Socio‑Economic Change and Rural Entrepreneurs in Pre‑Crisis East Java, Indonesia: Case Study of a Madurese Upland Community

Abstract

This paper examines the roles and economic strategies of rural entrepreneurs in a Madurese community in East Java, Indonesia. The incorporation of rural communities into the regional economy through commercial sugarcane production provided opportunities for entrepreneurs to expand their enterprises. They diversified their economic activities through their investment strategies and social networking. They dominated the local economy through their attempts to monopolize the resources provided by state agencies and brokers at the supra-local level. The entrepreneurs served as catalysts in the process of economic diversification, which sees a shift from subsistence agriculture to cash cropping. That had caused labour redundancy. The monopolization of job brokerage by village entrepreneurs, mediating between increasingly redundant manpower and external (international) labour markets, provided a new avenue for economic diversification and capital accumulation. The 1970s economic boom in Indonesia, fuelled by state oil income, was accompanied by agricultural modernization and infrastructure development in the rural areas of Java. Earlier studies have documented that relatively well-off farming families, members of which held office as local village administrators, reaped disproportionately large shares of state benefits in the form of credits, subsidies, and agricultural inputs (Husken 1979, 1989, 1996; Husken and White 1989; Hart 1986; Maurer 1996, p. 114). Former president Soeharto's New Order government (1965-98) sought the political support of the rural elite and