Protecting Peasants from Capitalism:

The Subordination of Javanese

Traders by the Colonial State
JENNIFER ALEXANDER
Australian National University

PAUL ALEXANDER
University of Sydney

Colonial Java represents the paradigmatic case of an ethnically stratified econ-

omy. The Dutch controlled large-scale agricultural production and processing
and the sale of these products in European markets. They also monopolised
the import of European manufactured commodities, such as cloth. The Jav-
anese provided labour for the cultivation and processing of export crops,
maintaining themselves by subsistence farming and subsidiary occupations,
such as petty trading and handicrafts. The Chinese linked the other two
groups, providing supervisors and skilled workers in export agriculture, bulk-
ing peasant crops for interregional trade and export to other Asian countries,
and wholesaling the imported and manufactured commodities that the Jav-
anese required. Although ethnic monopoly of economic function was never
quite this absolute, the basic hierarchical structure was only momentarily
threatened in the mid-1930s, when the Japanese began importing their own
commodities and selling them in their own stores to challenge the position of
both the Dutch and the Chinese (Cator 1936:75-7; Liem 1947:66).
For Dutch scholars during the colonial period, as for others who later drew
on their work (for example, Geertz 1963a), the reasons for this ethnic hier-
archy of commercial functions should be sought in inherent qualities of Jav-
anese society, culture, or personality. The Javanese were characterised as
essentially subsistence-oriented wet-rice agriculturalists with limited needs,
who placed a very high value on leisure and social obligations and preferred to
share resources rather than compete for them. Protected by the colonial state
from the detrimental effects of capitalism, the Javanese chose to intensify

This article was written when the authors were Fellows at the Netherlands Institute for Advanced
Study in the Humanities and Social Sciences. Its research was funded by the Australian Research
Council.

0010-4175/91/2696-2134 $5.00 © 1991 Society for Comparative Study of Society and History

370
 PROTECTING PEASANTS FROM CAPITALISM 37I

traditional agricultural practices rather than develop new crops, new cultiva-
tion techniques, or new markets. Freed from the Malthusian checks of war and
famine, they multiplied their population, gaining short-term benefits at the
expense of their descendants. The flow of money into the villages after 1830
and the development policies of the state after 1900 had provided the founda-
tions for a market economy, but the subsistence-minded Javanese were slow to
build on it. According to the prominent historian, Burger (1939:247), "the
reason why the Government has gone so far in its care for welfare has been the
unsatisfactory part the Natives play in business." The absence of Javanese
entrepreneurs was both a consequence of, and evidence for, the slow process
of modernization and individualization of Javanese society.
There is ample evidence that trading was an integral part of the precolonial
Javanese economy and that given the opportunity, Javanese could com-
pete successfully with other ethnic groups but were seldom given the oppor-
tunity to do so in the colonial economy. Beginning in the seventeenth century,
Dutch competitors forcibly took over the flourishing international trade that
the north coast Javanese and Chinese merchants conducted in such com-
modities as spices, rice, cloth, and pottery. As Van Leur (1955:188-90) em-
phasises, the Dutch owed their control of international trade to their more ef-
fective military organization, not to a more highly developed economy. As
late as the middle of the seventeenth century, "there was no question of a
European preponderance in trade, either in volume or organization" (1955:
189). The trading practices of European merchants, both large and small,
were similar to their Asian competitors: "the objectives, the methods of
profitmaking and the techniques of trading revealed no differences worthy of
mention" (1955:226).
Increasingly convincing evidence suggests that at the beginning of the
nineteenth century, before the Dutch had established political and economic
control over the entire island, the Javanese economy was expanding under the
influence of market relationships: The population was growing rapidly; in-
creasing areas of land were being planted in staple and cash crops; there was
extensive petty commodity production based on the processing of locally
produced raw materials; and indigenous trading networks distributed these
products locally and to other regions (Boomgard 1989b; Carey 1984, 1986;
Knight 1982; Svensson 1985). But during the ensuing century of colonial rule,
the wider economy relentlessly tightened the boundaries of this local econo-
my, and the rationality of economic decisions within it was increasingly
determined by the wider economy of which it became a subordinate part.
Export agriculture's priority for the use of land, labour, and irrigation not only
governed the opportunities for cash cropping and the methods of subsistence
fanning, but its labour demands combined with the terms of trade favouring
imported commodities, especially cloth, to restrict petty commodity produc-
tion. The Europeans monopolised the import and export trade to Europe, and
372 JENNIFER ALEXANDER, PAUL ALEXANDER

Chinese immigrants, encouraged to take control of interisland and interpro-

vincial commerce, established an export trade with other Asian countries
without encouragement. Far from being insulated from market relationships,
Javanese villagers were forced into land, labour, and capital markets in which
the other participants fixed the prices.
This revised history makes it implausible to view Javanese cultivators as
passively pursuing traditional practices throughout the colonial period or to
attribute the absence of Javanese entrepreneurs to their lack of commercial
acumen. Attention is rather directed to the political and economic structures of
the colonial state that determined both the range of choices open to Javanese
and the economic rationality of choosing one alternative rather than another.

A COLONIAL DISCOURSE
In 1658 a proclamation of the Dutch East India Company graphically de-
scribed Javanese traders as:
Women who, instead of taking up some honest business by which to earn a living
decently, seek to make a little money by sitting all day by the road-side selling a few
vegetables and other little things of small value, and do this in such multitudes that
they jostle each other and create great disorder in the market place, beside depriving
one another of profit and the possibility of obtaining a sufficient living from this
trafficking (De Vries and Cohen 1938:264).
The views encapsulated in this brief paragraph echo throughout the ensuing
two centuries of colonial rule. Javanese trading is inherently small-scale and
economically inefficient: a mere sideline activity (nevenbedrijf) in a subsis-
tence-oriented agricultural economy.
Significantly, this initial Dutch deprecation of Javanese commercial abili-
ties appears in the context of regulations that increased company revenue by
introducing duties on marketplaces (pasar) and shops (warung). Leasing the
rights to collect such duties, operate tollgates, and sell monopolised com-
modities provided a major source of revenue for both the Dutch and indige-
nous rulers until well into the nineteenth century. The Chinese took up most of
these leases, which often provided the initial entry point for their eventual
control of rural wholesaling (Carey 1984:18-20, 24-5), although the ultimate
source of the revenue was the Javanese rural economy.
The prominence of women among rural traders caught the eye of many
early observers. Raffles (1817: 1,353) went so far as to report that "women
alone attend the markets and conduct all the business of buying and selling,"
which was certainly an exaggeration. A century later, Van Deventer (1904:98)
extolled the Javanese woman as "a petty trader to the marrow of her
bones . . . the village woman is by far the most prominent in retail trade. Her
talent 'in taking care of the pence' in buying and selling is, for its kind,
unparalleled." Unfortunately, these are not early examples of a feminist per-
spective but elements of a rhetoric disparaging Javanese men. Raffles (1817:
 PROTECTING PEASANTS FROM CAPITALISM 373

