Pancasila Market Economy

Who is the real actor of the Pancasila economy? My impression is that Didin S. Damanhuri in his article includes religious elements and cultural values ​​in the practice of the Pancasila market economy.

KOMPAS/DIDIE SW

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My question in response to the article "Pancasila Market Economy" written by Bogor Agriculture University (IPB) Professor of Economics Didin S. Damanhuri in the daily Kompas (Feb. 2/2018) is this: Who is the real actor of the Pancasila economy? My impression is that Didin includes religious elements and cultural values ​​in the practice of the Pancasila market economy.

The Pancasila market economy, therefore, means a "tolerant" structure or system guided by the state, religion and the value system of society.

The actors of the Pancasila market economy

If that conclusion is correct, then the real actor is the "grassroots economy" player. Take, for example, the reaction of Andi (not his real name), a gemstone polisher at Pasar Cibubur Market in East Jakarta, when he saw a starving cat (on Jan. 27/2015). As Bunyamin (Abun), a clock repairman and one of the actors of the "grassroot economy", told me (on Oct. 1/2015), Andi took rice and milkfish to feed the cat. "The cat then ate voraciously," said Andi.

Moments after that, Andi received a customer requesting to polish not just one but six gemstones. At a price of Rp 25,000 per stone, Andi took home Rp 150,000 that day. It was a boon for Andi, as the gemstone business was declining at the time. "If we are loving," Andi told Abun, "God will give us sustenance we don’t expect."

Surya, a cigarette trader in Cibubur and one of the characters in my article "Grassroot Economic Actors" (Kompas, April 17/2015), was upset on Dec. 2, 2015, because his "boss", the owner of the gudeg food kiosk, took several boxes of cigarettes worth Rp 96.000 from his kiosk.

Since the "boss" did not pay for the cigarettes for three days, Surya did not have enough capital to run his business.

The way out: Abun gave Surya Rp 100,000 on behalf of the “boss”. In return, Abun was allowed to eat at the gudeg food kiosk for a few days. The “economic” relationship between Abun, the "boss" and Surya is complicated.

To supplement his income, Abun also sells mobile phone credit. In December 2015, the "boss" and his family owed him Rp 65,000. The debt was not paid in cash, but by allowing Abun to eat for five days, at a value of Rp 25,000 per day. Abun, meanwhile, owed Rp 40,000. His debt increased, because the "boss" bailed out Abun’s five-day installment for the Rp 10,000 daily Lebaran savings to the market cooperative.

In Decemebr 2015, Abun paid Rp 100,000 for the purchase of vegetables on behalf of the “boss”. After all, until Dec. 6, Abun still owed Rp 10,000. However, on the same day, the "boss" owed Surya Rp 36,000 for the purchase of cigarettes. On Dec. 25, 2015, Abun returned to Tasikmalaya. There, he received a text message from Asgar (no his real name, a pancong cake seller from Bandung at the Cibubur Market. It said: "Uncle Abun, please forgive me. I am sick again. Please pray for me to get well soon. "

Asgar suffered from a kidney disease and he had to wear a catheter when urinating after leaving the hospital in Garut. Abun, as he recalled on Thursday, Dec. 31 of that year, called and advised him to be patient. "There is no illness that cannot be healed by God," he said.

However, why should Asgar ask for forgiveness? Apparently, Asgar owed Abun Rp 48,000 for mobile phone credit. The debt was repaid only on Friday, Jan. 29, 2016, after Asgar had recovered.

The "economic" relationship of these four "grassroot" economy figures finally stalled. The boss\'s business declined. At the end of December 2015, he was forced to sell his "Lebaran" savings package at the market cooperative to a vegetable grower for Rp 5 million to pay his debts to Salamun, the owner of the house where Abun had opened his kiosk.

After five successful years, the business of the "boss" had begun to decline. This soured his relationship with Salamun. On March 14, 2016, Salamun told Abun that the kiosk of the “boss” would be padlocked if he did not pay off the debts. The “boss” paid the rental installments after the threat.

However, on May 11, 2016, the "boss" and his family closed and left the kiosk, three days before Salamun’s ultimatum, because he had failed to settle the outstanding rent.

Asgar, on the other hand, is still surviving. After recovering from his illness, he continued his cake business. On Aug. 6, 2017, he went home early, because there was an order for 100 pancong cakes. At a price of Rp 2,000 per cake, he would take in Rp 200,000.

After going home to Garut on Aug. 19, 2017 for a ritual for the seven-month pregnancy of his daughter on Sept. 11, 2017, he returned to Cibubur. On Sept. 25, he asked Abun to send Rp 1.6 million to his wife. In October 2017, Asgar returned to Garut to be with his daughter for the birth of her child. He had planned to be back on Nov. 17, 2017, because he had to wait until his first grandchild reached 40 days of age. However, he could not return as planned, because he fell sick and got well only in December 2017.

On Jan. 28, 2018, he appeared in Cibubur, emptying the rented room and bringing all his belongings to Garut. The next day, he sent a text message: "Oh, I forgot, I owe mobile phone credit to Uncle Abun." Abun replied: "No problem. I am now in the village again. Sorry, I cannot help ".

