Shleifer and Vishny (1993) meet Prabowo (2014?)

In my conversations in Jakarta last week, I began to see some of the factors that are driving popular support for presidential candidate Prabowo Subianto. Time and again I heard about the concept of “control” and “order” with respect to Indonesia’s political economy. The focus on Prabowo as the tegas [= decisive or resolute] candidate only captures this partially.

The specific argument was about corruption and uncertainty, and it was uniformly expressed to me by people in Indonesia’s upper-middle to upper classes. The idea is not that Prabowo is smart, or that he is capable, or that even that he is reasonable—no one holds these views. Rather, the idea is that Prabowo would be strong and ruthless enough to clamp down on the rampant corruption that plagues post-Soeharto Indonesia. He would not eliminate corruption, he would organize and “regulate” it.

This view recalls an important literature on corruption in post-Soeharto Indonesia associated with Ross McLeod (see here), Andrew MacIntyre (see here), and drawing on the theoretical insights of Shleifer and Vishny (1993). Describing their basic hierarchical model of corruption in places like the Philippines under Marcos, they write

It is always clear who needs to be bribed and by how much. The bribe is then divided between all the relevant government bureaucrats, who agree not to demand further bribes.

This is the Soeharto model. However, there is another scenario:

Here, the sellers of the complementary government goods, such as permits and licenses, act independently. Different ministries, agencies, and levels of local government all set their own bribes independently in an attempt to maximize their own revenue, rather than the combined revenue of the bribe collectors…This problem is made much worse in many countries by free entry into the collection of bribes. New government organizations and officials often have the opportunity to create laws and regulations that enable them to become providers of additional required permits and licenses and charge for them accordingly. Having paid three bribes, the buy of these inputs learns that he must buy yet another one if he wants his project to proceed. In some cases, the officials who have collected the bribe previously come back to demand more.

This is closer to the current state of affairs in Indonesia. I have written about this here and here. The point is not that the Soeharto model is “good,” or even that it is “good corruption,” it is simply that given the choice between living in a decentralized web of bribery and influence peddling versus a hierarchical of extortion, many in the business community would prefer the former.

This is an example of what I called for several weeks ago, a non-tautological argument for why a class of people would support Prabowo’s candidacy. You can start to see something of the group of voters coming out in favor of Prabowo based on their calculations of what they believe that they will benefit from his rule.

Now, none of this means that Prabowo could make actually such a change to Indonesia’s political economy. My guess is that he cannot, not without doing a lot more than winning the upcoming election. Constructing the New Order under Soeharto required two things: the systematic elimination of organized political opposition, and the centralization of coercive power under the office of the president. The former will be made difficult by the simple fact that aside from Prabowo’s brother, all of his elite political supporters are opportunistic, without any interest whatsoever in seeing Prabowo consolidate power. (Contrast this to Thailand’s conservatives, who share a common vision of Thai-style democracy.) The latter will be made difficult by the fact that Soeharto rose to power through the military itself, whereas Prabowo was discharged from the military in 1998 and would have to face a more difficult political task of reestablishing the kind of military authority that Soeharto unquestionably faced. These observations, though, are cold comfort for Prabowo’s opponents who understand just how “Soeharto’s ghost” continues to haunt Indonesian politics.