Social Change and Economic Modernization 
in Two Indonesian Towns: 
A Case in Point


by Clifford Geertz



THE TWO TOWNS I SHALL COMPARE ARE MODJOKUTO (A pseudonym), in eastern central Java, and Tabanan, in southwest Bali. Although they are culturally diverse and show certain important differences in social structure, they stem from a common historical tradition, represent approximately the same level of organizational complexity, and are embraced by a single national state and economy. It is this similarity amid difference which gives them their peculiar value for the analysis of Indonesian development. Modjokuto was studied in 1952-54, Tabanan in 1957-58.





Modjokuto, which is located in the great Brantas River valley, is a typical example of the drab, overcrowded, busily commercial little crossroads which are spaced every 15 or 20 miles apart along the main thoroughfares of the Javanese rice plains. It has a population of 24,000, including some 2,000 Chinese, and is the administrative headquarters for a district of some 170 square miles containing nearly 250,000 people. Its market forms the hub of a far-flung and intensively active trade network through which a fabulous variety of goods flows and from which perhaps a majority of the town population in one way or another draws its living; and it has a fairly large trade in the export of cash crops and the import of manufactures, carried on by the Chinese. As a community, it reflects the elaboration of modern nationalist political life, with a great many parties, labor unions, youth groups, women's clubs, and so on; and there are probably more than 2,000 students enrolled in the various schools of the town.


Modjokuto was founded in the latter half of the nineteenth century. By the early decades of this century it became a rapidly expanding boom town on the basis of Dutch activities in large-scale commercial agriculture, most particularly in cane sugar, in the surrounding countryside. Though the main economic returns resulting from this period of rapid growth went to the Dutch, there were important effects among the Javanese population as well. Native commerce of all kinds expanded and an incipient middle class of traders and landholders appeared, as did a proletarian class of landless workers employed on the plantations and in the mills.


In the early thirties, as a result of the world-wide depression, expansion ceased rather suddenly and rapid contraction occurred. Peasants who now had no income from renting their land to the mills turned to cash crops. The market was flooded with hundreds of very small-scale traders eking out a marginal living where a few large merchants had prospered before. And a certain amount of putting-out, cottage, and small industry appeared as an effort to take up the slack. Paradoxically, though income fell, the town experienced an intensification rather than a slowing down of human effort in economic activity. The over-all trend toward the conversion of the bulk of Modjokuto's inhabitants into small-scale businessmen continued unabated through the Japanese occupation period into the postwar era.


In the pre- 1930 boom period the town was composed of four main status groups: the gentry (prijaji), consisting of the government civil servants and some of the higher white collar workers from the mills; the traders (wong dagang), who were dealers in cloth, tobacco, hardware, and so on; the "little people" (wong tjilik), consisting of landless laborers, small peasants, and petty, craftsmen; and the Chinese (wong tjina), who, although they were almost without exception traders, actually stood largely outside the Javanese social system as a foreign, self-contained, and disliked minority.


The gentry represented the cultural and political elite of the town. They were rather less numerous than in most contemporary towns of equal size because Modjokuto was only a district capital while most of the otherwise comparable towns were regency capitals with consequently much larger civil servant contingents.


However, as an effect of the plantation economy, the commercial, trader class was much larger than normal for a town of its size. The leading figures in this group, the more substantial merchants, were strongly pious Moslems migrant from Java's north coast, for centuries the center of Javanese commercial life and Islamic learning. Thrifty, industrious, moralistically pious, they infused the town with the atmosphere of the bazaar, giving it an almost Levantine tone. And despite the greater cultural prestige of the gentry, the traders were, in this period, the most dynamic element in the society.


There were also probably more "little people" than in neighboring towns of comparable size, but this group played a mainly passive role. For their part, the Chinese lived in a separate quarter, devoted themselves almost solely to business, and maintained an uneasy but nevertheless workable relationship with the mass of the population.


After 1930, and particularly during the Japanese occupation and the immediate postwar period, the lines between the three Javanese groups began to blur. Depression, forced labor, guerrilla warfare, and runaway inflation, following one upon the other over a 15-year period, fundamentally disturbed the entire social system. By the time of the transfer of sovereignty from Holland to Indonesia in 1950, the process of dislocation of the traditional social structure had been accelerated to the point where the need for new patterns of organization was very keenly felt, a need only partially satisfied by the proliferation of political parties and other nationalist organizations after independence.


As a result, the most outstanding characteristic of contemporary Modjokuto social life is its provisional, in-between, "neither-fish-norfowl" quality. From a town composed of self-contained subcultural status groups having no more contact with one another than was absolutely necessary, Modjokuto has more and more come to consist of a melange of mass organizations engaged in competitive interaction. 1 Yet not only have the more traditional social loyalties not wholly dissolved and the more modern ones not wholly crystallized; the general economic structure of the town also remains peculiarly poised between the past and the future. The reconstruction of Modjokuto's economic life, like the reconstruction of her social structure generally, is so far but half-begun; it remains tentative, ill-defined, seemingly unable to complete itself. Bustling, fluid, forward-looking, and yet for all that basically undynamic, the town seems stranded between the heritage of yesterday and the possibilities of tomorrow.





Tabanan, located in the southwest quarter of the island of Bali, has a population of 12,000, including about 800 Chinese. According to tradition, the Tabanan royal line was founded in 1350. In 1906, 18 generations of theoretically unbroken succession later, the ruling king of Tabanan, tricked into captivity by the Dutch, cut his throat, and the 500-year reign was interrupted. In the twenties, the closest living relative of the dead king was restored to a cardboard throne as a Dutch gesture toward

Balinese self-government. In 1955 the most recent king in the line abdicated for political reasons. Since then there has been no official king, but the role of the nobility still remains central. Here it has not been the bazaar but the palace which has stamped its character upon the town, not the Islamized trader but the Hinduized aristocrat who has been its distinctive figure.

Compared to Modjokuto, Tabanan has much more of a "just beginning" quality about it in terms of social, political, and economic modernization. One index of this is the striking contrast between the occupational structures of the two towns.


Percentage of Population



Farmer .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



Storekeeper, trader, peddler . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



Skilled worker, craftsman .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



Unskilled worker . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



Civil servant, teacher, clerk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .




