system. It is a manifestation of crony capitalism in a metastatic stage that undermines democracy. Not only that. It also destroys the environment, fools the people with false growth, and drains the nation’s wealth for a handful of elites.

Indeed, comparing it with theory, or established economic policies is like comparing a “malignant tumor” with a healthy organ. Soemitro, Wijoyo, Habibie, even Reagan, had (debatable) frameworks to achieve certain economic goals. “Edanomic” has no noble goals; its goal is the perpetuation of power and the accumulation of oligarchic wealth.

“Edanomic” is actually a path to the abyss. It is not a solution, but a source of problems. To allow it is to approve the looting of the future of the country’s children by the giant “rats” hiding behind the cloak of power, and the flags of pseudo-prosperity.

According to the Infobank Institute, it’s time to build a sovereign, just and sustainable economic system and prosperity – rooted in the interests of the people. Not the lust of a handful of elites. A real people’s economy, not a parody of the “crazy” that destroys. And, it’s also time to stop dancing in the orgy of “edanomic” that is getting more and more crazy. This is certainly not just a platitude.

Soemitro Djojohadikusumo’s thinking in Soemitronomic can be a way out of “edanomic”. But, the condition is strong leadership, firm and clearing out the “cronies” who have been hiding in the “edanomic” spaces.

And, an additional condition is the need for a reshuffle – replacing “apprentice” class ministers with ministers with DNA – who understand the economic vision of the Prabowo Government. Not sycophants who apparently still need to eat by becoming commissioners in many state-owned enterprises – which is actually an important feature of “edanomic”. Finally, “edanomic” – a crazy economy – needs to be ended by restoring the rule of law. Also, which functions are executive, which are legislative and judicial. Not mixed up like “gado gado” – before it becomes a big disaster for Indonesia to welcome