Extract 1 – Contents

Page

Preface

    1

Chapter I. Problems in the Supply of Capital

    3

1. The Peasant Sector

    4

The Agricultural Bias of the Economy
Java and the Outer Islands
Java and Madura: Low Productivity
Reasons for Low Productivity on Peasant Java and Madura – General
Lack of Capital
Land Scarcity and Irrigation Possibilities in Peasant Java
Productivity, Employment and Public Health
The Sugar Companies and Communal Property in Java
The Outward Redistribution of Peasant Incomes: Usury, Tenancy, Trade and Taxes
Fluctuating Incomes in Java and Madura
Terms of Trade Between Agricultural and Industrial Goods
The Decline of Cottage Industries and Handicrafts
The Outer Islands – the Great Exception

    4
    6
    7
    8
    9
  12
  14
  15
  19
  26
  26
  27
  28

2. The Industrial Sector

  36

3. The Internal Trade Sector

  40

Importance of Trade and Intermediary Functions
Immobility of Factors
Malinvestment

  40
  41
  43

4. The Foreign Sector

  44

Volume and Distribution of Foreign Capital
Returns on Foreign Investments
Changes Since the ’Thirties
Oil Benefits from Balance of Payments Autonomy
The Future of Foreign Investments

  45
  47
  48
  51
  54

5. The State Sector

  62

Conclusion

  65

Appendix: Voluntary Savings Institutions in Indonesia
 

  67

Chapter II. Problems in the Demand for Capital

  79

1. The Internal Market

  79

The Extent of the Market
Technical Discontinuities and Natural Monopolies
Utility Capital
Malinvestment
Competition from Imports

  79
  80
  83
  84
  85

2. The Export Market

  86

The Importance of the Export Market
Decline in Exports
Rubber – The Seeming Exception
Terms of Trade – Trend
Terms of Trade – Short-term Fluctuations
Foreign Currency Holdings

  86
  91
107
110
112
116

Conclusion
 

118

Chapter III. Population Problems and Corollaries

119

1. The Problem

119

The Growth of Population
Urbanization and Industrialization
Migration from Java to the Outer Islands
Export Crops and Estate Employment

119
121
123
124

2. The Corollaries

125

Pressure on the Land in Java and Madura
Diminishing Returns in Yields
Growth of Landlessness and Differentiation in Landownership
Decline in Living Standards in Java and Madura
Some Notable Exceptions
Social Unrest and Subversion
Note on the PKI, 1945–1955
 

125
126
127
133
139
142
146

Chapter IV. Creating Savings and Mobilizing Capital out of Current Incomes: Methods and Problems

150

1. The Extent of the Need

150

2. The Extent of the Supply

155

3. Fiscal Methods

157

Increasing Government Revenue
Decreasing Government Expenditure

157
172

4. Monetary Methods

176

Deficit Financing and Inflation

176

5. Balance of Payments Problems
 

186

Chapter V. Savings out of Increasing Incomes: Methods and Problems

192

1. Agricultural Extension – Indonesia and the Japanese Model

194

The Record of Japan
Extension Services in Indonesia
Difficulties in Following the “Japanese Model”

194
196
198

2. Forced Savings with a Stagnating Agriculture – Indonesia and the Russian Model

206

The Concept of Underemployment
The Control of Consumption
Collectivization and the Problem of Taxation
Collectivization in Russia
Collectivization in Intensive-Agricultural Economies: Difficulties in Following the “Russian Way”
 

206
211
214
216
218

Chapter VI. Investment Patterns

229

1. Balanced Growth

229

Productivity, Markets and Priorities
Labour-intensive Investments; Agricultural Co-operatives

229
231

2. Balanced Growth in Indonesia

233

3. Problems in the Concept of Balanced Growth

252

The Social Marginal Product Rule
Consumer Sovereignty and the “Scissors”

252
259

4. Conclusion
 

262

Chapter VII. Conclusion: The Need for International Income Transfers

263

“National” or “International” Analysis

The Importance of International Transfers

The Consequences of Isolation
 

263

264

265

Appendix. The Culture System

267

Key to Abbreviated Bibliographic References Used in the Text

273