The Act of Killing and Money-printing

The new @joshuaoppenheim documentary, The Act of Killing, is fantastic. The Oscar-nominated film follows Anwar Congo and Adi Zulkadry (Indonesian “gangsters”) as they recount in surprisingly honest and gruesome detail their murderous exploits from the mass killings of the early Suharto era.

Their frankness seems buoyed by two factors. First, director Joshua Oppenheimer uses a novel interview/investigation technique, where he encourage Congo and colleagues to “re-enact” the killings. These guys are huge movie buffs, so it appeals to their own desires to imitate Hollywood action stars. This is a brilliant way to get around what might otherwise be a very guarded conversation.

But the other factor is perhaps equally important, which is that Indonesia has never gone through a meaningful national reconciliation process for events that involved the deaths of up to three million people. Congo’s frank admissions define the psychological consequences of complete immunity, in ways that would startle students of even (say) Latin American mass murders.

In focusing so much on a few personalities, the film inevitably leaves out historical context. Viewers that have never studied Indonesia will be left with all sorts of questions, starting with,who are the main characters, sociologically speaking? Congo and colleagues describe themselves as “free men”, but the subtitles mostly translate this as “gangster”. Is this the right translation? These people seem like some mix of paramilitary leader, extortionist, and elected official.

According to the collectively distilled wisdom over on Wikipedia, Indonesian jagos or “premans” (from the Dutch vrijman or  freeman) have a history going back to precolonial times. Because of the historically weak and non-centralized Indonesian state, jagos/premans served functions as varied as tax collector, protector of revolutionary leaders, and  then killer of revolutionary leaders. These individuals were inextricably linked to what passed for state power before, during, and after colonial times. This seems to be at the nub of how they confess to killing without fear.

The film reminded me of a paper I read some years back by Andrew MacIntyre, a professor at Australia National University. In “Funny Money: Fiscal Policy, Rent-seeking, and Economic Performance in Indonesia” (available here), he explores the seeming paradox between Indonesia’s “bad institutions” and the country’s economic growth successes in the decades leading up the Asian Financial Crisis. While on paper, the government ran balanced budgets, this does not account for a whole range of off-budget clientilistic expenditures. He writes of “three basic types” of these:

1 Command Lending: The government could direct the managers of one or more of the many state enterprises and official economic entities to make resources under their control available to support a government initiative. Although in principle most of these state enterprises and economic entities had official reporting requirements and were subject to oversight from a government ministry, in practice such constraints could be readily circumvented. The institutions most susceptible to being tapped for this purpose were the central bank, the state commercial banks, the state pension funds, and other entities such as the grain stockpile authority (BULOG). The central bank was a special case, for unlike other state enterprises or economic entities, when it was directed to fund a given project it also expanded the money supply in the process. Command lending via the central bank can thus be thought of as unfunded form of off-budget fiscal activity which may also have had significant inflationary consequences.

2 Private Contributions: The government could also informally induce the private sector to provide financing for a project about which the government cared but was unwilling or unable to finance through the budget. In this case, the government persuaded selected business people that it was in their best interests to contribute to a pressing but unfunded policy priority. Although these monies were used for public purposes, because their source was private they were highly discretionary and easy to conceal.

3 Hidden Government Funds: A third possibility was that the government could draw upon funds it had hidden away in bank accounts other than its official treasury accounts. In other words, the government could use off-budget revenue to fund off-budget expenditure. Again, such expenditure was entirely discretionary, since officially these accounts did not exist. That is to say, they did not show up in the official statement of the government’s financial position (the budget) and were not subject to the scrutiny of either taxation authorities, or the parliament.

While these types of expenditures almost guarantee one a bad bill of health from the international financial institutions, MacIntyre speculates that the Suharto regime was very efficient in its management of so-called “corruption.” Delving into monopoly pricing theory, MacIntyre writes that, “Once Suharto consolidated his grip on the presidency and the administrative apparatus beneath him, he achieved something approaching monopolistic rent-management and thus had a direct interest in ensuring that government goods were not priced excessively and thus did not depress economic activity.”

What “The Act of Killing” and “Funny Money” have in common is that they show how seemingly depraved acts can persist with a good deal of legitimacy for long stretches of time. Combine the role that premans and client networks historically played in a loosely federated country, with the particular “political settlement” in Indonesia in the 1960s, and you have corruption as economic equilibrium and killing without shame.