Despite the lesser detraditionalization of Tabanan as compared to Modjokuto, the Balinese town is also beginning to change toward a more modern type of structure. Within the last five years a great number of Balinese-owned businesses have appeared, the local civil service bureaucracy has expanded, and political activity has become more intense and involves an increasing proportion of the population. Though still calm, well-ordered, and in a sense self-contained, the town is not static, and a fundamental transformation of its social and economic structure seems to have at least commenced.


The primary moving force in the transformation is the local nobility. Before 1906 the members of about 15 noble houses, all of them patrilineally related to one another and to the royal family at their head, formed the effective ruling group not only in the town but also in the surrounding countryside. The peasantry was tied to them by customary obligations to render corvČe and military service, and looked to them for general leadership in certain supravillage religious matters as well. In addition, though most of the nobles lived in the town, all of them owned land in the villages (which was worked by commoner share tenants), had taxation rights, and exercised judicial powers. Although internally riddled with intrigue, the nobility, which formed an endogamous caste, was unreservedly accepted by the mass of the population as the legitimate bearer of regional political authority.


When the Dutch took over South Bali just after the turn of the century (before this time, the Dutch though nominally sovereign, had permitted the Balinese kings to rule their bailiwicks largely independently), they suppressed the traditional political service tie between lord and peasant and replaced it with a territorialized bureaucratic relationship, transforming the nobles into colonial civil servants. Though they were able to maintain their economic ascendency as landlords and much of their castebased prestige, the nobles lost a great part of their effective political power.


Since the revolution even this modified pattern of aristocratic preeminence has come under attack. Progressive land taxation, laws protecting tenants against displacement and high rents, and the general egalitarian sentiments engendered by nationalist ideology have made landlordism a much less attractive proposition than it was before the war. Further, the opening of administrative posts to talent and to political party patronage has tended to reduce the monopolistic hold of the aristocracy on the civil service.


In such a situation trade and industry, insofar as they can be profitably pursued, become an attractive means to maintain one's threatened status, wealth, and power; so it is perhaps not entirely surprising that it is this group of obsolete princelings which is behind Tabanan's recent economic expansion. The fundamental instability introduced into Tabanan's social system by the Dutch displacement of the indigenous aristocracy from their position at its political center has now begun, 50 years later, to have its effect on the economic structure of the society. The "just starting" quality of the town's modernization is in part misleading, for the sources of the changes now occurring trace back to the reduction of Tabanan in 1906. The suicide of the old king represented in a quite literal sense the death of the old order; and the contemporary movement of his heirs into the yet but partly formed world of trade and industry represents the birth, whether it ultimately proves to be abortive or not, of a new one. In Modjokuto the economic leadership has fallen to the successors of the Islamized commercial elite of the tens and twenties, in Tabanan to the successors of the Hinduized, caste-insulated political elite of the traditional state.





In Modjokuto the problem of economic development presents itself primarily as an organizational one. What the entrepreneurial group of Islamic small businessmen most lacks is not capital, for in terms of the realistic opportunities for innovation which they actually have their resources are not inadequate. Not drive, for they display the typically "Protestant" virtues of industry, frugality, independence, and determination in almost excessive abundance. Certainly not a sufficient market, for the possibilities for significant expansion of both trade and industry stand apparent in Modjokuto on all sides. What they lack is the ability to mobilize their capital and channel their drive in such a way as to exploit the existing market possibilities. They lack the capacity to form efficient economic institutions. They are entrepreneurs without enterprises.


Progress toward more effective patterns of economic activity in Modjokuto takes the form of a movement away from a bazaar type economy --that is, one in which the total flow of commerce is fragmented into a very great number of small and disconnected person-to-person transactions--toward a firm economy--that is, one in which trade and industry take place mainly within the framework of a set of impersonally defined, corporate social institutions which organize a variety of specialized occupations with respect to some particular productive end. It is the creation of firm-like distributive or productive institutions, of small stores, service shops, and factories, which represents the process of development in the present state of Modjokuto's economy. Out of the diffuse, individualistic, confused tumult of the bazaar a few of the more ambitious of the town's established trading class are attempting to organize their activities in a more systematic manner and conduct them on a larger scale. In the means these men use and in the obstacles they face in their endeavor to move out of the world of the bazaar and into the world of the business establishment they display most clearly the characteristic texture of the problem of economic growth as it appears in contemporary Modjokuto.


The Traditional Bazaar Economy


The traditional bazaar (pasar) is at once an economic institution and a way of life, a general mode of commercial activity reaching into all aspects of Modjokuto society and a sociocultural world nearly complete in itself. As agriculture for the peasant, so petty commerce for the trader provides the concrete backdrop against which almost all of his activities are set. It is his environment, as much, from his perspective, a natural phenomenon as a cultural one; and the whole of his life is shaped by it.


To understand the bazaar in this broad sense one needs to look at it from three points of view: as a patterned flow of economic goods and services; as a set of economic mechanisms to sustain and regulate that flow; and as a social and cultural system within which those mechanisms are embedded.


So far as the flow of goods and services is concerned, one of the most salient characteristics of the bazaar is the sort of material with which it deals: unbulky, easily portable, easily storable foodstuffs, textiles, small hardware, and the like whose inventories permit marginal alterations in the scale of trading operations rather than demanding discontinuous major changes in investment levels. A second important characteristic is that, whatever the wares, though volume in any sale is very small, turnover is very high. Goods flow through the bazaar channels at a dizzying rate, not as broad torrents but as hundreds of little trickles, funneled through an enormous number of transactions. And this flow of goods is anything but direct: commodities once injected into the market network tend to move circuitously, passing from trader to trader for a fairly extended period before they come within the reach of a genuine customer. One piece of cloth may have half a dozen or more owners between the time it leaves the Chinese-owned factory in a nearby city and the time it is finally sold to someone who seems likely to use it. And, third, it needs to be emphasized that most of the processing and manufacturing activities which take place in Modjokuto are also included within the bazaar realm. The bazaar is not merely a simple distributive apparatus; it is a productive apparatus as well. The two elements, the movement of goods and their processing, insofar as this is accomplished in Modjokuto, are wholly intertwined.


