May 3, 2006

Forest Property Right in Indonesia: Discussion and Conclusion

It has been argue above that both approaches recognized state property right over forest resources but have different point of view. CBA view state property right enforces the process of social differentiation that leads to depeasantinization. As the result, CBA would see the workers as a social class, encounter the worst impact of capitalism in forestry sector compared to concession holders, capitalist class, who get much surplus. In the other hand, NIE has different view that property right is seen as a way to reduce transaction costs. State property right should be chosen because state can be external guarantor in order transfer and exchange is possible (Stein, 1994: 1834). NIE emphasizes the objective of property right is to improve market allocation. In terms of actor involved in forest management, CBA sees that only private sector involved in forest management because state acts to support capitalist interest. on the contrary, NIE would argue that no matter of parties involved in forest management whether big company or small company even community as long as such arrangement would reduce transaction cost. It also would have implication to whom property right be given. Since forest management consists of large capital, it explains in the eye of NIE that only big companies involved. The distinct feature of class-based analysis is an approach based on class as a result of different access to means of production. CBA also clarifies the process of class differentiation however in the case of explaining rural change in forestry sector, it comes slightly different from what CBA argued. In the context of forestry sector, indigenous people never move toward rich farmers nor capitalist agriculture. They would even become landlessness. The transformation of rich peasant to capitalist agriculture, as Lenin said, does not happened. In terms of differentiation based on economic wealth, it happened when some inhabitants works in companies and able to improve their well-being compared to medium or poor peasants. One strength of NIE that it explains the significance of non-market mechanism by acknowledging transaction costs (anon, 2005). Therefore transaction cost becomes one of important feature that should be reduced in order to improve imperfect market. Compared to the other approach from which NIE derived, neo-classical approach, NIE offers more realistic, historical and social in its approach. The central objective of NIE is to reduce transaction costs therefore in the case of property right, it opens opportunity to the other property right regimes such as community-based property right. Moreover, NIE does not have any opposition whether community, private or state property right as long as transaction costs is reduced then it would be acceptable. In some cases that most players are locally based and transaction cost can be reduced so that applying state property right would somewhat increase transaction cost instead of reduced it. To the question of resource degradation, NIE left confusing explanation that as institution develops it assumed transaction costs would be minimized. In the other hand, moral hazard, derived from asymmetric information, sharply have impact to forest degradation. In other words to say that in the reality of forest management, although property right has been set up moral hazard still also happened in parallel. Thus, institution failed to explain how to overcomes this problem. In that sense, weak state might be explanation why environmental degradation happened in the settled institution (Bromley, 1997). CBA obviously is not a perfect approach. The approach has been developed in the context of agrarian society however in the contemporary world differentiation based on agrarian criteria is not really useful. Other basis for differentiation like demographic (anon 2005) and economic wealth might relevant to consider in the context of some wage labors are able to improve their livelihood. Capitalist class nowadays doesn’t only constitute in farmers society but also industrious capitalist who own financial capital. Apart from class approach, it doesn’t consider gender relation, which to some extent produce similar inequality to means of production (anon, 2005).
To conclude the discussion above and answer central question in which approach is the most suitable to explain agrarian change in forestry sectors in Indonesia, it is the class-based approach which clarify some points related to the process of rural change. The approach perceived the underlying problems in inequality of access to means of production therefore the process of differentiation become inevitable. As the result, indigenous people forced out from their land and often conflicts took place struggling to get their access back over the land. Some of them might have permanent lost their access to land becoming landlessness. For peasants, the only choice is dissolving into wage laborer. In the context of state property right in forest management in Indonesia, class-based approach demonstrates that the notion of conflicts is persistence over time during the beginning of commercial forest management[5]. Indigenous people become resistance to capitalist pressure because they are the one who get the worst impact of forest exploitation in terms of abandoning their existence as well as their customary right. The approach also explain environmental degradation resulted from expropriated rent by concessionaires. However the approach has weaknesses that is, it doesn’t consider gender relation in which produce similar inequality and theory focuses in farming society but nowadays capitalist class has been developed covering non-landed capitalist such as financial capitalists and knowledge capitalists.

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end notes
[2] Peluso (1995) in John McCharty (2000a) The Changing Regime: Forest Property and Reformasi in Indonesia, in Martin Doornbos, Ashwani Saith, and Ben White (eds.)(2000). Forest: Nature, People, Power, Blackwell Publishers Ltd, Oxford, UK, p. 91
[3] See
[4] Arimbi HP and Emmy Hafild,
[5] there has been many scholar wrote about conflict in forest in Indonesia, just to name some examples: Peluso (1992), Peluso and Harwell (2001), Magin (2001), McCarthy (2000)

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