Geopolitical Economy, Class Relations and Lawyers: The Constitution of Commercial Law in Indonesia

Jessica Manulong

doi:10.60867/00000124

This thesis analyses the relationship between the constitution of commercial law and class relations in Indonesia. Why has commercial law taken the shape it has? How have class relations and geopolitical pressures shaped the emergence of commercial law in Indonesia? The thesis is located at the often contradictory intersection of two imperatives: the growing dominance of the Indonesian capitalist class through its close relationship with key state apparatus, and the emergence of commercial law and the associated legal field. In this context, the primary research question is: How and why was Indonesian commercial law and its field constituted in a manner that integrated Indonesia into the global political economy? After Indonesia’s independence, domestic capital was mostly military-owned. The Guided Economy administration under Soekarno’s regime nationalised most of the Dutch-owned capital (Robison, 1990). Then, in the mid-1960s, as the old regime collapsed and the New Order emerged, Suharto recognised that the new economy needed fresh capital inflows. Under Suharto’s authoritarian regime, other domestic capitalists, such as conglomerates, the military, and politico-bureaucrats, acted as predatory capitalists by controlling forestry concessions, government contracts, and access to credit. The Asian Financial Crisis presented an opportunity for the IMF to lawfully intervene and further liberalise Indonesia’s market. The commercial law and political economy literature in Indonesia overlooks the relations between commercial law and the unfolding dynamics of class relations, with a particular emphasis on the role of powerful sectors of domestic Indonesian capital consolidating their dominance via changes in forms of legality. The relationship between commercial law and changing geopolitical and class relations is not merely functional. Commercial law has a degree of relative autonomy, and this autonomy is reflected in the way the law becomes a terrain of conflict between classes and within the dominant capitalist class. At the same time, lawyers and law firms become key mediators in this reconstitution of the state and capital within the terrain of commercial law. The major contribution of this thesis is to link the often technical and formal struggles over the site and form of commercial rules to broader struggles within the capitalist class and between Indonesia and the global political economy. In periods of crisis, or conjunctural crisis, the intersection of the global crisis and the changing class relationships at the domestic level trigger significant transformations in the terrain of commercial law in which lawyers act as key mediators. The argument is that political and social forces within the international political economy unsettle domestic class relations. These conflicts are then played out in the terrain of commercial law. This thesis examines three conjunctural crises in Indonesia: the hyperinflation crisis in the mid-1960s, the drop in oil prices in the 1980s, and the Asian Financial Crisis in the late 1990s. In each of these periods of conjunctural crisis, the relationships between state and capital were reconstituted within the terrain of commercial law. The thesis argues that the dynamics of commercial law must be understood in the light of these struggles and conflicts within an ostensibly formal legal terrain. In the first conjunctural crisis, lawyers became intermediaries and foundational architects of Indonesia’s entry into the global capitalist order. During the second conjunctural crisis, lawyers played a crucial role as an ideologically and politically constituted gap emerged between the global reforms resulting from the oil crisis and the rise of domestic conglomerates that expanded the Indonesian commercial landscape. During the third conjunctural crisis, when the geopolitical economy disrupted class relations, lawyers and law firms were able to reconstitute state-capital relations and reform commercial law from a practice-based framework to a private-governance-based framework. The thesis provides a framework to understand how geopolitical economy triggers conjunctural crises in which the key contradictions between the political and economic roles of Indonesian capital (or its dominant fractions) and the global economy crystallise in the specific terrain of commercial law. It is the contestation within this field of commercial law that is central to the emergence of new forms of lawyering, including the organisation of the profession and the role of law firms.

Geopolitical Economy, Class Relations and Lawyers: The Constitution of Commercial Law in Indonesia

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