As for the set of economic mechanisms which sustain and regulate this flow of goods and services, three are of central importance: a sliding price system, a complex balance of carefully managed credit relationships, and an extensive fractionization of risks and, as a corollary, of profit margins.


To a degree, the continual haggling over terms merely reflects the fact that the absence of complex bookkeeping and long-run cost or budgetary accounting make it difficult for either the buyer or the seller to calculate very exactly what, in any particular case, is a reasonable price. The buyer and seller have to explore the matter through a system of offer and counter-offer.


Even more important, the sliding price system tends to create a situation in which the primary competitive stress is between buyer and seller. In a firm economy the fixed-price system, along with standardization, brand names, advertising, and the other economic customs which accompany it, relieves the buyer-seller relation of competitive pressure and places that pressure on the relation between sellers. Lacking fixed prices, in the bazaar the buyer pits his knowledge of the contemporary state of the market, as well as his stubbornness and persistence, against a similar knowledge on the part of the seller and the seller's nerve and stubbornness.


One result of this kind of competition is that it tends to focus all the trader's attention on the individual two-person transaction. The aim is always to get as much out of the deal immediately at hand as possible; and the bazaar trader is perpetually looking for a chance to make a smaller or larger killing, not attempting to build up a stable clientele or a steadily growing business. His aim is not so much to create a market for whatever he has to sell as it is to be present when a chance to sell appears and to make the most of it. The sliding price system provides the flexibility needed in the fluid economic context of the bazaar, but it does so at the cost of encouraging an essentially speculative, carpe diem attitude toward commerce.


The second economic mechanism of importance is a complex and ramified network of credit balances binding larger and smaller traders together. This network is the primary integrative factor in the bazaar, for it creates a hierarchic ranking of traders in which larger traders give credit to smaller ones. These credit balances are only half understood if they are seen only as a means by which capital is made available, for they set up and stabilize more or less persisting commercial relationships. If a buyer owes you too small a balance, it is relatively easy for him to shift his business to some other seller; if he owes you too much, he may default. The margin between these two possibilities is carefully calculated. From the financial point of view, the bazaar consists of a complex of debts carefully managed to keep trade active and yet not disrupt it. Most of everyone's time is consumed in pursuing debtors and dunning them, or in trying to wheedle a little more credit from one's creditors. Such an economy can be seen as a sort of hydraulic system in which the balance of credit pressures at hundreds of larger and smaller couplings determines the speed, direction, and volume of the flow of goods through the system.


Third, despite his aim to maximize his trading activities, the bazaar trader has a tendency to spread himself thin over a very wide range of deals rather than plunge deeply on any one. As a result, even moderately large single deals with only two persons involved are very rare even if the traders involved are large enough to handle such deals alone. Both large and small transactions usually involve a multiplicity of people, each making a small contribution and each taking out a small return, thus fractionating both risks and profits. The bazaar traders are individualists in the sense that they operate independently of any persisting economic organizations, make decisions entirely in terms of their own interests as they conceive them, and relate to each other wholly through separate personto-person agreements; but this does not mean that alliances among traders are not extremely common. The individual trader is the center of a series of rapidly forming and dissolving one-deal, compositely organized trading coalitions. Further, this tendency to spread risks and profits is so much a habitual reaction of bazaar traders that it would persist for a long time even if capital were to become much more readily available.


Lastly, as a sociocultural system the bazaar is characterized by an interstitial position within Javanese society generally; by a highly developed division of labor which, in the absence of firms, guilds, and so on, provides directly the major basis of social-structural organization for the market as a whole; and by a very sharp segregation of specifically economic from diffusely noneconomic social ties.


From an historical point of view, the main reason for the interstitial position of the bazaar within Javanese society is that it is primarily not a local growth but was introduced from outside after Java had already achieved very high levels of social, political, and religious development. It was only in the fourteenth and fifteenth centuries, when Madjapahit, the island's greatest kingdom, climaxed more than a thousand years of political and cultural evolution under the aegis of Hinduism, that a comprehensive commercial network was forged. Islam was introduced, and the bazaar pattern took its characteristic historical form. A quality of intrusiveness, of incongruity and alienness, clings to the bazaar trader even today. The Javanese word for "trader" still also means "foreigner," "wanderer," or "tramp." The status of the traditional merchant in the wider society is thus ambiguous at best, pariah-like at worst: the peasant tends to fear the trader as a cheat, the gentleman to despise him as a money grubber.


On the social-structural side the most notable characteristic of the bazaar pattern is the hyperspecialized division of labor, of which the folk caricature is the trader who sells only left shoes. This overdifferentiation reflects more than an oversupply of labor. The fact that in what is otherwise an extremely fluid system there is a strong tendency for individuals to persist in a single kind of trading rather than to shift easily among various sorts is evidence of the fact that trading is a full-time, technically demanding, completely professionalized occupation, not the part-time job of a farmer come to market.


Relationships between traders are highly specific: commercial ties are carefully insulated from general social ties. Friendship, neighborliness, and even kinship are one thing; trade is another. The impersonal approach to economic activity which has sometimes been held to characterize only advanced economies is present in the Modjokuto bazaar in marked degree. It is the one institutional structure in Javanese society where the formalism and status consciousness so characteristic of the culture generally are relatively weak: bargaining, credit balances, and trade coalitions, largely free of the constraints of diffusely defined cultural norms, all respond quite directly to the narrow concerns of material advantage.


In sum, the bazaar economy is traditional in the sense that its functioning is regulated by fixed customs of trade hallowed by centuries of continuous use, but not in the sense that economic behavior is not well differentiated from other sorts of social behavior. What the bazaar economy lacks is not elbow room but organization, not freedom but form. 2


The Developing Firm-Type Economy


The exact nature of the innovational task facing Modjokuto's would-be entrepreneurial class is conditioned by two main determinants: the general character of the bazaar as an economic institution, and the emerging form of postrevolutionary urban society. From an individualistic, speculative, marvelously intricate trading pattern, the entrepreneurs must move to a systematically yet simply organized firm-based "business" pattern dedicated to long-term economic ends. And from an interstitial, vaguely outcast position within traditional society they must move to an established place as respected shopkeepers and manufacturers, true bourgeois, within the now developing modern type of class structure.