1,353) added that Javanese men were "fools in money matters," while Van
Deventer (1904:99) claimed they lacked thrift, independent judgment, and
entrepreneurial spirit (ondernemingsgeest). That many traders were women
evidently reinforced colonial views that trade was insignificant, for Boeke
(1953:45) remarked of petty commodity production: "its character is dis-
tinctly occasional and it is practised mainly by women. Its traditional tech-
nique is closely connected with these two characteristics."
This rhetoric was not unimportant in the ideological legitimation of state
policies that inhibited Javanese participation in the most profitable areas of
commerce. If Javanese trading was simply a sideline activity for women who
used inefficient trading methods, then it was surely reasonable and in the best
interests of the Javanese for some other group to take over the critical eco-
nomic functions of distributing imported commodities and bulking agriculture
produce for export. But it also may not have been altogether inconsequential
that confining the Javanese to a subsistence economy helped to reproduce a
large, cheap, and docile labour force for the export agricultural industries on
which Dutch wealth was founded.

EXPLAINING POVERTY
Although the explanations of the Javanese economy's supposed stagnation
during the last decades of colonial rule were considerably more sophisticated
and drew on contemporary sociological and economic theories, they began
from the same premises as their predecessors. Boeke's statement of the prob-
lem (1910, 1953) accepted even by those of his contemporaries who sharply
rejected his solutions, characterised the Eastern economy as "backward,
primitive forms and methods of business organization; pre-capitalist concep-
tions of labor; undeveloped sense of economic cooperation and insufficient
notion of its indispensableness; helplessness in regards to the demands of a
money-economy" (1953:109). He stressed that these were all social factors
and that although personal factors, such as the Easterner's "easy-going dis-
position, his tendency to underrate future obligations, his impatience [,and]
his lack of insight" should not be ignored, "they may very largely be traced to
much more pronounced social factors" (1953:109).
One of Boeke's critics, the economist Gonggrijp (1919, 1925), agreed that
there were fundamental empirical differences between Javanese and Western
economies but rejected Boeke's claim that specific economic theories were
required to understand each system: Both could be explained in neoclassical
terms. The Javanese temperament—economically childlike, economically
carefree, artistic, impulsive, rarely and irregularly active (1925:391, n. 12)—
in combination with restricted needs, the lack of a well-developed exchange
economy, and a high subjective rate of interest, created rapid declines in value
curves. These preferences account for "the Natives love of borrowing" (1925:
393), absenteeism from work, and lack of response to price incentives. His
374 JENNIFER ALEXANDER, PAUL ALEXANDER

policy suggestions are consistent and savage: Because of the rapid drop in the
natives' value curves, raising wages or lowering the costs of necessities sim-
ply diminished the incentive for them to work.
Even Van Gelderen (1927), whose analysis of the colonial economy traced
Javanese poverty to a weak bargaining position in an economy in which
capital, land, and labour markets were fragmented and capital was too highly
valued in relation to other factors of production, especially labour, remarks:
the indigenous element is directed above all towards the direct gratification of the
needs felt by the small-scale producer and his dependents. . . . to the Native way of
thinking production is no more than a means, albeit a necessary one, of attaining the
goal of consumption. Hence there is a strong urge to consumption, a tendency for as
many as possible to share and use what is produced (1927:117, 125).
Economists who were directly engaged in policy formation put similar
views in considerably blunter terms. Van Ginkel introduced his report on the
1924 Welfare Inquiry with the mordant observation that, given a population
whose economy is adapted to living on credit, to which the urge to accumulate
is alien, which does not rank the begetting of children as less important than
the improvement of one's individual position, and which cannot yet be per-
suaded to obtain the maximum yields from its fields, it is inevitable that the
level of prosperity will not climb far above a minimum subsistence (1926:8).
A striking feature of these discussions is the absence of empirical support
for these characterisations of the Javanese or for the descriptions of the rural
economy. A few decontextualised anecdotes, presented as self-evident il-
lustrations rather than demonstrations, of Javanese economic incompetence,
appear and reappear. In discussing the evidence for land concentration
gathered during the numerous enquiries into the diminishing welfare of the
Javanese, Hiisken and White (1989:242) remarked on the tendency of the
investigators to ignore their own findings when formulating the conclusions to
their reports—a tendency even stronger with respect to trade and petty com-
modity production, activities seen as so obviously peripheral to the Javanese
economy as not to require systematic investigation.

COUNTERCURRENTS
That even sympathetic writers fell under the spell of stereotypes indicates how
firmly they were embedded in the colonial consciousness. Van Deventer
(1904:96-103; cf. Pierson 1877; Brooschooft 1901) was one of the few writ-
ers at the beginning of the twentieth century to appreciate the significance of
trading within the Javanese economy. Emphasising the enormous number of
transactions in the periodic market places and the buoyant and vigourous tone
in which they were conducted, he also noted that Javanese had been heavily
involved in international trade in the early sixteenth century. Even more
unusual, he recognized that the Javanese had maintained a foothold in itiner-
ant trading {marskramerhandel) and intermediate trade (tusschenhandel) de-
 PROTECTING PEASANTS FROM CAPITALISM 375

spite the Chinese domination of these activities at that time. As examples of

the former, he cites the batik and woven mat makers of Tasikmalaya and the
linen weavers of Kudus, who peddled their wares all over Java. As examples
of the latter, he mentions the merchants (saudagar) of Madura, Semarang,
and Pasar Gede, men with substantial warehouses and considerable finance
(fl.5000 to fl. 15000) who wholesaled a variety to commodities, and the
juragan from Pekalongan and Kudus who shipped goods as far as Singapore.
Van Deventer clearly felt that commerce on this scale required, in addition
to considerable finance and well-founded trade relationships, the en-
trepreneurial spirit that he thought most Javanese lacked. Despite his recogni-
tion that these forms of trading must once have been solely in Javanese
hands—on the somewhat curious grounds that there are indigenous terms for
both—he sought a specific reason for the current success of these Javanese
entrepreneurs. Anticipating Geertz (1963a), he attributed it to the modernizing
influence of Islam: Those Javanese who had been on the haj had more capital,
more energy and more enterprise than their fellow villagers. As only a tiny
minority of Javanese had sufficient funds to visit Mecca, the association
between economic success and the haj is unassailable. Van Deventer offers no
evidence, however, that the prospect of the haj was a unique motive for the
accumulation of wealth or even that pilgrims were any more pious than other
Javanese.
Fifty years later, agronomists such as Van der Kolff (1937; 1941) and De
Vries (1948), who had had far more direct contact with Javanese villagers than
other scholars or officials, took a different view of their economic capacities.
Van der Kolff (1941) did not attribute the high levels of rural debt to a lack of
concern about the future but to the abject poverty that left the Javanese with
nothing to save; however, De Vries (1948:44) argued that "the Indonesian as
an economic subject operates from the same premises as the Westerner." Such
views, however, were only a minor countercurrent in the ocean of the domi-
nant discourse.

