MEANING REVITALIZATION ON ECONOMIC DEVELOPMENT

HUMAN DIMENSION AS AN ALTERNATIVE FOR MEANING REVITALIZATION ON ECONOMIC DEVELOPMENT: CHALLENGE FOR INFORMAL SECTOR

Ign. Heri Satrya Wangsa
e-mail: ignheri(at)yahoo.com / ignherisw(at)gmail.com

ABSTRACT

Success in economic development has been so far quantitatively viewed by numbers, on the contrary, regardless human dimension. It is necessary to find the integrated meaning of economic development which focus on human dimension. In addition, that human-based orientation has been an effort to revitalize mis-interpretation of today’s meaning on economic development which is specifically defined within capitalism frame as passive participation (human as a tools or object), capital accumulation (capital-oriented), and creating new inefficient bureaucratic lines. The human-oriented economic development has lead to human as the primary actor. Therefore, the revitalization meaning of economic development should be characterized by active participation of concerns owned by all actors in economic development, drive to the creation of human capital accumulation, and empower bureaucratic accessability. Discussion for informal sector is very relevant as this sector has highly relevant to employment absorption (Wirahadikusumah in Alisjahbana, 2003). Revitalization in economic development meaning within the context of informal sector implies the modified meaning of economic development in informal sector which is more integrated and human-based. This meaning of revitalization should be human-oriented and have the same perception for development strategy which facilitate active participation as the essence of human, drive human capital accumulation to get competitive values, and empower bureaucratic accessability to have bureaucratic adaptability. Participation can be medium of learning to find the essence of human which could be valuable asset to free from exploitation as the consequences of capitalism. Human dimension in economic development within the context of informal sector could be an alternative approach to strengthen and intensify the role of informal sector.

Keywords: economic development, informal sector, human dimension

BACKGROUND

Economic development

Attainment indicators for economic development could be well understood from various perspective. In capitalism perspective development means capital accumulation through economic growth strategy using foreign investment and industrialization. The foreign investment is inspired by success story of Marshall Plan in supporting development in West Europe and Japan. While the industrialization focused on modern sector and capital-based orientation experienced by the United Kingdom as the first industrial country (Kuncoro, 2003:8). Whereas, the perspective of economic development focusing on human dimension could be categorized into 2 (two) namely, human as instrument and human as the target.

The idea of human as instrument in economic development has brought the meaning of development as an effort to increase human capacity. However, the capacity has been oriented to the formation of human as resources to increase production value and productivity. The such opinion could be called as production centered development as stated by Tjokrowinoto in Kuncoro (2000:168). The main point on production value and productivity has reduced human as medium or instrument to maximize satisfaction and profit. (Kuncoro, 2000:168). This idea has swept away and minimalized the existence of human within the frame of passive object of the development

The idea of human as target in economic development could hopefully place human at his own dignity as the main actor or subject in development. Human is the owner of development. Therefore, development is a matter of medium or instrument to attain wealfare for human.

Informal sector

Many opinions including empiral proofs state the contribution of informal sector in decreasing unemployment rate as that sector relatively has high ability to absorb workforce. In many developing countries, informal sector has contributed to overcome unemployment problem (Gilbert & Gugler in Setyawan, 2007).

Tokman (2007) stated the notion of the informal sector was brought forward in a 1972 ILO report on Kenya (ILO, 1972), following a 1971 paper (Hart, 1973). They highlighted that the problem of employment in less-developed countries is not one of unemployment but rather of employed workers who do not earn enough money to make a living. They are ‘working poor’. This conceptual interpretation was based on their opposition to formality and their lack of access to the market and productive resources.

The most interesting aspect to learn from informal sector as viewed by Gilber & Gugler in Setyawan (2007) and Tokman (2007) is that contribution this sector to overcome unemployment problem eventhough the real meaning of unemployment is slightly change to “working poor” caused by inability to access to the market and productive resources.

In addition, informal sector is always marginalized, economically and socially perceived as “lower class”, and even “sentenced to death” for its role in development. This means there is a sharp contradiction between positive contribution of informal sector which has been confirmed as an effective way in supporting economic potentials, in other side the role of informal sector has not been well placed objectively.