In the light of the theories of Max Weber concerning the role of Protestantism in stimulating the growth of a business community in the West, it is perhaps not surprising that the leaders in the creation of such a community in Modjokuto are for the most part intensely Reformist Moslems, for the intellectual role of Reform in Islam has, at least in some ways, approached that of Protestantism in Christianity. Emphasizing that the systematic and untiring pursuit of worldly ends may be a religiously significant virtue of fundamental importance, Reformism, which swept through the urban trading classes of Java from 1912 to 1920, paved the way for the creation of a genuinely bourgeois ethic. By substituting a progress-oriented self-determinism for classical Islam's ineluctable fatalism it injected into the bazaar context a dynamic which had previously been lacking. Chinese-owned enterprises aside, of the seven well-established stores in Modjokuto, six are run by Reform Moslems; of the two dozen or more small factories of one sort or another, all but three or four are in pious Moslem hands.


Thus, despite marked cultural differences, economic development in Modjokuto is tending to take the classic form we have known in the West. An at least in part religiously motivated, generally disesteemed group of small shopkeepers and petty manufacturers arising out of a traditionalized trading class are attempting to secure an improved status in a changed society through the rational, systematic pursuit of wealth. This sequence of change, occurring several centuries after it occurred in Europe, and taking place in a world which is already partially industrialized, will have a significance and outcome in Java quite different from what it had in Europe, but the general similarities between the two cases are nevertheless quite real.


Leaving aside any detailed descriptions of the enterprises the Javanese pioneers in economic change have in fact created, it is worth noting that they are all either small "Western-type" retail stores or small workplace-type factories, and thus are true firms in the broad sociological sense of well-defined corporate institutions specifically devoted to economic ends. The stores, catering to the modernizing tastes of the new urban classes--school teachers, students, political leaders, civil servants, technicians--are characterized both by a generally better quality of goods, including many that are imported, and a more regularized manner of doing business than is typical of the bazaar. They have fixed (or nearly fixed) prices, a concern with firm reputation and advertising, a steady clientele, and an interest in creating markets rather than merely responding to them. The extreme complications in distributive patterns have been eliminated, and in fact success in such retailing enterprises seems heavily dependent upon the ability of the owner to establish workable relations with stable, reliable distributors (or manufacturers) in one or another of the major cities of the island to complement the growth of sales relationships with the emerging urban public. The factories-cigarette, garment, food processing, furniture--are all small scale (the largest employs about 50 workers), but a number have become at least partly mechanized, follow rigorous work schedules, and produce a cheaper and more reliable product than those of which cottage industry, putting-out arrangements, or individual craftsmen are usually capable. The establishment of these stores and factories is not to be thought of as merely comparable in difficulty with a similar operation by an enterprising American individual. Each involved a set of breaks with tradition which required boldness, judgment, and a certain unconventionality not possible for the traditional bazaar trader. The storekeeper or factory owner is a new type of man. To conceive of the required deviations from traditional purchase, employment, management, and sales practices, and to persuade some of the other parties to the transaction that the new relationships' were appropriate and acceptable, required considerable talents. To establish the stores even more than the factories required a set of new relationships each of which would have been more difficult if the conditions permitting the others had not also existed.


A Rising Middle Class and Its Problems


Modjokuto's fitful and sporadic movements toward economic change are but part of her more general movement, also fitful and sporadic, toward a whole new pattern of social life. The movement from territorially based traditional political allegiances toward ideologically based modern ones in the nationalist parties and associations, the transformation of the stratification system from a collection of discrete, more or less closed status groups to across-the-board, culturally heterogeneous open classes, and the development of corporate economic firms out of a background of hyperindividuated bazaar trading are all of a piece. Each of these changes demands the others as its environment for it to flourish, and together they both produce and are the results of fundamental alterations in cultural beliefs, attitudes, and values. It is in this sense that such often vaguely employed terms as "modernization," "urbanization," "rationalization," and "economic development" are really equivalent in their basic meaning; they all point, if from somewhat different directions, to an integral pattern of social change.


Nevertheless, Modjokuto's pattern of development has its own specific quality, as indices of which four points may be mentioned.


First, Modjokuto's entrepreneurs are almost all traders or traders' sons; their activities both grow out of the bazaar context and are a rebellion against it. The traditional trading culture of Modjokuto is both facilitative and inhibitory of economic reform; it is both the source of the innovators' methods and aspirations and one of the major barriers against the employment of those methods and the realization of those aspirations.


Second, the immediately limiting factor on entrepreneurial activity is not lack of capital, shortages of skilled or disciplined labor, insufficiency of markets, or lack of technical knowledge (though these all are problems), but the task of organizing diverse activities into unified institutions--stores or small factories. It is the ability and originality to organize a range of different economic activities in a systematic manner that most distinguishes a Modjokuto entrepreneur from his noninnovative bazaar-trader fellows--not wealth, not education, not even drive.


Third, the entrepreneurial group is a group, not a random collection of individuals. Innovators are clearly set apart by both their social origins and their religious intensity, and they represent the sort of generally disesteemed, highly serious petty businessmen who have appeared in the early stages of economic revolution in many countries.


And fourth, Modjokuto's economic growth is dependent on an ongoing revolution in urban style of life--explicitly in the emergence of the postrevolution pattern of politicosocial organization, the new bases of social ranking which have appeared along with this pattern, and the expansion of the school system which sustains it. Together, these have caused a critical shift in taste in the urban masses as against their prewar counterparts.


On the other side of the ledger, there are two main barriers to the success of the Javanese entrepreneurial group in Modjokuto. One is the presence of the Chinese. In the race to be the town's modern middle class the Chinese have the advantages of possessing more capital and greater business acumen; they have more experience and are better organized than the Javanese shopkeepers and factory owners. But they are Chinese, and resentment against them, always great, has mounted rapidly since the revolution. The recent regulation forbidding the residence of noncitizen Chinese in towns the size of Modjokuto may have greatly reduced their role. It is difficult to say whether for the better or the worse so far as the economy is concerned.