Transaction without setting the price

Abun apologized he could not help Asgar return to Garut, although Asgar still owed him. Abun also did the same thing when Asgar, on Dec. 2016, has asked for a prayer for his recovery from illness – as a way to apologize for still owing – by encouraging to stay strong.

And when Surya was confused because he ran out of capital because the "boss" had not paid on time for the cigarettes he had bought, Abun took the initiative to cover the debt. This "tolerance" attitude was also practiced by Surya, who refrained from "expanding" into his "rival Amat’s territory to sell cigarettes when Amat was unable to sell cigarettes for 1.5 months because of illness.

This illustration of more than three years of trading activities shows the "non-market" element in the activities of these grassroot economy figures. Except for the impersonal attitude of the house owner, Salamun, these four actors reflected the spirit of peace depicted in Patrick Guinness\'s 1986 painting Harmony and Hierarchy in Javanese Kampung to describe the Kampung Legok community in Yogyakarta, in the 1980s, which can create peaceful conditions to reduce the disappointment of life changes.

And, based on their different characters, the four figures showed the shared poverty anthropologist Clifford Geertz describes in Agricultural Involution (1963). However, the essence of the activity is the "transaction without price". I was inspired to coin this phrase by French philosopher Marcel Mauss’s (1872-1959) description of gifts based on the hau concept among the Maori of New Zealand.

Through the work of anthropologist Marshal Sahlins, Stone Age Economics (1974), we can learn that hau is the spirit of things. How to find hau? In Sahlins’ book, Mauss explains: The first person rewards the second person without a price, without bargaining. Then, the second person presents it to a third person. After a while, the third person rewards the second person. It is the latter gift which contains hau – which comes after the gift of the first person. So the second person must return it to the first person. The third person\'s gift is the first person\'s gift. If the second person keeps it for himself, he will get hurt. As mentioned latter, transactions based on this hau conceptpotentially have the structural vision of the "Pancasila market economy".

The trade practices of the four grassroot economy figures above are what I symbolically call the "transaction without price" process. Conventionally, the "price" is the calculation of the profit and loss in a commodity transaction based on demand and supply, says Thomas Sowell in Basic Economics: A Common Sense Guide to the Economy (2017).

However, the four figures actually eliminated the price, in the sense of material calculations, in the process of their transactions. Why did Andi feed the starving cat at the market?

What was the benefit Abun got when paying the debts of the "boss" to Surya? Why did the "boss" pay Abun’s monthly Lebaran savings in the cooperative, and why was Abun willing to pay for the vegetables for the boss’s food stall? Why did Surya not take advantage to “expand” his market when Amat was sick?

These questions cannot be answered with conventional economic rationale. They can be partly explained by Max Weber\'s book The Protestant Ethic and the Spirit of Capitalism (1958).

By using the eudemonistic phrase – the value of moral action lies in its ability to create happiness – Weber emphasizes that the economic excitement can no longer be subjugated by humans as the satisfaction of material desires.

Here, the four figures have their own incentives in trading. With the premise of Islamic teachings reflected in Abun\'s "counsel" and his willingness to apologize to Asgar, I am inclined to see Weber\'s eudemonistic ethic more applicable as the basis of the trading behavior of these grassroot economic figures. Then what to do with hau? Through the book Stone Age Economics, we know the basic view of Mauss about the economic system hau, namely la circulation obligatoire des richesses, tributs et dons (obligations of wealth turnover, prizes and donations).

Here, there is a deterrent power of concentration of wealth. Unconsciously, through the instinct of Islam, these grassroot actors demonstrated the economic practice.

This is may reflect Didin Damanhuri’s theory about the necessity of religious influence and the value system in the "Pancasila market economy". The problem is that, until now, there is no concrete model of the "Pancasila market economy" that emphasizes la circulation obligatoire. However, through the thesis of Alavi Ali, "On Brexit: Comparing British and German Varieties of Capitalism" (Freie Universität, Berlin, 2017), we find the coordinated market economies (CMEs).

While Alavi\'s theory explains the inevitability of the British Exit (Brexit) due to the absence of CMEs in the country, we find the operational concept of the "Pancasila market economy" which, influenced by religion and the value system, structurally prevents the concentration of wealth in the hands of a few.

Thus, if liberal market economy (LMEs) actors, as seen in the UK and the US, carry out their business based on supply and demand, the CMEs emphasize the spirit of "mutual cooperation", non-market forces, says Alavi Ali, to describe the activities of various actors in the market economy.

The goal is not only to excite the market by producing goods and services in certain quantity and quality, but also to suppress the uncertainty related to the behavior of market participants and enable an increase in confidence in collectively formed commitments.

KOMPAS/JOHNNY TG

Fachry Ali

CMEs, thus, are the business of common prosperity through market mechanisms. We know, in reality, these CMEs proved to work in Europe, especially in Germany. However, in this context, in the CMEs we find a model of how to formulate a "market economy of Pancasila" that is not only operationally but also structurally prevents the concentration of wealth. The grassroot economic leaders we are talking about have practiced it.

On Feb. 12, 2018, Amat was active again. Talking about Aman, Surya said to Abun: “Karunya karak datang. Tas gering di lembur (Pity on him. He just entered the village and is sick again).”

Fachry Ali, Co-founder of the Institute for Studies and Promotion of Business Ethics (LSPEU Indonesia)