DISCOUNTING JAVANESE TRADE

Although the ethnic hierarchy of economic functions and rewards was ulti-
mately attributed to, and justified in terms of, the essential characteristics of
all three groups, colonial discourse concentrated almost exclusively on those
intrinsic qualities of the Javanese that supposedly crippled them in competi-
tion with the Chinese. Most scholars and officials, if not planters and busi-
nessmen, carefully avoided biological arguments, deriving Javanese economic
behaviour from their communal society, from the tropical climate, or—with-
out obvious irony—from the abundant natural resources of Java. Neverthe-
less, the litany is damning: Javanese are variously described as passive, sub-
missive, consumption-orientated, thriftless, uninterested in profit (with the
notable exception of windfall profits, see Boeke 1953:41), lacking en-
376 JENNIFER ALEXANDER, PAUL ALEXANDER

trepreneurial spirit, imbued by magico-religious thinking, and incapable of

sustained work except occasionally in agriculture (Brooschooft 1901:28-31;
Hasselman 1914:340-2; Van Ginkel 1926:7-9; Gonggrijp 1925:102; De Kat
Angelino 1931:1,197).
No further explanation was required to account for the subordination of the
Javanese to the hardworking, thrifty, if cunning and sharpdealing Chinese; or
the rational, methodical, honest, if somewhat stolid Dutch (Gonggrijp
1925:391). Deeming the hierarchy of commercial functions an inevitable con-
sequence of the essential nature of the ethnic groups involved removed any
necessity for—indeed the possibility of—political, economic or historical
analysis. Moreover, attributing the ethnic stratification of rural commerce to
Javanese deficiencies eliminated any need for a positive explanation of the
relative success of the Chinese. Such an explanation would have inevitably
thrown some doubt on the hegemonic distinction between Eastern and
Western society in which the ethical justification for the extremely unequal
division of wealth and incomes in the colonial economy was grounded. De-
spite a few grudgingly admiring remarks about their frugality and industry, the
Chinese too are usually characterised in negative terms as usurers and
speculators.
In this intellectual climate there was simply no point in investigating the
reasons why the Javanese were absent from all but petty trade: The answer
was obvious. But the pervasive view that Javanese poverty was due to their
incompetence as economic actors, at least outside the circumscribed sphere of
subsistence agriculture, had at least two deleterious consequences for the
formation and implementation of government policies and for the course of
subsequent scholarship. In the first place, the definition placing any eco-
nomically successful Javanese as outside the authentic Javanese community by
virtue of that success alone built a substantial obstacle for those programmes
designed to alleviate poverty. Javanese who had accumulated some wealth
were not seen as incipient entrepreneurs but as hajis and usurers—"although
the concept haji and the concept wealthy usurer are not altogether syn-
onymous"—who had only attenuated ties to their natal communities (Boeke
1910:33). Colonial officials deplored the slow development of commercial
acumen among the Javanese but castigated the few relatively wealthy Javanese
as exploiters of their own people (Hasselman 1914:340-42; Van Ginkel
1926:7-9).
The implication that commercial success required the internalization of the
values of thrift, diligence, and economic rationality uncommon in the Jav-
anese population at large structured subsequent explanations of the ethnic
stratification of the colonial economy. Sympathetic and perceptive writers
from Van Deventer (1904) to Geertz (1963a) construed the problem as one of
explaining the success of the few rather than the subordination of the many
and saw the wealth of some Javanese as an illustration of the modernizing
influence of Islam. Several studies of santri (devout Muslim) communities
 PROTECTING PEASANTS FROM CAPITALISM 377

have investigated this relationship, describing attitudes towards economic

calculation, savings, and accumulation that appeared to contribute to their
economic success (Castles 1967; Geertz 1963a, 1968; Nakamura 1983). There
are, however, few empirical grounds to infer the absence of values as com-
patible with economic achievement in other Javanese communities, especially
the numerically far larger group of non-santri traders and some explicit state-
ments to the contrary (for example, Geertz 1963a:47). Some contemporary
readers might also be more sceptical of the assumption that thrifty, diligent,
and honest are appropriate characterisations of entrepreneurs. Similarly, al-
though the long association between Islam and trade in the communities on
the north coast of Central and East Java is well documented, as is the close
link between the growth of the reformist Islamic organization Muhammadiyah
and the emergence of a group of large-scale Indonesian entrepreneurs during
the interwar years, there are few indications at other times or in other places
that successful traders were usually devout Muslims. Indeed in Kotagede,
where Muhammadiyah was founded, the wealthy merchants (kalang) who
established extensive commercial networks throughout south Central Java in
the nineteenth century "were as much abangan (peripheral, nominal Mus-
lims) as the bulk of people in the town" (Nakamura 1983:11, 34-40).
A second, closely related, consequence is that both colonial administrators
and later scholars consistently underrated the importance of market rela-
tionships, trade, and petty commodity production in the rural economy. For a
century after 1830 Javanese traders almost disappeared from official statistics
and reports. In marked contrast to the frequent and detailed reports on the
sugar and rice economies, sectors critically important to the state, information
on the level and organization of rural trade appears as an afterthought—as
residual categories in tables or as paragraphs buried in the text. The annual
Colonial Reports comment only in very broad terms on the current level of
Javanese small-scale trade and the production of handicrafts. Less frequently,
they discuss the level of trade in particular regions, usually in terms of fluctua-
tions attributed to poor harvests, falling sugar prices, or the construction of
railroads. The contemptuous attitude of the state is epitomised in the introduc-
tions to the two major investigations of Javanese living standards carried out
in 1904-5 and 1924: "Native trade is of little significance and scarcely merits
the title of commerce" (Hasselman 1914:115; cf. Van Ginkel 1926:1,179).
Perspective, however, depends on where you stand. Certainly the census
figures for the early twentieth-century record trading as the primary occupa-
tion for only a small percentage of Javanese: 1.4 percent in 1905 and 3.0
percent in 1930 (Volkstelling 1905; 1930). Even if these figures were accu-
rate, there were five times more Javanese than Chinese involved in trade in
1930; but there are three reasons to suspect that the figures are far too low.
First, the occupation of anyone engaged in agriculture was usually listed as
farmer, regardless of the proportion of income obtained from this source.
Second, by the turn of the century, and probably well before, the average
378 JENNIFER ALEXANDER, PAUL ALEXANDER