Secondly, a middle class, to be successful, will have to be able to move into industry, and there may be some question whether the Javanese shopkeepers will be able to do so because of the so-called "lumpiness" problem. Some recent economic theory has emphasized the discontinuities in economic change, the quantum jumps which are often required in moving from traditional to modern production methods. Steel mills, automobile plants, or even capital-intensive sugar refineries do not come in all sizes; nor do they arise gradually by incremental changes from obscure beginnings. Some observers feel that in the context of this requirement there is about Modjokuto's "shopkeeper revolution" a peculiar air of irrelevancy.


There are, however, a number of counterarguments to this view. In the first place, without the growth of some sort of sturdy, indigenous business class the Indonesian government is likely to find the task of inducing rapid economic growth an insuperable one. Such a class provides the skills, values, and motivations without which industrial development is as impossible as it is without natural resources; and no more than iron or coal deposits can such resources be created by fiat. It is one thing to stimulate, channel, and supplement the growth of a modern economy; it is quite another to create such an economy ex nihilo out of an almost wholly traditional culture. Whatever their shortcomings, Modjokuto's shopkeepers and manufacturers are a human resource for the Indonesian government to work with.


Second, the establishment without prior steps of fairly large industrial units, even if it should be a necessary part of the process of economic development, which is not certain, is only a small part. Multiple and unconnected regional expansions, intermittent and self-contained spurts of this industry or that, largely independent, even contradictory, institutional developments--all these too are characteristic of countries in the initial stages of growth. It is necessary neither that everything be done at once nor that maximum integration be maintained at each and every stage of development. And, in any case, in the sort of jammed and disorganized situation Indonesia finds herself in today, no genuine growing point is so small or so peripheral as to be irrelevant. Modjokuto is not Indonesia, but neither is Djakarta.





In Tabanan the nascent entrepreneurial class of displaced aristocrats is concerned not with reorganizing a bazaar economy but with readjusting an agrarian one. They are not trying to give some articulate form to a fluid, individualistic trading pattern but to adapt the intensely collective and long-established institutions of traditional peasant society to novel economic ends. By mobilizing habitual sentiments of loyalty, respect, obligation, and trust they hope to make ancient custom serve modern enterprise.


Such modern enterprise does not yet exist in Tabanan; they must create it. Like their Modjokuto counterparts, they must establish autonomous merchandising and manufacturing firms, institutional forms more or less novel to the society; but the social and cultural building blocks available for the task come not from the bazaar but from the village. Enmeshed, as they have always been, in a complex network of traditional ties both with one another and with the great mass of commoners they once ruled, the town-based aristocracy is attempting to manipulate these ties in such a way as to construct and support modern economic enterprises. Thus an analysis of social and economic organization in the Balinese village is prerequisite to an analysis of this urbanbased pattern of development.


Rural Social Structure and Economic Organization


The general organization of the Balinese village is best seen as a set of overlapping and intersecting corporate associations known as seka. A seka is a more or less enduring social group, formed on the basis of a single criterion of membership and dedicated to some narrowly specified social end. Some seka are permanent, others temporary; in some membership is ascribed, in others more or less voluntary; in all, each member has absolutely equal rights and duties regardless of what his general position in the society may be. Every Balinese belongs to from three to four up to a dozen seka, and the Balinese do virtually everything except make love in seka, for they strongly prefer to act in groups rather than as individuals. This combination of an almost ant-like attack on the performance of important social activities with a tendency to direct any one group to a single end rather than employing the same group for multiple purposes leads to what one might call, paradoxically, a pluralistic collectivism. The crosscutting of social alliances means that almost no one is completely engrossed in any single totally comprehensive institution without alternative loyalties to which he may have recourse against group pressures, and yet no one is ever obliged to operate entirely on his own, independently of some well-defined social aggregation.There are, speaking roughly, five types of seka: temple congregations, residential units, irrigation societies, kinship groups, and voluntary associations.

  1. Temple congregations . Members of each such group are obliged to worship at a given temple on certain holy days, and to maintain it. The first duty involves elaborate ritual offerings of food, and so on; the second, financial support. Both demands are met by collective economic activity more often than by monetary assessments: harvesting jointly and contributing the harvester's tenth share to the temple; working riceland bought in the name of the temple; dance and drama performances for its benefit; and so on.

  2. Residemial units : hamlets of a dozen to a couple of hundred households centered around a communal meeting house. There are monthly gatherings at which policy decisions (taxes, fines, exiling wrongdoers, public works undertakings) are made, and the hamlet can call on members for public services of various sorts. To earn income the hamlet may form a harvesting group, or sponsor a dance society, or buy riceland. There are also hamlet-owned enterprises such as coffee shops, retail stores, and small brick and tile factories. One hamlet even started its own bus company, financed by selling its riceland, and used the profits to build a school and pay the teachers' salaries. Other hamlets form the basis for co-operatives, one particularly successful consumer-producer co-operative being maintained by 16 hamlets in concert. In addition, some hamlets are craft-specialized, concerned with the manufacture of salt, the forging of musical instruments, weaving, pot making, carpentry, tailoring, or some other occupation.

  3. Irrigation societies . Members of these seka are all those whose land is irrigated from a single watercourse. As land holdings tend to be scattered, one man may be a member of several such societies, and the members of any such society come from perhaps 10 to 15 hamlets. The main functions of an irrigation society are management of water resources, coordination of planting, and the performance of agricultural rituals. Within an irrigation society a water seka may undertake to keep dams in repair and canals clean for pay. In rare instances wholly professionalized water seka composed almost entirely of landless villagers belonging to no irrigation society at all are paid to perform these tasks for three or four irrigation societies.

  4. Kinship groups . Descent is patrilineal, residence patrilocal, and semiendogamous corporate kin groups play a very important role in village life in some hamlets, often forming the framework for economic enterprise. Thus in one village four such groups were engaged in the competitive manufacture of gamelan orchestra instruments, primarily a smithing job; in others weaving, harvesting, or other activities may be organized in kinship terms.

  5. Voluntary associations . Membership in such seka is through voluntary affiliation, and they often have purely economic functions. They may plant, weed, harvest, carry sheaves from the fields, make house roofing from grasses and palms, transport goods, perform dances, drama, or music, hawk iced drinks or snacks, make tiles and pottery. Sometimes several tasks are performed by a single, well-established, long-persisting voluntary seka.

