The politics of wealth distribution in post-Soeharto Indonesia: political power, corruption and institutional change

Abstract

This thesis examines the processes through which the redistribution of political and economic power is taking place in post-Soeharto Indonesia. In order to do this, patterns of `grand' corruption between the business community and the state are explored in three sites: the allocation of government contracts, the interaction between business associations and the state, and the negotiations over the repayment of debt. It is found that corruption has become more widely dispersed with the inclusion of new state actors and that the basis of allocation has moved away from the political influence of the Soeharto-era towards the more uncomplicated power of money. It is proposed that the conventional arguments which either invest institutions with the sole responsibility for limiting corruption or alternatively view them as completely irrelevant to the real exercise of power are both flawed. Rather, it is argued in this thesis that institutional change does indeed affect patterns of corruption, freezing out some participants, introducing others and defining new sites of corrupt exchange. The significance of such an analysis lies in the idea that corruption can never be destroyed but rather it is controlled through alterations of its character. Thus, any attempts to limit corruption must be grounded in such an analysis of its particular character. It is found that corruption has become more widely dispersed with the inclusion of new state actors and that the basis of allocation has moved away from the political influence of the Soeharto-era towards the more uncomplicated power of money. It is proposed that the conventional arguments which either invest institutions with the sole responsibility for limiting corruption or alternatively view them as completely irrelevant to the real exercise of power are both flawed. Rather, it is argued in this thesis that institutional change does indeed affect patterns of corruption, freezing out some participants, introducing others and defining new sites of corrupt exchange. The significance of such an analysis lies in the idea that corruption can never be destroyed but rather it is controlled through alterations of its character. Thus, any attempts to limit corruption must be grounded in such an analysis of its particular character. It is further hypothesised that efforts to limit corruption are badly served by an exclusive focus on the rules inherent in institutions at the expense of the inclusion of corruption's deeper structural causes. In response to this, the idea that corruption is partially driven by the need to foster the domestic capital accumulation process in a context of historic underdevelopment is explored throughout this thesis. Thus, it is proposed that corruption can be viewed as a system of wealth distribution based not just on money and connections, but also ethnicity and nationality