Central and East Javanese farm was close to, perhaps even below, the extent
required for a subsistence living. There were very few large holdings and
around a third of households owned no land at all (Alexander and Alexander
1982). It is very difficult to reconcile this pattern of landholding with a
subsistence agricultural economy. Third, in addition to listing specifically
agricultural labourers and workers in foreign enterprises, the tables list up to
20 percent of the workforce in residual categories such as coolie or "insuffi-
ciently described profession." Villagers not engaged in agriculture and not
employed in foreign enterprises had few ways of earning a living except from
trading or petty commodity production.
One later analysis of the statistics in the 1904-5 welfare investigation
demonstrates that 15 percent of all households derived their income from trade
and small industry (Httsken and White 1989:241). In addition, the figures
exclude households that owned land and ignore the earnings of women. A
detailed examination of the data for one district, albeit in one of the most
densely populated regions of Central Java, gives much higher figures: 29
percent of men and 70 percent of women in Kebumen were primarily engaged
in nonfarm employment (Alexander and Alexander n.d.). A conservative
inference is that around 1905 trading and small-scale industry made a signifi-
cant contribution to the incomes of a third of village households. The signifi-
cance of trade and petty commodity production appears to have increased in
the ensuing twenty-five years: Svensson (1985:34) calculates that in 1930, 45
percent of Javanese were engaged in off-farm employment.
An additional indication of the importance of rural Javanese trade can be
gained from the statistics on the export of agricultural produce. Although
overshadowed by the fl.372,000,000 of sugar exported by the Dutch-owned
companies, exports of native crops, including tea, coffee, cassava products,
kapok and vegetable oils, from Java were worth more than fl. 100,000,000 in
1928 (Department of Agriculture 1930). Although the Chinese controlled final
processing and export of these crops, the Javanese regarded lower-level pro-
cessing and trading as their preserve. Despite their prominence in official
statistics, these products were not major commodities of commerce. Most of
the commodities bought and sold in rural marketplaces were produced by
Javanese for sale to other Javanese and thus were of little interest to the state
(Alexander and Alexander n.d.).
The level of trade, at least as measured by tax receipts in official mar-
ketplaces, rose and fell with the prices of export commodities; but by the end
of the nineteenth century all village households relied on the market for some
of their necessities some of the time, and a sizeable percentage were almost
totally dependent on it. Contemporary accounts point to the very low value of
the average market purchase (Levie 1935) or the absence of cash in many
households for many days of the year (Boeke 1926) as evidence that the
market was peripheral. But a three-cent purchase, exclusive of the staples rice
 PROTECTING PEASANTS FROM CAPITALISM 379

and maize, is hardly insignificant in terms of a ten-cent daily wage (De Vries
and Cohen 1938:265-7). Poverty limited the ability of Javanese to make
purchases, but it did not remove the necessity for them to do so.

A BENIGN STATE?
Although there is as yet little information on the intervening period exists as
yet (but see Boomgaard 1989b: 109-35), the significant role of commerce in
the Javanese rural economy before 1830 and again after 1900 indicates that the
rigid ethnic stratification of the economy was not an inevitable consequence of
essential ethnic differences but was fabricated by the colonial state after it had
achieved political and economic control. Further, linking what was the stagna-
tion of the Javanese economy to the essential nature of Javanese society was
less an explanation than a critical step in legitimating the vast disparities of
wealth and income in colonial society, an ideological process that divorced the
political from the economic and represented the colonial state as essentially
benign. This was not easily accomplished. Direct and overt state control of
export agriculture ceased when the cultivation system's forced deliveries of
labour and produce wound down after 1870, but the state directly intervened
in most areas of the rural economy despite its proud espousal of free trade in
the international arena. The state authorised systems of land tenure; super-
vised the leasing of village land to sugar companies and, through its control of
irrigation, structured other forms of agricultural production; regulated local
trade and set wage levels; and controlled the prices of basic commodities and
monopolised access to credit. Many of these activities may well have been
genuinely intended to enhance Javanese welfare, but whatever the motives,
representing such interventions as protecting the traditional village economy
disguised the common interest of the state and the Dutch companies in expro-
priating Javanese capital and Javanese labour. In undertaking to protect the
village from the influence of capitalism, the state, in fact, set the conditions
for the village's participation in a capitalist economy of which it was an
integral but subordinate part.
The late 1920s are a particularly appropriate context in which to examine
the relationship between the colonial discourse on the Javanese economy,
government policy, and the structure of rural trade; for during the preceding
twenty-five year period of the Ethical Policy, many legislative measures had
been explicitly intended to raise, or at least restore, rural living standards. As
Boomgaard (1986b:57) points out in one of the few recent discussions of these
policies, welfare services (agricultural extension and rice policy, irrigation,
health and credit reform) were "an aspect of Dutch colonial rule that had been
the pride and glory of civil servants and scholars alike." The pride seems
justified, for in the early twentieth century no other colonial power had such
extensive programmes for the economic development of the indigenous popu-
lation of their colonies. But good intentions do not guarantee positive results.
38O JENNIFER ALEXANDER, PAUL ALEXANDER

Because the welfare measures were structured by a discourse premised on

Javanese economic incompetence, they did little to raise living standards and
their major consequence was to tightly restrict Javanese autonomy in land and
capital markets.
Our discussion concentrates on credit reform, which many colonial officials
regarded as their most successful major welfare measure (De Kat Angelino
1931:11,306-8) but was also a substantial hurdle for Javanese traders seeking
finance to establish and expand their enterprises. The effects of the credit
legislation, however, can only be understood when it is situated in the context
of other state actions inhibiting capital accumulation within the village econo-
my. The construction and improvement of irrigation services, for example, the
major financial contribution of the state to the development of the village
economy, certainly increased by far the land available for village cultivation
beyond that taken for sugar production. But, as we have argued elsewhere
(Alexander and Alexander 1980), the design of irrigation systems and the
ways in which they were administered locked villages into a cropping cycle
that the demands of sugar production determined. This required the Javanese
to develop labour-intensive, but inefficient, techniques for rice cultivation and
made it difficult for them to grow the most profitable cash crops, such as
tobacco and sugar, on their most fertile land. Furthermore, the state regulated
trade in rice, the most valuable Javanese product, with the intention of main-
taining "a stable, preferably low, price level" (Boomgaard 1986b:67). What-
ever the welfare consequences of this policy, and it is arguable that the state
and the sugar companies benefited more than the poorer villagers, it severely
limited returns in the village economy's largest sector. Restrictions on move-
ment outside the village and the licensing of such agricultural processing
plants as rice mills and oil presses were other obstacles to Javanese participa-
tion in the extra-village economy (Brokx 1925).