Eko Budihardjo and Sudanti Hardjohubojo in Alisjahbana (2003:148) stated several findings related to informal sector as follows:
1) There is a close relation between economic activity in informal sector and the existence of slums area with or without legal support.
2) The economic activity in informal sector (mainly PKL) is not applied as the temporary “stepping stone” to “jump” to the next phase which is considered as better and safe place for career. This sector is well perceived as the best choice to improve welfare.
3) From the education aspect, those who are in informal sector have various educational background such as university student and even some of them hold bachelor degree.
4) The sustainability of informal sector tend to the existence of formal sector.
5) Most of them who are in informal sector do not have prestige for their “profession” and are reluctant to hand over to their predecessors.
6) Profit taken from their business is not re-invested to increase or make business expansion, but focusing more on their children education, fixing their houses, and buying some consumer goods. Therefore, the quality of their welfare is considered as “poor” and unfeasible (Wiebe in Setyawan, 2007).
7) The business characteristic is consumer-oriented, flexibility in a matter of time and place.

From the above findings the writer makes the following interpretations:
Informal sector seems to have character as “unexpected sector”, socially perceived as “lower class” (see no. 1 and 5). The resistance toward changes of external environment has not been totally positioned and rationalized as an opportunity to improve economic welfare as there is no ability to strengthen (and allocate) their own assets which have no economic value (see no. 2). The various education background could become facts that the competitive values have not been owned yet. Education bacground is only a matter of formality that could not be used to support, and allocate the existing economic value assets (see no. 3). Informal sector has complementary relationship with formal sector. Within economic perspective there is a close relation between the two sectors as assumed by dualism in economic activity (Alisjahbana, 2003:82). The complementary relationship indicates that it is unnecessary to categorize social class as it always places formal sector at “higher class” and informal sector at “lower class” (see no. 4). There is no opportunity to make saving as the sector is considered as less profitable. Therefore, the profit can not be used to increase investment to make business development and expansion as well. This has become a dilema that in one side it is caused by the pressure of capitalism facts which are favorable for formal sector, in other side there has been no competitive values which could make their business survive (see no. 6). Business flexibility which means time and place flexibility can make this sector getting worse unless it can develop and manage competitive values that make this sector place in “equal position” with formal sector (see no. 7).

PROBLEM FORMULATION

How could we rationalize the concept of human dimension as an alternative for meaning revitalization in economic development?

THEORETICAL REVIEW

Facts of Capitalism: Commodities and Money

Medema, et al (2003) defined a commodity as an object outside us, a thing that by its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy; makes no difference.

Every useful thing may be looked at from the two points of view of quality and quantity. It is an assemblage of many properties, and may therefore be of use in various ways. To discover the various uses of things is the work of history. So also is the establisment of socially recognized standards of measure for the quantities of these useful objects. The diversity of these measures has its origin partly in the diverse nature of the objects to be measured, partly in convention.
The utility of a thing makes it a use-value. But this utility is not a thing of air. Being limited by the physical properties of the commodity; it has no existence apart from that commodity. A commodity; such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use-value, something useful. The use-values of commodities furnish the material for a special study, that of the commercial knowledge of commodities. Use-values become a reality only by use of consumption: they also constitute the substance of all wealth, whatever may be the social form of that wealth.

If we abstract from the material substance of the circulation of commodities, that is, from the exchange of the various use-values, and consider only the economic forms produced by this process of circulation, we find its final result to be money: this final product of the circulation of commodities is the first form in which capital appears. The first distinction we notice between money that is money only, and money that is capital, is nothing more than a difference in their form of circulation. The simplest form of the circulation of commodities is C-M-C, the transformation of commodities into money, and the change of the money back again into commodities; or selling in order to buy. But alongside of this form we find another specifically different form: M-C-M, the transformation of money into commodities, and the change of commodities back again into money; or buying in order to sell. Money that circulates in the latter manner is thereby transformed into, becomes capital, and is already potentially capital.

Facts of Capitalism: Human as Labour

The capitalist buys labour-power in order to use it: and labour-power in use is labour itself. The purchaser of labour-power consumes it by setting the seller of it to work. By working, the latter becomes actually, what before he only was potentially, labour-power in action, a labourer. In order that his labour may re-appear in a commodity, he must, before all things, expend it on something useful, on something capable of satisfying a want of some sort. Hence, what the capitalist sets the labourer to produce, is a particular use-value, a specific article. The fact that the production of use-values, or goods, is carried on under the control of capitalist and on his behalf, does not alter the general character of that production. We shall, therefore, in the first place, have to consider the labour-process independently for the particular form it assumes under given social conditions. (Medema, et al. 2003:385-386)

Labour is, in the first place, a process in which both man and Nature participate, and in which man of his own accord starts, regulates, and controls the material re-actions between himself and Nature. He opposes himself to Nature as one of her owns forces, setting in motion arms and legs, head and hands, the natural forces of his body, in order to appropriate Nature’s productions in a form adapted to his own wants. By thus acting on the external world and changing it, he at the same time changes his own nature. He develops his slumbering powers and compels them to act in obedience to his sway.