In short, seka organization, whether religious, political, irrigation, kinship, or voluntary based, is the heart of Balinese social structure, which can in fact be seen as a set of crosscutting seka of various types loosely adjusted to one another. It is on this type of pluralistic collectivism that the aristocratic entrepreneurs of Tabanan town must base their efforts at innovation, reform, and economic growth.


The Tabanan Aristocracy and the Firm-Type Economy


One of the most persistent, most widespread, and most fallacious scholarly stereotypes of Balinese social organization is that it consists, and has for centuries consisted, of almost wholly independent, closed-in peasant communities--socially insulated, self-absorbed "village republics" enduring passively and patiently beneath an equally self-contained and aloof though more unstable gentry ruling class. In this view, kings, dynasties, whole ruling classes have come and gone, but the peasant, the real, original Balinese, for whom such political upheavals merely signify a change of tax collectors, plods on forever in the unchanging paths of uncounted centuries. Between noble and commoner the relations are conceived to have always been ones of pure hostility and a direct opposition of interest.


This view of gentry-peasantry relationships is wholly misconceived. The Balinese gentry were not "outsiders" but, from the very beginning, an integral part of Balinese society. They were not simply tribute takers; they performed altogether crucial interlocal political, religious, and economic functions upon which the supposedly self-subsistent villagers were dependent for their very existence. In traditional times (that is, prior to 1906) nobles gathered commoners into military seka for wars. They judged interhamlet legal issues and punished various crimes, such as miscaste marriages. They inherited the ricelands of village decedents without heirs, executed the more serious hamlet-passed punishments, supported exiles from the hamlets; and, of course, they had a very large number of retainer families living in the villages themselves. Further, they conducted important ceremonies, such as cremations and temple consecrations, in which the whole population was involved both as mobilized labor and tribute givers and as audience for the great ritual dramas produced.


The members of the gentry were also landlords maintaining villagedwelling sharecroppers, played a certain role in co-ordinating irrigation societies, monopolized foreign trade, and set up local markets. In politics, religion, art, and economics the rulers and the ruled represented, in traditional Bali, not parallel but intersecting, not independent but complementary, social groups. Though the caste barrier between aristocrat and commoner was almost impermeable, the etiquette of deference extraordinarily well developed, and the lines between local and supralocal concerns very sharply drawn, both the Balinese state and the Balinese village became what they became in great part as the result of the close, multifaceted, long-term, and ever-changing interaction they had with one another, a circumstance too obvious to need special comment were it not so often denied.


It is this heritage of undisputed leadership in supralocal affairs which the Tabanan aristocracy is now attempting to turn to their account in building an urban-based nationally oriented firm economy. In contrast to the Modjokuto small businessmen, whose puristic Islamic piety represents a nonconformist pattern within the local culture, Tabanan entrepreneurs are cultural exemplars. They symbolize the quintessence of indigenous culture, demonstrate its furthest reaches of complexity, refinement, and sophistication. And today, when many of the specific structural arrangements which supported this role of cultural representative have been either dissolved or drastically reorganized, the sentiments which underlay them persist. Thus in their bid to create a modern economy the aristocrats have at their disposal a quantity of cultural capital in the form of traditionalized social loyalties and expectations which Modjokuto's self-made shopkeepers entirely lack. "We have lost control of the government," these disestablished nobles say, "so we'll capture the economy."


Perhaps the most striking case example of the manner in which modern firm-building in Tabanan reflects and depends upon traditional patterns of organization and loyalty is the development of what is today the town's largest and most important business concern, Gadarata (an abbreviation meaning "The People's Trade Association of Tabanan"). Founded in 1945 by four local noblemen plus a long-resident Javanese market trader, who evidently served as a technical advisor, the association amassed its capital of 100,000 rupiah by levying a "contribution" of five rupiah on every household head in the region, each contributor being awarded a voting share in the projected enterprise. Approximately 10,000 villagers bought a share apiece, and the remaining 50,000 rupiah were raised by selling multiple shares to richer individuals, most of them town aristocrats. The plan was to funnel all export trade of the region through this one well-organized, incorporated, upper-caste-managed concern as agent, as well as to launch certain other associated business enterprises. A large twostory warehouse, store, and office building, the town's most imposing edifice, was erected at the main crossroads near the market.


In 1950, after the transfer of sovereignty, the governing board, which by now had had two more strategic members of the ruling family added to it (the Javanese trader had withdrawn), reorganized the firm by changing the value of the shares from five to 100 rupiah each, thereby reducing the total number of shares from about 20,000 to about 1,000 at a single blow. The individual household head shareholders in the villages were thus forced into either selling out their interests to larger holders or banding together into "Gadarataseka" of 20 people each and selecting a representative to cast their vote at the annual meeting. Altogether, about 350 such seka were formed, covering about 7,000 of the original 10,000 villagers, while the rest of the small owners sold out to the leadership group, which thus consolidated its hold on the firm through this process. By the end of 1957 the enterprise had become worth something more than a half million rupiah and dominated much of the export trade of the area. By almost any measure, Gadarata, which now operates a retail store selling a wide variety of imported goods as well, has been a most successful undertaking.


Over-all management and policy making are by now completely in the hands of seven salaried directors, five of whom, including the chairman and vice-chairman, are members of the ruling family. The process of bringing the firm progressively under the sole control of the "palace" group is now almost completed, a fact recognized and for the most part accepted by aristocrats and villagers alike. Despite some grumbling, most of the peasants do not expect to have any particular say in an institution focused around the nobility simply because they have provided capital any more than they expected to influence state policy simply because they contributed work and material to the lord's ceremonies in the old days. The managerial revolution has come quickly to Tabanan mainly because it involves no revolution.


A number of other stores and industries, some of them differently organized, of course, but also all noble led and dominated, could be cited as further examples--another trading concern, a tire recapping factory, several hotels, a weaving factory, a bus line, a bookstore, a garmentmaking shop, an ice factory. Thus, though there are also some smaller stores run by commoners, at the heart of Tabanan's postrevolutionary economic expansion has been a very small group of displaced traditional rulers. Tabanan's erstwhile ruling family--about 6 per cent of its population--overwhelmingly dominates the nascent modern economy of the town.