TAXATION
The distribution and accumulation of capital within the indigenous economy
was also markedly affected by taxation. In his influential account of colonial
policy, De Kat Angelino (1931:11,643) reviews taxation changes, concluding
that "the progress of the last three-quarters of a century is really extraordi-
nary." The forced deliveries of the cultivation system and the arbitrary land
tax assessments legtimating them were gradually replaced after 1866 with
carefully regulated land taxes based on relatively detailed land surveys and
harvest samples. Landowners were taxed at 8 to 20 percent of the market price
of their paddy yields above a fixed minimum and a fixed amount for their dry
fields. In each case the assessment was fixed for ten years, and the village
officials received 8 percent of the total collected. Labour taxes in the form of
personal services for the Javanese elite, which colonial officials had seen as a
major reason for the peasantry's poverty in the mid-nineteenth century (Anon
 PROTECTING PEASANTS FROM CAPITALISM 381

1858:66,74), were abolished, as were labour services for Dutch officials and
forced labour for the sugar companies. Labour taxes for the maintenance of
village roads, irrigation systems and marketplaces, and for policing the vil-
lage at night, were retained on the grounds that these benefited all villagers,
although by 1920 the wealthy often paid a substitute (Meijer Ranneft and
Huender 1926: Appendix XI). The practice of farming rights to collect market
taxes and tolls, to sell commodities such as salt, and to lend money had been
replaced by government monopolies.
However, other observers were less sanguine about the consequences of
taxation for Javanese living standards; and in 1924 the conjunction of the
postwar slump with a 50 percent increase in land tax receipts prompted a
comprehensive investigation of the effects of taxation on the rural economy
(Meijer Ranneft and Huender 1926). This inquiry demonstrated that taxation
receipts had doubled in the previous decade, although there was considerable
debate about the size of the increase in real terms and its effects on the rural
economy. Much of the latter discussion concerned the extent to which taxation
pressure had increased since 1913 and the relative shares of taxation paid by
the Javanese and other groups. A widely quoted report (De Kat Angelino
1931:11,692) calculated that Europeans paid an average per-capita tax forty-
five times higher than that paid by Indonesians, but it did not add that their
incomes were fifty-three times as great (Burger 1975:1,116). The measure of
onerous taxes adopted in these discussions is, to say the least, conservative:
Reasonable taxation was that which did not dispossess Javanese from their
land or prevent them feeding and clothing themselves!
The meticulous data in the report documents the process by which consider-
able sums were extracted from the Javanese peasantry. In 1924, for example,
direct taxation in the form of a head tax and land rent amounted to
fl.46,700,000. Indirect taxes—excises and duties—were calculated to add
fl.39,200,000 and the salt and pawnshop monopoly a further fl. 17,200,000.
Once local and minor taxes were added, the total amounted to nearly
fl. 125,000,000 (Meijer Ranneft and Huender 1926:15). The lowest estimate
placed this at more than 9 percent of the gross income of Javanese villagers
and had to be paid in cash (De Kat Angelino 1931:11,642). Taxation appropri-
ated a considerable proportion of any surplus in the rural economy—certainly
far more than the villagers earned from hiring their land and selling their
labour to the sugar factories (Meijer Ranneft and Huender 1926:166). Nor is it
obvious that much of this money was returned to the villages as goods and
services: The 1924 health budget for the entire colony was fl.20,000,000,
while the irrigation works, the major contribution to village agriculture, aver-
aged less than fl. 10,000,000 per year after 1900 (De Kat Angelino 1931:
11,302, 311).
The village surveys conducted under the auspices of the inquiry paint an
even bleaker picture of the general level of taxation and further suggest that it
382 JENNIFER ALEXANDER, PAUL ALEXANDER

was unequally distributed (Meijer Ranneft and Huender 1926:Appendix V).

Landowners with medium or small holdings, about half of the rural house-
holds, paid more than 10 percent of their income in direct taxation alone. This
suggests that they were required to pay up to 20 percent and in some areas as
much as 25 percent of their annual household income of fl. 150-200 (Meijer
Ranneft and Huender 1926:21). In contrast, village headmen and other offi-
cials paid 7 percent in direct taxes on incomes twice as high and were also
given a commission of 8 percent on the taxes they collected. Taxation not only
inhibited capital accumulation within the village economy as a whole but also
probably influenced the distribution of capital tended to concentrate the funds
available in the village among the elite. In addition, the different basis for
assessing liability for taxes in urban areas favoured traders living in towns
over their rural counterparts.
State policies were clearly a considerable barrier to capital accumulation
within an economy in which restrictions on crops, cultivation techniques and
prices already limited agricultural returns. In these circumstances, the annual
extraction of at least 9 percent of the gross income from a population barely
capable of feeding and clothing itself left little capital available for other
ventures. As budget studies demonstrate (for example, Boeke 1926), this also
created a chronic cash shortage along with an associated strong demand for
credit in rural households.

COMBATING USURY
The high level of Javanese indebtedness was a major and continuing concern
for Dutch officials. As early as 1805, following some years of official com-
plaints, the Chinese moneylenders in the West Javanese regency of Buitenzorg
were ordered to report debts owed to them (Boomgaard 1986a). Twenty-six
moneylenders listed 672 loans, mostly to Javanese, with the median debt
amounting to about a third of the annual income of a prosperous farmer.
Boomgaard (1986a:49) estimates that servicing these debts alone would re-
quire 5 percent of the total income of the Regency. A century later, the
Taxation Inquiry concluded that debts to official sources (pawnshops and
village banks) totalled more than fl.215,000,000 and required annual interests
payments above fl.25,000,000; an unreasonably conservative estimate for
pawnshop profits alone were more than fl. 16,000,000 in 1924 (Meijer Ran-
neft and Huender 1926). In addition there was unofficial debt to Chinese and
Indonesian moneylenders for which no figures were available but "in some
areas often runs into far higher figures than official credit" (Fruin 1938:174;
Burger 1927). The village surveys summarised in the report suggested that the
debts of most rural Javanese households amounted to around half their annual
income, a figure reiterated in contemporary documents (Huender 1921:142;
Van Ginkel 1926:311-23).
Although they agreed that debt was a major reason, perhaps the major
 PROTECTING PEASANTS FROM CAPITALISM 383