At the end of every labour-process, we get result that already existed in the imagination of the labourer at its commencement. He not only effects a change of form in the material on which he works, but he also realises a purpose of his own that gives the law to his modus operandi, and to which he must subordinate his will.

The elementary factors of the labour-process are (1) the personal activity of man, that is, work itself, (2) the subject of that work, and (3) its instruments.

An instrument of labour is a thing, or a complex of things, which the labourer interposes between himself and the subject of his labour, and which serves as the conductor of his activity. He makes use of the mechanical, physical, and chemical properties of some substances in order to make other substances subservient to his aims.

In the labour-process, therefore, man’s activity, with the help of the instruments of labour, effects an alteration, designed from the commencement, in the material worked upon. The process disappears in the product, the latter is a use-value. Nature’s material adapted by a change of form to the wants of man. Labour has incorporated itself with its subject: the former is materialised, the latter transformed. (Medema, et al. 2003:387)

Psychological Perspective

Maryadi in Skinner (1953), an expert of behavioral approach, said that human behavior constitutes from learning process toward social environment group where he lives as one of its constituent. Generally, the forming in behavior has principles of reinforcement. Behaviors are formed and maintained as they are reinforced by environment and the socially unaccepted behavior will be gradually disappeared.

The psychological approach is applied for the reason that meaning of development can not be separated from the role of human. Informal sector could be viewed as instrument for human to attain economic welfare through motivational hierarchy (Chaplin, 1981), human which get involved with economic activity as driven by his motives of need.

Psycho-economic Perspective

Reynard (1983:171) explained the human factor in development. Development is more than a growth, even if we restrict discussion to economic development: it involves all those mental and social changes that make a population better able to pursue its own economic evolution. But development and growth are closely linked in practice, so the demonstration that the dynamism drive of the producers and of the consumers each accounts for around one-third of all growth is sufficient to show that the human factor is dominant in economic development.

Within this perspective the role of economic development is not just a matter of how to reach the growth but more on developing mental and social changes to pursue economic evolution. Man can perform his role as dynamism driver when he is as producer or consumer.

Cultural Perspective

Culture is all ideas, beliefs, and knowledge owned by human in a society (Hoed, 1992). According to Koentjaraningrat, culture is considered as all system of ideas, action and human works in a society through learning (Hariyono, 1994).

There are three forms of culture:
1. Cultural system. Cultural system is the complexity of ideas and thought owned by human as center for aspiration and orientation in experiencing life problem. This orientation is strongly solidified as soul of a group of society.
2. Social system. Social system is a patterned action of a group of a society. This system produces a pattern of human activity which interact and make social interrelation. Indicators or guides which are followed by human while conducting interaction are called as social values.
3. Physical culture. Physical culture is all physical objects, action, and human works in society. It brings real and clear character that can be material objects or other things touchable. This physical work usually reflects cultural value mindset and patterned action by a group of society. (Hariyono, 1994)

METHODOLOGY

Discussion in this article focus on the efforts to rationalize in the area of psychology, social, culture and economics. The rationalization could hopefully facilitate to find some keywords which could be used to know human dimension in economic development within the frame of meaning revitalization on economic development. While the discussion on informal sector is used as medium to support the understanding.

The writer hopes that this article could facilitate future research which is more comprehensive related to human dimension as an alternative for meaning revitalization in economic development.

DISCUSSION

Fact of capitalism has made impact to destruction of logical order. Too much focusing and even wrong viewpoint on economic thoughts have bad idea of commodity and the concept of use-value. The mis-placed economic thoughts have triggered human to create “inefficient space” or it could be popularly known as “inefficient new bureaucratic lines” as new use-value of commodity. Within the perspective of culture this phenomena is commonly stated as “commodification culture”. Economic development is one of rational economic medium for human (and society) to pursue economic evolution (see Reynaud, 1981:171). For the purposes of growth the efforts toward human empowerment (through development) will result in productivity. However, this productivity has to be consciously owned as labour-power in use (see Medema, et al 2003:385-386) which could be valuable assets to build “bureaucratic accessability”.

