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Is Mohammad Hatta's cooperative economic vision still relevant today?

Indonesia at Melbourne - April 30, 2024

Muhammad Syarahil, Mutianwar Efendi – The global community is confronting an unprecedented crisis that requires a profound change in its approach to economics and development. Unsustainable consumption and production patterns, environmental deterioration and social inequality are increasingly recognised as the consequences of the current growth-based economic system, which presupposes infinite resources and perpetual expansion.

Mohammad Hatta, the first vice president of Indonesia, was a staunch proponent of cooperatives, placing great importance on communal ownership, participatory decision-making and societal responsibility. His speech in Lausanne, Switzerland in 1965 on the needs of cooperative organisations in developing regions laid out his global vision for the cooperative movement, which has influenced the economic policies of other developing nations.

There are many points of convergence between Mohammad Hatta's cooperative economics and degrowth, an emerging movement advocating for decentralised economies and deemphasising Gross Domestic Product (GDP) as a measure of economic performance.

So what can a re-examination of Muhammad Hatta's ideas contribute to contemporary debates on the future of economics and development? And can his ideas offer practical insights for policymakers, academics and activists working to create a more equitable and environmentally friendly world?Mohammad Hatta's cooperative economic vision

Mohammad Hatta was a distinguished Indonesian patriot. He played a crucial role in the Indonesian fight for independence from Dutch colonial rule but he also strongly supported cooperative economics as a means to empower local communities, promote social justice and attain economic self-reliance.

Aside from his political endeavours, Hatta was also an exceedingly productive writer and intellectual, and his ideas about economics and social equity still hold significance. His conception of cooperative economics was based on his conviction of the efficacy of collective endeavour and societal accountability. Hatta advocated for the foundation of economic progress on principles of equality, solidarity and cooperation rather than individualism and competitiveness.

Hatta viewed cooperatives as a vehicle to achieve these objectives by establishing forums for individuals to unite and combine their resources, expertise and understanding to tackle shared challenges and improve their quality of life. He believed cooperative economics presented a fairer and more enduring alternative to capitalist structures, which he saw as intrinsically exploitative and detrimental.

Hatta's 1953 study, "Cooperatives in Indonesia" is one of his seminal contributions to the field of cooperative economics. In it, he contends that cooperatives are indispensable vehicles for fostering economic progress, particularly in rural regions where small-scale farmers encounter many obstacles, including limited access to capital, markets and technical expertise. He presents cooperatives as a way to surmount these challenges by enabling individuals to collaborate and distribute the rewards of their labour.

In his 1954 article "Cooperatives and the People's Economy," Hatta argued cooperatives were a manifestation of the people's economy, wherein individuals possessed authority over their economic fate and could collaborate to attain shared objectives. He saw them as a way to contest the supremacy of capitalist methods of producing goods, which, he argued, sustained exploitation and inequality.

Hatta's economic theory was forward-thinking and profoundly pragmatic. He not only wrote about his ideas but, while serving in government – as Vice President (1945-1956), Prime Minister (1948-1950) and Minister of Foreign Affairs (1949-1950), – implemented many of them, founding multiple cooperatives in Indonesia, including agricultural cooperatives, cooperative banks and credit unions. These offered financial services to marginalised small-scale farmers and artisans unable to access traditional banking services.

Hatta was also one of the proponents of establishing the Indonesian Cooperative Council (Dewan Koperasi Indonesia) in 1947. This council's promotion of cooperative education and training played a vital role in the expansion of cooperatives in Indonesia.

Muhammad Hatta and the degrowth movement

Hatta's thinking about cooperatives was founded on principles of communal ownership and participatory decision-making. He believed that by pooling resources and working collaboratively, individuals could establish more robust and fairer economic systems that could benefit the entire society rather than only a select few who hold privilege.

As mentioned, this holds real relevance for the modern degrowth movement, which aims to establish sustainable and egalitarian economic systems, prioritising the well-being of individuals and the planet over perpetual growth and consumption. A fundamental aspect of the degrowth agenda is the push for a more decentralised and localised economy. This entails shifting away from globalised production and consumption systems and towards community-based models prioritising local resources and needs.

Hatta's ideas about cooperative economics align seamlessly with this strategy, encouraging collective ownership and democratic decision-making, and fostering the development of community-based economic systems grounded in local resources and needs.

Cooperatives can foster a fairer allocation of economic authority among individuals in a community by advocating for shared ownership and participatory decision-making. This can result in the development of more resilient economic systems, as communities can more effectively adjust to evolving conditions.

Moreover, cooperatives have the potential to facilitate the advancement of more environmentally friendly methods of production and consumption. Cooperatives can promote the prioritisation of community and environmental well-being over immediate financial gain by highlighting the significance of community responsibility for local environmental governance.

This can also result in the adoption of more sustainable methods of production and consumption, such as organic farming, renewable energy and local area production. Cooperatives offer a framework for exploring and testing new economic models, which empower members to explore novel ideas and techniques. This can lead to the development of more enduring economic frameworks that can be duplicated and expanded on by other communities.

Why Muhammad Hatta still matters

Muhammad Hatta was a forward-thinking intellectual whose ideas regarding collaborative economics prefigured today's degrowth movement.

His economic ideas present a viable and fair alternative to the capitalist paradigms driving social inequality and environmental degradation. They have had a significant influence on the cooperative movement in Indonesia and overseas. They can still serve as a source of inspiration for scholars, activists and legislators striving to construct a fairer and more environmentally friendly world.

In light of the current difficulties we confront, such as climate change, social inequality, and economic instability, it is crucial to give careful thought to alternative economic models that place sustainability and equity at the forefront.

Adopting Hatta's concepts of cooperative and decentralised economics could help create a future in which economic progress is not achieved at the cost of social and environmental welfare but more in alignment with it.

Source: https://indonesiaatmelbourne.unimelb.edu.au/is-mohammad-hattas-cooperative-economic-vision-still-relevant-today