reason, for Javanese poverty, Dutch official sources strongly rejected any
suggestion that debts might be caused by poverty (Hasselman 1914:340-5;
Van Ginkel 1926:8). Rather high levels of rural indebtedness were attributed
to two interrelated reasons, both grounded in the nature of Javanese society:
"the ineptness of the common people in money matters" (Fruin 1938:106; Van
Ginkel 1926:8) and the rapacious activities of Chinese and Javanese mon-
eylenders (Hasselman 1914:319-21; Burger 1927; Boeke 1931:243-63).
The first argument is a direct reworking of the essentialist view of rural
Javanese society discussed above. The continuing strength of these assump-
tions in the thinking of Dutch officials is apparent when the Head of the
Government Credit Service, a man with extensive experience in Java, could
confidently claim in 1938 that "the introduction of money has affected the
surface of life only" (Fruin 1938:108). The great majority of Javanese house-
holds, which he characterised as rice farmers consuming their own crops, did
not require finance for productive purposes. Therefore, in the rural economy
"credit does not stimulate production. . . It has only one function, namely,
that it helps to even things up, to tide the farmer over the periods when cash is
scarce and enables him to lay out, at a given moment, lump sums of money to
be repaid in installments." Because credit was essentially used for consump-
tion purposes, especially to finance ceremonies, "rural credit is only socially
useful and justifiable in so far as it performs its equalizing, levelling function
effectively and without involving too much expense" (Fruin 1938:109). Al-
though Fruin (1938:164) mentions the use of credit to finance trade and local
industry, and that "40 percent of the borrowers are women," these purposes
are ignored in his general remarks. Similar views are expressed in other
contemporary discussions (Cramer 1929; Kraft 1929).
In the eyes of colonial officials, the very high interest rates prevailing in the
rural economy prevented the effective use of credit for consumption purposes.
Although systematic investigations of the unofficial moneylenders' activities
are notably lacking (but see Van Gutem 1919), in part because secured loans
under fl. 100 were strictly speaking illegal, anecdotes suggested that the an-
nual interest rates were exorbitant. According to Hasselman (1914:319), "the
interest varies from 32 to 100 percent, and sometimes from 200 to 400 percent
per annum." Adam (1916:1605) quotes rates of 120 percent per annum under
the sawelasan system.
The more detailed accounts, however, reported lower interest rates. Kraft
(1929:131), for instance, remarks that "an interest of ten cents per guilder per
day is not unusual," a nominal rate of 3,650 percent per year. But he precedes
this comment with an example: "If two and a half guilders are borrowed from
private moneylenders, they are usually paid back by thirty daily payments of
ten cents." If daily refers to market days, a reasonable inference (Van Gutem
1919), this would mean an annual interest rate below 40 percent. Hasselman
(1914:113-29) gives similar examples, and it is probable that both were
384 JENNIFER ALEXANDER, PAUL ALEXANDER

misinterpreting the Javanese credit institution termed ngalap-nyaur (Alex-

ander 1987: 121-3). It is probable, moreover, that all such calculations over-
state the interest rate because in the Javanese economy the interest to be paid
was not a direct function of the loan's term (Van Gutem 1919).
In a classic example of blaming the victim, colonial officials ascribed high
interest rates to the economic deficiencies of the Javanese. An adviser to the
popular credit service for much of his career, Boeke attributed high interest
rates "to the immobility of the factors of production, hence also to the forces
of tradition, and in general to social causes" (1953:182). The influential
economist Gonggrijp (1925) provided a technical explanation: A high subjec-
tive preference for time and immediate gratification produced rapidly drop-
ping value curves in which future values are highly discounted. Even gener-
ally sympathetic observers, such as Van Gelderen (1927) who rejected claims
that the Javanese were lazy, agreed that the strong urge to immediate con-
sumption inhibited capital formation and promoted extensive borrowing. This
chorus drowns out Van der Kolff's (1941) reasonable comment that people
living on the subsistence margin had no choice but to consume everything
they produced.
Given such a characterisation of the Javanese economy, it is not surprising
that reform of the credit system should become, with irrigation and technical
education, a foundation of the Ethical Policy of rural development pursued
between 1900 and 1930. As Van Deventer (1904:253) said: "A well-orga-
nized credit system should facilitate the development of agriculture and free
the Natives from the bonds of usury holding him at subsistence level." The
state instituted an official monopoly on all secured loans for less than an
average household's annual income and established a widespread network of
village banks and pawnshops. Although this credit system provided substan-
tial contributions to government revenue, it neither eliminated moneylenders
nor removed the onerous burden of debt from the backs of the villagers.
In its final form around 1930, the popular credit system comprised three
major institutions: village banks, desa lumbung, and pawnshops. Members of
the village ran the 6,000 desa lumbung and village banks, although the gov-
ernment supervised their activities and charged them for it (Boeke 1919:43;
De Kat Angelino 1931:11,311-23). Landowners who contributed paddy were
permitted to draw from the store during periods of scarcity. Loans had to be
repaid at the rate of one and a half kilos for each kilo borrowed, but the
difference between postharvest and other seasonal prices meant that the effec-
tive interest rate was about 12 percent. In 1929 it was estimated that 100,000
tonnes were lent to more than a million borrowers (Cramer 1929:150). Profits
from the desa lumbung provided the funds for the village banks, which made
small loans of up to fifteen guilders "especially to retail trade and small
industry" (Cramer 1929:151). In 1924, 1.2 million villagers borrowed
fl.50,000,000, with many persons borrowing several times. Nominal interest
 PROTECTING PEASANTS FROM CAPITALISM 385

rates were about 35 percent for short-term loans, but the average interest rate
was only 6.9 percent on the total funds available. Administrative costs, main-
ly payments to the village headman and other officials, totalled about 4
percent (Cramer 1929:152; Fruin 1938:163-5). In the light of earlier com-
ments on Javanese economic competence, it might seem grounds for congrat-
ulation that these institutions using finance obtained with the village were able
to advance credit at relatively low rates, without security and with insignifi-
cant arrears. Government attention, however, was focussed on the pawn-
shops.

PAWNSHOPS

Moneylending had been an important source of state revenue since the begin-
ning of the colonial period. Initially, the right to make small loans in amounts
up to a maximum of a household's annual income was farmed out, primarily
to Chinese. Some restrictions were imposed on the interest rates, but these
proved impossible to police. By 1870 the rural population's high level of
indebtedness caused major concern. Although several attempts were made to
curb what were seen as the malpractises of moneylenders, these were ineffec-
tive, and after 1900 a system of government pawnshops was established with
a monopoly on all secured loans of less than fl. 100 (De Kat Angelino
1931:11,306-9). "Although these government pawnshops were begun as so-
cial service institutions, they have gradually come to be placed on a business
footing" (Fruin 1938:162).
This early example of privatisation produced a very successful and profit-
able business. By 1928 the 400 government pawnshops in Java transacted 49
million pawns for a total of fl. 181,000,000. The vast majority of transactions
were for less than one guilder, some for only ten cents, with about 10 percent
above fl.25. Because the value of the article pawned was usually more than
the loan, the nearly 10 percent of the pawns not redeemed were a significant
contribution to profits—about fl. 16,000,000 each year. In theory the pawner
received any sale proceeds above the loan, but the procedures for recovering
this were cumbersome; and during the 1930s Depression the Dutch exported
fl. 158,000,000 of bullion obtained by melting down unredeemed pledges at
government pawnshops (Fruin 1938:162).
In view of the professed aim of combating usury, it is remarkable that
several aspects of the operation of pawnshops mirrored techniques used by
moneylenders which increased the chance that small borrowers would pay
more than the value of the pawn in interest or lose their security. Unlike the
village banks, only the interest was paid in regular installments. The capital
had to be repaid in a lump sum at the end of the term or the loan renewed. Ten
percent of loans was renewed, but some moneylenders specialised in buying
pawntickets from persons unable to redeem their belongings (Cator 1936:83).
386 JENNIFER ALEXANDER, PAUL ALEXANDER