Upper Caste Revolution and the Limits of Tradition


The essential nature of Tabanan's "upper caste revolution" can be summarized, and its longer-run prospects tentatively assessed, by making a fourfold comparison of similarities and differences between development in Tabanan and in Modjokuto.


1. Business Organization

The bringing together of hundreds of villagers (as stockholders) into a single firm is not a realistic possibility to a Modjokuto entrepreneur. Not only does he entirely lack the traditional prestige to mobilize people on such a scale, but 300 years of intensive, Western-stimulated social change in Java have eroded the foundations for large-scale collective effort in the villages. And, too, Modjokuto's entrepreneurs emerge directly from a bazaar economy in which individualistic, every-man-for-himself activity is carried almost to an extreme, in constrast to the lineage-like organization of the generally solidary and corporate ruling family from which Tabanan's new men come.


As a result, almost all modern enterprises in Modjokuto are individual or immediate family concerns. Capital must be raised either through personal savings or government loans; selling shares to villagers or largescale borrowing on the open market is virtually absent. Even partnerships, so easily formed in Tabanan, where strong noneconomic ties of kinship, co-residence, or status deference usually insure their persistence, are almost nonexistent in Modjokuto. When it comes to the organizational problem, the Tabananers have a clear advantage.


Yet there is another side to the coin, which is reflected in the constant complaint of the directors of the popularly based large firms that they are unwieldy and inefficient. In particular, as national political affairs come to have more importance, there is a tendency for the operation of these supposedly specifically economic institutions to reflect them, causing internal disruption, something the individualistic Modjokuto entrepreneur completely avoids. Cast in quasi-political terms to begin with, Tabanan's firms can easily become political in modern terms, a condition which, at least in a democratic, multiparty state, is extremely disfunctional to further growth or even continued solvency.


Second, and perhaps even more important, the popularly based concern has a tendency to behave very uneconomically because of the "social welfare" pressures of its members, who, for the most part, are not basically growth minded. Not only is there great pressure to divide profits rather than reinvest them but there is also a tendency to employ overly large staffs in an attempt by the directorate to appease the rank and file.


Both Tabanan's group-centered approach to change and Modjokuto's individual-centered approach have defects and virtues. Tabanan's method smooths the way to the formation of larger-scale concerns; but traditional values supporting collective benefits as against individual enrichment induce a strong resistance to the rationalization of these concerns once they are formed. Modjokuto's method avoids this problem; but, although bold and rugged, not to say ruthless, individualism has advantages in stimulating creativity and destroying traditional constraints on enterprise, it also imposes severe limitations on the capacity to grow by limiting the effective range of collective organization. Modjokuto firms seem to grow so large and then no larger, because the next step means widening the social base of the enterprise beyond the immediate family connections to which, given that lack of trust which is the obverse of individualism, they are limited. Where Tabanan's approach tends to expand firms beyond their most efficient organizational base, Modjokuto's tends to confine them to too narrow a one.


2. Religious and Ideological Dynamics

In Modjokuto the entrepreneur mainly follows a discordant, rationalized, and self-consciously critical Islamic modernism--which sets him apart from his much less devout and zealous fellows and which in its very nature makes economic achievement ethically significant. His countertraditional ideological orientation puts him in the position of being not only an economic but also a religious and ethical innovator. Tabanan's economic leaders, on the other hand, are committed to religious beliefs and values which, far from clashing with those of the general society, are the most elaborate, developed, and systematic expression of the culture's traditionally institutionalized ethos.


Thus both marked deviation from the main stream of traditional religious thought and complete conformity to it seem able to provide an ideological context suitable to growth. What is important as a stimulus to economic enterprise is not whether a creed is revisionist or restorationist, but whether the state of affairs the creed celebrates differs significantly from the entrepreneurs' perception of the actual situation. In both Java and Bali there yawns a gap between the vision of the way things ought to be and the way they seem to be. In Modjokuto the pious shopkeepers see themselves as the vanguard of a truly Islamic Indonesia which must be created out of a community whose religion is now heterodox and outmoded. In Tabanan the nobility sees itself as wrongfully displaced from its true position as cultural cynosure, and as fighting to maintain the traditional patterns of deference, respect, and reverence upon which it feels the intrinsic value of Balinese culture rests.


3. Political- versus Economic-Based Development

The Javanese entrepreneurs want mainly to get rich, the Balinese to get (or remain) powerful. Tabanan's entrepreneurs, in contrast to Modjokuto's, have come from a class long used to wielding power; they have not lost the sense of confidence that comes with the effective exercise of political power on a broad scale. The comparable class in Modjokuto--the civil servant prijaji --has over 150 years been reduced to a group of nonpolicy-making petty bureaucrats, and has long since lost its original sense of playing a decisive role in its society. Thus in Tabanan the taste of the individual entrepreneur for economic innovation grows out of an aristocratic, even arrogant sense of being a man born to lead, while in Modjokuto it grows out of his sense of his superior shrewdness, toughness, flexibility, and ambition as contrasted to the passive, acceptant traditionalism of the mass of the population.


Again, each movement has its strength and weakness. Modjokuto's is apparently more apt to lead to democratic liberalism and the protection of individual political freedom; but it may be unable to cope with the need for large-scale enterprises which now seems to be faced by latecomer backward nations. The Tabanan entrepreneurs can set up larger enterprises by virtue of their ability to corral larger amounts of capital and also by virtue of being able to get the protection of monopoly situations or other special privileges from the government. But their developmental pattern skates fairly close to totalitarianism, and the development of this politically based sort of pattern into a Japanese-type industrial feudalism, a semitraditional, semimodern capitalism in which a small elite gains most of the advantages of modernization, is a very possible even if not necessary outcome. A traditional elite can make a more integral attack on the multiple problems of economic modernization than can a foot-loose bourgeoisie, which must go at its task haphazardly and piecemeal, but there is the danger of that intense domination of political concerns over all other concerns which is the hallmark of modernized totalitarian states.


