The Evolve of Patriotic-Capitalism: A short reflection in Russia and Indonesia

www.pewartanusantara.com - In this article, I would like to address a historical change of ideology about state economic management that is called Patriotic-Capitalism. In the last article, I assert that the stagnation of economic development has made patriotic ideology convert from a socialistic approach to capitalistic models. But the evolution of capitalism to be globalized-capital drove patriotic-capitalism to adopt a certain kind of market logic to advancing economy. This logic stressed that to archive prosperity the state must participate and compete within global market economy. Consequently, the state tends to plane their economy to produce global commodities, not to self-fulfilment vital goods.

In this vein one thing that seems obvious is private enterprise has important role in the economy. They expected to be a magnet of innovations with their interest and capital. It’s no more than an attempt to encourage entrepreneurship to increase productivity. This mechanism raises the new bourgeois class. Unfortunately, they don’t want to promote patriotic ideology like socialists or nationalists. They have an ideology called liberalism. This ideology promises as far as the freedom to accumulate capital, to own property and to speak up about politics is guaranteed anything going to be better.

The economical success of the new class surely lies in the relative wealth they are compared with other social groups. Therefore, nationalist social groups like bureaucrats and military apparatus feel dissatisfied. This group have a high degree of dependency on the state. When the state's economic performance is bad for example the economic growth is relatively high but low tax revenue, the distribution of the economy mostly lies to those who participate in the market. This condition brought a kind of inequity about the benefit who participate in the market and not.

That proposition seems less convincing if we do not address cases. To handle this problem, we mention the case of Indonesian and Russia in recent times. We set to discuss Russia first and then compare it to Indonesia.

As someone interested in the international affair, the conflict Russia-Ukraine absorbs my attention to coup better understanding. Since Putin declare their military operation—with the argument to eliminate Nazification—most observers and people around the world condemn that unilateral decision. Almost all western public discourses called this decision a military invasion. International pundits seem to provide a bounce analysis that made this conflict well understood and end as soon as possible. One analysis tells that the better way to enforce Russia back off their military power is not to supply weapons to Ukraine but with giving economic sanctions. This recommendation is based on how the Russian political elites (they are patriots because they were KGB agents) are involved in the national business oligarch.

According to one analysis since Uni Soviet collapse the economic development was no longer controlled by the state but monopolized by private entrepreneurs. They control most heavy sectors in Russia such as oil and gas. In the other world, they are the richest people in Russia. With their wealth, they consume high-end global commodities and possess valuable property abroad. This was be responded to by the old state actor with outrageous feelings because they still perceive themselves as the backbone of Russia. Thus, they consolidate patriotic power (or military army) within patronage that hold Russia’s politics.

Because of Russian political elite establish their power with patriotic ideology, they must convince the military army under not only a material incentive but also emotional stimulations. Certainly, the military invasion was a kind of this incentive. With real power in hand, they easily make a deal with business elites to extract Russian resources to global market. This is the weak spot of Russia's political power led by Putin. In the other world, we can say that patriotic capitalism in Russia with market liberalization bear oligarchic power.

Indonesia's case does not offer a quite distinct narrative. Under the Suharto regime, national economic management follows what we call ‘economic substitution market.’ This model means Indonesian products oriented both to domestic and international markets. Essential goods with government regulation are produced for the domestic market. And for extractive goods tend to sell in the international market. This difference in product orientation has a specific characteristic that is labour-intensive and capital intensive or large-scale enterprise. From this time the government prefer to increase export commodity production than domestic commodities. The reason is export commodities bring more money.

Read also: The Rise of Patriotic-Capitalism

After the 1998 financial crisis, Indonesia witnessed and experienced a new political and economical atmosphere. We can call this with neo-liberal transformation on the economy and democratic consolidation in the political sphere. In the former, the amount of raw material extraction and large-scale agriculture plantation increases significantly because privatization is the paradigm of economic regulation to develop the national economy. Consequently, those who previously have more capital become business elite. But to maintain and secure their wealth they must cooperate with military power. This is why the Indonesian high tier military frequently plays their power to serve the business interest. That alliance tied so solid. When we observe the surface of contemporary Indonesian politics, they whose trajectory carrier from the military institution and now become a politician or state administration seems to have initial business in export-oriented sector. Finally, patriotic capitalism as the embrace of people’s economy just hijacked by oligarch.