Pre-independence economic thought

It is useful to briefly examine the cultural/business traditions and economic thought that existed prior to the Second World War. Documentation relating to these topics is relatively scarce, especially before the colonial period.

In the case of Indonesia, Arndt (1981) has opined that the Dutch were purely interested in trade and profit-seeking. It is less clear whether the views of the Dutch were driven by mercantilist theories. Whilst the extraction of resources (such as spices) for trade did benefit the Dutch, Indonesia (Java, primarily) was not yet targeted as a market for manufactured goods (ibid.). This was rather different from Malaya (Peninsular Malaysia), where mercantilist-type thinking may have informed colonial policy and where raw materials (tin, rubber) were exported from Malaya and manufactured goods were imported from Britain (Li, 1982).

Perhaps a more important idea related to development that has received some attention relates to the nature of the indigenous population within Southeast Asia. For example, Arndt (1981) discussed the “theory of dualism” propounded by J.H. Boeke, who argued that Indonesian people lacked the desire to improve their material (economic) welfare. Boeke's “theory of dualism” argued that there were major differences between Western and non-Western economic cultures and objectives at a fundamental level. This theory, which was subsequently rejected by many later development economists, had parallels in the sociology literature in the form of the “myth of the lazy native” (Alatas, 1977).

There are likely to be much fewer records pertaining to economic ideas and reactions of the indigenous population (compared to colonial records and views). Also, the “indigenous population” in these countries was not an entirely homogenous group. One important indi­genous group was the local rulers (sultans/kings). Another was the nationalists. In the much- cited work by Gullick (1988), indigenous political leaders within the feudal system extracted an economic surplus (via taxation) to maintain their political power. There is no evidence on how “Western economic theories” influenced such practices, if they did at all. As for the nationalists, their main concern was for overcoming relative economic backwardness (Roff, 1967). Some of these concerns were manifested as part of a more general concern for inequality, sometimes under the influence of early socialist ideas (Boestaman, 2004). Overall, pre-independ­ence economic thought amongst the indigenous population in Indonesia and Malaya is a relatively unexplored topic, and therefore more research needs to be carried out on the pre-independence and pre-colonial periods.