Most of discussion in this article use informal sector to guide better understanding in an effort to revitalize meaning in economic development. Attributes that can be derived from the existence of informal sector are adopted from findings of research conducted by Eko Budihardjo and Sudanti Hardjohubojo in Alisjahbana (2003:148), and opinion stated by Tokman (2007). They are character of “unexpected sector”, and inability to access to the market and productive resources.

Discussion in this article within the frame of economics is limited to how to rationalize human as an economic man (homo economicus). The writer uses three rationales to guide discussion for the Conceptual Model, namely Participation and The Essence of Human, Human Capital Accumulation and Competitive Values and Bureaucratic Accessability and Bureaucratic Adaptability.

Participation in psychological context means a process to take part in certain activity (Chaplin in Kartini-Kartono, 2001:354). In Rationale-1 human and participation in development are closely linked to the essence of human. In order to make his own economic evolution (Reynaud, 1983:171) economic development should refer to mental and social changes. Target of the economic development is how to attain mental and social changes. Therefore, the empowerment of human in economic development is relevant with the opportunity to provide learning environment that facilitate human to make mental and social changes. Participation could be interpretated as an initiative that comes from the conscious effort to improve economic welfare. Without participation human could only place himself as a “meaningless” object of development.

Consequences for the facts of capitalism are still on the “safe track” eventhough human is considered as instrument, or in other word, labourer (see Medema, et al. 2003:385-386). However, those need to be well-interpretated as the meaning of instrument is too risky to have exploitation specifically referring to the “character of production”. Within the context of informal sector in urban development active participation that directs human to find his essence could be accelerator to the importance of strengthening economic value assets. By this description human could place himself as actor or subject in the development.

In Rationale-2 the essence of human that has been consciously well perceived, as described in Rationale-1, builds a mechanism that facilitate human to maintain and increase economic values. This is relevant with Tokman (2007) that informal sector is unable to access to the market and productive resources. Maintaining and increasing economic values are such a powerful assets to access to the market and allocate productive resources.

Fact of capitalism which concerns on “too much” economic rationality has potential to exploit resources. Fact of capitalism resembles fact of exploitation. Human as one of potential resources could also be threatened by exploitation. However, human capital accumulation and competitive values that are resulted from the revitalized or “new” meaning of development could safe human from exploitation. In the context of informal sector, this could be valuable asset despite the “pessimism” that informal sector is still far from offering acceptable conditions in terms of job stability and labour and social protections. (see Tokman, 2007:2)

Rationale-3 is related to inability for informal sector to access market and productive resources. The writer uses the term of bureaucratic accessability and bureaucratic adaptability to resemble productive resources or a particular use-value (human as labourer). Bureaucratic accessability means the ability to access bureaucracy as human has sufficient bargaining power or particular use-value. Therefore, bureaucratic accessability means bureaucratic adaptability. The meaning of “particular use-value” may have the same with the “adaptability skills”.

From the cultural perspective the idea of corrupted bureaucracy has been a “classical” problem that the business should be concerned with. Tokman stated that this should be a commitment owned by the Government to provide support by facilitating access to market and productive resources (see Tokman, 2007:3).

In Indonesia the above “classical” problem still has significant role to contribute ineffeciency. The only solution is that the human capital should be accumulated (through human empowerment) to gain competitive values (Rationale-2) in which the principles of effeciency will be dominated to improve accessability and adaptability skills. The idea of corrupted bureaucracy may still exist and be unavoidable facts, and this may not be the target of economic development. Therefore, human dimension should be considered and placed at “the real target”.

CONCLUSION

The urgent need for meaning revitalization on economic development is caused by the pressure of capitalism facts which are dominating the mindset that capital accumulation has solely become the target for the development. The dominant capitalism facts have no indication coming to an end, on the contrary, they tend to minimizing the role of human. Therefore, it is necessary to revitalize the meaning of economic development which does not mean to avoid the facts of capitalism but to minimize resistance against them through human dimension approach.

There are 3 (three) elements proposed by the writer in an effort to revitalize meaning of economic development within the context of informal sector in urban development, namely: participation, human capital accumulation, and bureaucratic accessability. Participation means to give back the essence of human dignity as the target as well as owner of the development. Human capital accumulation means that the orientation on economic development should not be directed at human as instrument or medium to achieve productivity. However, the human capital accumulation should become instrument or medium to increase productivity which is “free from exploitation” as the consequence for capitalism reality. The capability of bureaucratic access is the ability to adapt with bureaucratic barriers. Bureaucratic barriers are unavoidable facts specifically when the economic mindest is too dominated in every aspect of human life. Therefore, human dimension in economic development should create bureaucratic adaptability.

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