A Prize for the Village Ruling Class: “Village Funds” and Class Dynamics in Rural Indonesia

Abstract

The Village Fund in Indonesia has been praised as a breakthrough policy in eradicating rural poverty. This article, based on a study of a “best practice village” in central Java, however, reveals that the Village Fund has simply facilitated the triumph of the village ruling class. Though village political institutions have adopted good governance measures (participation, transparency, accountability, and so on), the poor remain largely powerless and are unable to gain a significant share of the Village Fund. In contrast to existing “elite capture” literature which has often highlighted local elite domination, this article moves beyond this limited view. By looking at the economic bases of the powerful actors occupying village political positions and institutions, this article shows how members of the village ruling class are primarily capitalist farmers whose power lies in land ownership and agricultural commodity production. As a result, development projects in rural areas continue to be the “prize” for the village ruling class when there is no re-organisation in the structure of land ownership and production relations in the countryside.

Key Words:

• Class dynamics
• Indonesia
• political economy
• rural development
• Village Fund

Acknowledgements

The authors would like to thank the anonymous reviewers for their constructive inputs to improve the draft of this article. We are also grateful to the editor who worked closely with us to get the article to publication.

Notes

1 Historians such as Niel (1960) and Sutherland (1979) have discussed the economic base of elite power in Indonesia. Nonetheless, since their main concern is in historical explanation, they were less focused on the conceptualisation of the “elite” and tended to take the concept for granted.

2 This literature has grown substantially. As examples, see Platteau (2004); Fritzen (2007); Labonte (2012); Platteau, Somville, and Wahhaj (2014); Platteau and Abraham (2002).

3 This critical political economy understanding of class is also different from the Weberian gradational approach to class that often measures and stratifies class based on income and skill. The Weberian approach has overlooked the relations between classes and the fact that the triumph of one class in society is at the expense of another (see Gubbay 1997).

4 Several other studies share a similar view (Hilman and Nasution 2019; Pardi and Istiyanto 2020; Huruta, Kundhani, and Manurung 2020; Enggraini et al. 2020; Purnomo et al. 2020).

5 The odd one out is Yadi, the owner of a building materials store in the village, who is neither a capitalist farmer nor a member of the “magnificent four” of powerful family blocks. However, he is socially isolated and has been unable to transform his economic power into a hegemonic political and cultural force in the village.

6 Parto, a semi-proletarian farmer works for Harto; Pardi, a fully-fledged proletarian works for Tanto. Parmin, a semi-proletarian farmer works for Cahyo.

7 This means in the narrow sense, the allocation for “infrastructure” (minus salary) is less than 91% (perhaps about 70% of the VF), as mandated by VF regulations. Unfortunately, data that break down the VF allocation for salaries, materials, and equipment were not available.