The pawnshops also followed two different lending practices: one for the 90
percent of small loans under fl.25, the second for loans of more than fl.25.
The articles pawned in the first case were far from luxuries: nearly half were
kains, the major item of male and female clothing, the rest being agricultural
implements (Keers 1928:387-9). Larger loans were secured by gold, or more
commonly silver, jewelry (Keers 1928:390). The two categories of borrowers
also paid very different interest rates. Large borrowers, "for which the service
has no monopoly" (Fruin 1938:162) paid an annual rate of 12 percent, com-
parable with the rates of banks in the towns and more flexible than loans
secured by real property. Small borrowers paid 48 percent and after 1928 paid
72 percent per year (Keers 1928:374, n. 1). High overall profits belied the
claim that heavy transaction costs justified these rates, although it is true that
administrative expenses, especially wages to government officials, were con-
siderably higher than the village banks (De Kat Angelino 1931:11,308).
The government-sponsored system of popular credit in effect institu-
tionalized the two-tier credit market in the rural economy. Village officials and
larger landowners, or their clients, could obtain unsecured loans from village
banks at annual interest rates below 15 percent, as well as secured loans from
pawnshops at similar rates. But the large majority of poorer villagers could
only obtain loans from official sources by pawning their clothing or tools,
paying at least 50 percent in annual interest and running a substantial risk of
losing their possessions. That so many persons took loans under such onerous
conditions indicates a considerable need for cash that could not be met from
incomes or savings. In other contexts, interest rates above 50 percent per
annum would be regarded as usurious in themselves; and there seems no good
reason to alter this judgment when a government instrumentality changes
them.
Far from eliminating usury, the credit reforms did much to make short-term
lending at high interest rates a very rewarding investment for those villagers
with capital. Although contemporary accounts (such as Hasselman 1914:319—
21; Burger 1927:397-401) are replete with references to "village chiefs,
landowners, bloodsuckers and hajis" whose usurious practices impoverished
the peasants, they do not investigate how these unofficial moneylenders ob-
tained their funds. Yet in an economy in which all sectors of the population
needed access to credit, in large part because of taxation demands, it was the
state's monopoly of legal credit that made it possible for village elites to
relend funds borrowed from official sources at three times the rate they paid
and still undercut the government pawnshop. The small borrowers' heavy use
of the pawnshops despite the high interest rates, especially as one pawn in ten
was extended and a similar proportion were never redeemed, might be in-
terpreted less as an indication that the unofficial moneylenders charged even
higher rates than as evidence of a continuing need for cash.
Although there seems little reason to question contemporary reports that
 PROTECTING PEASANTS FROM CAPITALISM 387

occasional borrowers were charged interest of well over 100 percent and that
some persons who fell into debt were deprived of their land, it is doubtful
that this was the common practice in East and Central Java; for it is not
compatible with the continuing pattern of landownership. Besides, even at the
official rates, the returns to the lender were very high in comparison with other
investments, especially when weighed against the social and political costs of
forcing fellow villagers into complete destitution.
The high costs of the limited finance available within the village economy
militated against its use for productive purposes. Very few rural enterprises—
cash-cropping, trading or small manufacturing—could generate sufficient in-
come to repay a loan at 15 much less at 50, percent. Traders and small
manufacturers usually began with finance obtained from their own or their
close relatives' resources and depended for expansion on stock provided on
credit by their suppliers or advances from their buyers (Adam 1916; Alex-
ander and Alexander n.d.). Loans were only sought in emergencies. Not
surprisingly, therefore, most loans were spent for consumption purposes: cere-
monies, medical expenses, and feeding the household during the scarcity
season. As Hefner (1983:679-81) suggests, the extensive systems of ex-
changes associated with rituals may have tended to reduce differences in
wealth—a rather different type of "equalizing, levelling function" than that
Fruin describes (1938:109)—and thus restrain the accumulation of capital by
a few. In as much as ceremonies were financed by loans, however, the process
would be reversed for the credit system transferred wealth from the poor to the
rich.
By restricting the operation of land markets, the colonial state prevented the
alienation of Javanese land and the bifurcation of the village into a small class
of landowners and a large proletariat; but it also facilitated the village elites'
effective control of considerable areas of the most fertile land (Hiisken and
White 1989). Similar processes occurred in the credit markets. Whereas the
state's laudable intention was to protect the Javanese from perceived exploita-
tion, its intervention inhibited the use of scarce village capital to finance
productive enterprises by setting the base rate for consumption loans above
the return that could be obtained from investment in agriculture, trade, or
industry. In both cases it benefited the self-perpetuating elite of village offi-
cials and larger landholders, usually synonymous terms in Central Java.
The low level of Javanese investment in commerce and industry throughout
the colonial period cannot be taken as evidence of a lack of desire for wealth
or of the skills required to attain it. Rather it should be seen as an eco-
nomically rational response to state policies that both restricted capital ac-
cumulation in the village economy and created more rewarding, if less pro-
ductive, avenues for investment. "In fact, what is remarkable is not how little
the Javanese responded to the stimulus of Western enterprise but, in spite of all
the obstacles put in their way, how much" (Geertz 1965:56).
388 JENNIFER ALEXANDER, PAUL ALEXANDER

FINANCING EXPANSION
All anthropological studies of peasant markets, including those of Java, have
stressed the critical importance of low- or no-cost credit in facilitating the flow
of trade (Alexander 1987; Chandler 1984; Dewey 1962; Geertz 1963a). Very
few traders have sufficient trading capital to finance their purchases; most rely
on advances or delays in payment to maintain the flow of trade. Furthermore,
because trading is risky, traders also need to borrow money quickly in
emergencies, to pay their accounts, and to maintain the confidence of their
creditors and suppliers. As enterprises expand, the requirement for both types
of credit become increasingly heavy: Firms in contemporary industrial so-
cieties are linked together by complex webs of credit relationships (William-
son 1985).
Throughout the colonial period, Chinese wholesalers financed their enter-
prises with credit from the European import and export firms. Goods for retail
were usually provided on ninety-day, interest-free payment terms; and the
considerable sums advanced to Chinese engrossers to purchase agricultural
products were only repaid at the end of the season (Cator 1936:68-75; De-
partment of Agriculture 1930:303-5; Vleming 1926:138-63). In an emergen-
cy, bank loans could be obtained at around 10 percent interest; and Chinese
traders provided a significant proportion of those taking upper-level, low-
interest loans at the pawnshops (Keers 1928:396).
By the mid-nineteenth century, when the ethnic hierarchy of economic
functions was firmly established, ethnicity structured both the range of
choices open to Javanese and the costs and benefits of taking one option rather
than another. The low estimation of their financial abilities, iterated and
reiterated by officials, businessmen, and scholars prevented Javanese from
obtaining the terms of trade customary among Europeans or between Euro-
peans and Chinese. Their failure to obtain these terms confined the vast
majority of Javanese traders to small-scale enterprises, thus providing em-
pirical confirmation of the initial evaluation. As we have shown, Javanese
were further constrained by state policies intended, sometimes at least occa-
sionally, to protect them from their perceived economic incompetence. Re-
strictions on what Javanese grew, how they grew it, and what prices they
received limited returns from agriculture; heavy taxation appropriated much of
what remained after basic necessities had been met. Although the interest
rates institutionalised by the state were too high to finance efficient production
or trade, they made consumption loans a lucrative investment for village
elites. Rather ironically, these rural Javanese traders who were consistently
successful at obtaining supplies or trading finance at interest rates well below
those prevailing in the village economy forged trading links with Chinese
wholesalers (Van Gutem 1919:105-50; Vleming 1926:203-14). Although
this did furnish the finance they needed to survive, it did not provide the basis
for competing with their creditors.
 PROTECTING PEASANTS FROM CAPITALISM 389