4. Urbanizations.

As noted, Modjokuto is much more urbanized than Tabanan. The Balinese town, several centuries older, is only now losing the outlines of a traditional court center. Urbanization, which the growth of the plantations stimulated in Modjokuto, brings a mingling of individuals from all walks of life, greater personal anonymity (and hence greater freedom from traditional constraints and prejudices), a more variegated life. The brisk disorder of Modjokuto, compared to the sedate deliberateness of Tabanan, is certainly conducive to change, flexibility, and aggressiveness, if only because it is impossible for everyone to stand still very long and continue to survive.Yet urbanization, particularly when it occurs within a wider society which is economically stagnant, also breeds malaise, discouragement, and aimlessness; and so, though urbanization may be a necessary condition for economic take-off, it is hardly a sufficient one. Tabanan lacks a large commercial class, a developed proletariat, a strong office clerk and schoolteacher intelligentsia comparable to that of Modjokuto, but on the other hand it may be fortunate in starting the whole process of modernization at a time when it may prove possible to avoid the sort of change without progress characteristic of the Javanese town since the middle thirties. Everything depends upon what happens in Indonesia as a whole. If over the next decade or so economic opportunities expand significantly, Tabanan's lack of a history of boom, bust, and stagnation may prove advantageous; half an urbanization may prove to have been worse than none.





Indonesia as a nation is not the village or the small town writ large. One cannot generalize in any direct way from Modjokuto or Tabanan to the country as a whole. What then can be learned from a study of the two towns? The following six propositions are intended as tentative summary hypotheses derived from the above comparative analysis, designed only to point out some possible leads for future research:

  1. Innovative economic leadership (entrepreneurship) occurs in a fairly defined and homogeneous group.
    In both towns the entrepreneurs come neither from the general population in a more or less random way nor from several distinct social groups at once; in both the come almost entirely from a single quite clearly demarcated, set-apart group, the pious Islamic traders in Modjokuto, the ruling family in Tabanan.

  2. This innovative group has crystallized out of a larger traditional group which has a very long history of extravillage status and interlocal orientation.
    In neither area are the peasants leaders in economic change; both leadership groups are primarily interlocal in their outlook, some of their most important ties being with groups and individuals in areas other than their own. In Modjokuto this horizontal orientation originated out of contact with the all-Indonesia trading network which grew out of the internationally based bazaar culture of the fifteenth and sixteenth centuries. In Tabanan horizontality was an aspect of the sophisticated "great tradition" court culture associated with the indigenous Indonesian state structure, which was carried forward through the whole of the colonial period as well.

  3. The larger group out of which the innovating group is emerging is one which is at present experiencing fairly radical change in its relationships with the wider society of which it is a part.
    In prewar Modjokuto the town's traders were a self-contained, setapart, rather despised group; today they are becoming integrated into a broad and generalized middle class within an uncertainly urbanizing structure. In prewar Tabanan the aristocrats were the unquestioned political and cultural elite of the region; today their position is increasingly threatened by the growth of a universalistic civil bureaucracy and the populist sentiments of nationalist ideology. It is thus neither upward nor downward class mobility or a blockage of these which is necessarily crucial but any kind of decisive change in intergroup relations which, by throwing accepted status demarcations into disarray, stimulates active efforts to anchor social positions to new moorings.

  4. Ideologically the innovative group conceives of itself as the main vehicle of religious and moral excellence within a generally wayward, unenlightened, or heedless community.
    Islamic Reform, a sort of Moslem puritanism, the doctrine of the overwhelming majority of the entrepreneurs in Modjokuto, aims at a radical purification of the prevailing religious and moral syncretism of heterodox elements and is intensely critical of a wide range of established usages of ethics and worship. The ideology of Tabanan's new men, on the other hand, is catholic and restorationist, but they have the same sense of representing the proper against the prevailing. They see abandonment of customary patterns of deference, progressive usurption of political power by the hereditarily unequipped, and growing failure of the average man to recognize and appreciate the indispensable social and cultural functions performed by those of high status as symptoms of a general cultural decline. Thus both innovative groups tend to see the general cultural level of the whole wider community as almost entirely dependent upon the success of themselves and their activities.

  5. The major innovational problems the entrepreneurs face are organizational rather than technical.
    The specific technical problems so far as development is concerned in the two towns now have mostly been solved; they need only be adopted to local needs. The Indonesian entrepreneur does not have to invent a sugar press, an ice machine, or a tire recapper; he has only to purchase them. It seems likely, therefore, that the organizer will play the central role in stimulating Indonesian take-off rather than the engineer-inventor as in the English and American experience.

  6. The function of the entrepreneur in such transitional but pretakeoff societies is mainly to adapt customary, established means to novel ends.
    It is their uncommon ability to operate at once in the traditional world of established custom and in the modern world of systematic economic rationality which is the chief resource of the economic innovators of both Modjokuto and Tabanan. In Modjokuto the small shopkeepers and manufacturers capitalize on the knowledge and skills developed in the bazaar economy and attempt to apply them toward the creation of economic institutions better organized and more efficient than the bazaar economy has been able to produce. In Tabanan the businessmen nobles redirect the political loyalties of agrarian society into the support of economic rationalization. Both groups draw much of their strength from this ability to operate on both sides of the line between traditional and modern in economic matters and so form a bridge between the two. As a result, they are able to create transitional economic institutions within which many of the values, beliefs, structure, and skills of a customary trading or peasant culture are integrated with features characteristic of developed and specialized-enterprise (firm) economies.

The degree to which these propositions, or others which might be derived from our two-town comparison, will prove of value to the analysis of development generally remains to be seen. But, in more general terms, perhaps this sort of community-study approach to economic growth will help to turn planning in underdeveloped countries away from the rigid, a priori, hypertheoretical, almost dogmatic approach which has often been characteristic of it toward a more pragmatic, concrete, and realistic approach--one which uses general principles, economic or sociological, not as axioms from which policies are to be logically deduced but as guides to the interpretation of particular cases upon which policies are to be based.





1  These organizations, though of great political importance, cannot be adequately described in this summary. They include political parties, labor unions, youth groups, peasant organizations, women's clubs, and so on.

2  For a full description and analysis of the Modjokuto market, see Alice G. Dewey , Peasant Marketing in Java ( New York: Free Press of Glencoe, Inc., 1962).



Social change and economic modernization in two Indonesian towns: a case in point, in: Hagen, Everett Einar (ed.): On the Theory of Social Change: How Economic Growth Begins, Homewood/Il./USA 1962: The Dorsey Press, pp. 385-407




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