At various places and at various times groups of Javanese traders broke free
from this poverty trap, providing one indication that structural constraints
rather than a lack of commercial acumen relegated Javanese traders to a
subordinate position in colonial commerce. Examples include the dried-fish
merchants of Semarang and Madura, the gold- and silversmiths of Kota Gede,
Magelang tobacco wholesalers, Solo batik traders, and mat vendors from
Tasikmalaya: All communities singled out in the 1903 economic inquiry and
engaged in similar enterprises in contemporary Java (Hasselman 1914; Alex-
ander 1987; Chandler 1984). In the nineteenth century, many of these traders,
but by no means all, were from communities reputed to be devout, orthodox,
Muslims, while reformist santri were prominent in Sarekat Dagang Islam,
which Javanese entrepreneurs organised in 1911 to challenge Chinese control
of the batik industry (Noer 1973). Within the colonial discourse, this apparent
association between orthodox Islam and larger-scale enterprises provided both
an explanation for the success of these Javanese traders and a concommitant
demonstration of their alienation from the authentic Javanese community;
hence the denigrating epithet, "haji" and "usurer."
However, little evidence indicates that the internalization of new values
congruent with commercial success—the development of an "entreprenurial
spirit"—was the salient difference between these merchants and the much
larger, less successful, group of rural traders. This is not to deny the signifi-
cance of cultural distinctions for the development of particular types of trade
and industry in specific locations: Single industry villages are as prominent in
contemporary Java as they were in the nineteenth century (Alexander
1987:86-110). But it should be emphasised that among pious Muslims
(Geertz 1963a:12-3, 1965:84-91) and those less orthodox (Nakamura
1983:34-40) alike, it was the identification with a distinct community of
origin rather than religious affiliation in a broader sense which expedited the
formation of stable trading partnerships and the circulation of commodities on
credit. Living in discrete sectors of urban settlements, freed from the control
of village elites, not liable for state land-based taxes, and above all dealing in
commodities produced by Javanese for sale to Javanese—the traders from
these communities were much better placed than their rural counterparts to
capture a niche in the market.

CONCLUDING REMARKS
Although comparative analyses of Asian societies have often represented
colonial Java as the epitome of a subsistence rice-farming economy, recent
research has thrown considerable doubt on its conventional portrayal as a
relatively homogeneous society essentially unaffected by its long period of
colonial rule (Bray 1986; Geertz 1963b; cf. Boomgaard 1989b; Hart et al.
1989). It is increasingly clear that social classes grounded in differential
access to resources are basic elements of Javanese social structure, although
the economic and political significance of particular classes as well as the
390 JENNIFER ALEXANDER, PAUL ALEXANDER

mechanisms of class reproduction have differed with time and place (Hiisken
and White 1989). It is equally clear that agrarian commercialisation was a
process that waxed and waned throughout the colonial period and before—it
was not a twentieth-century development. Although involution may no longer
be tenable as a model of Javanese economic history, it continues to structure
discussion in the absence of an equally sophisticated alternative interpreta-
tion. Not least of the difficulties in constructing a new model is that, in
anthropology at least, elegant and parsimonious explanations are more com-
monly precursors of empirical research than products of it.
Recent studies situating changes in the village economy within the political
and economic structures of the colonial state offer one promising interpreta-
tion. Accounts of land tenure, for example, have shown that what are usually
viewed as the communal elements of Javanese land tenure should be in-
terpreted less as evidence of the resilience of traditional practices than as
innovative responses to the state's demands for land and labour taxes and to
state policies promoting joint ownership (Bremen 1983; Boomgaard 1989a).
Analyses of rural labour relationships and of the concentration of the effective
control (but not ownership) of land in a few households have similarly eluci-
dated the significance of the complex web of political and economic ties
between village and state for the creation and the reproduction of rural elites
(Hart 1989; Hiisken 1989). This essay has taken a similar approach but
switches the emphasis from production to exchange: from agriculture to trade.
We argue that there is little empirical evidence for the view that a lack of
commercial acumen or the absence of values conducive to economic growth
confined most Javanese to the lowest levels of commercial activity throughout
the colonial period. This is not to deny the significance of those cultural
practices which clearly were important for the continuing success of Chinese
and particular groups of Javanese entrepreneurs. But accounting for the
achievements of the few does not necessarily explain the subordination of the
many. It is not reasonable simply to assume that the great majority of the
Javanese who engaged in trade and industry (which were more substantial
sectors of the rural economy than is usually recognized) lacked the personal
qualities required for success.
Our account of the reproduction of the ethnically stratified colonial econo-
my gives greater weight to the activities of the state. Although often intended
to protect villagers from market relationships, the state's interventions in the
rural economy, which ranged from the determination of farming techniques
through price and wage controls to a monopoly of credit, restricted capital
accumulation; concentrated what finance was available in the hands of village
elites; and made moneylending a more lucrative investment than commercial
agriculture, small industry or trade. Irrespective of their commercial abilities,
rural Javanese entrepreneurs attempting to expand the scale of their enterprises
above the level of petty trade had little choice but to enter unequal trading
partnerships with Chinese merchants.
 PROTECTING PEASANTS FROM CAPITALISM 39I

In trade, as in agriculture and industry, Javanese were confined to the

lowest levels of the economy, less because they lacked the desire for wealth or
the skills to acquire it, than because the colonial state's attempts to reconstruct
the traditional village (Breman 1983; Kemp 1988) had forced them into mar-
ket relationships while stripping them of the economic autonomy that efficient
participation required. The dualistic models of both popular and scholarly
discourse characterising the Javanese Village—traditional, static, labour-in-
tensive, nonmaterialist, anticapitalist—only as the negation of colonial cap-
italism obscured the direct relationship between the latter's wealth and the
former's poverty. From a comparative Asian perspective, however, the salient
feature of colonial Java's economic history may well be the long period of
effective state intervention in the rural economy and the extent to which the
rationality of villagers' economic decisions was determined by supravillage
agencies.

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