The Rise of International Capital

This study analyzes the social forces and political coalitions driving regional integration projects in Asia with a focus on ASEAN and Indonesian conglomerates. It asks which social forces, within the domestic political economy of Asian states, are driving governments to seek regional arrangements for economic governance. In particular, the book asks how the emergence, reorganization, and expansion of capitalist class have conditioned political support for regional economic integration. By addressing these issues, the study emphasizes that the wellspring of regional economic institution projects stem from the process of capitalist development and the social forces it has unleashed. The book’s aims place the social and class relations that underpin regional projects—rather than the institutions which result from them—at the center of the analysis of regional integration. The research for this account draws primarily on primary documents from archival and field research conducted by the author—including company documents and in-depth interviews, government reports and policies, and trade publications and data sources, which are supplemented with secondary sources where relevant.

Since the end of the Cold War, the development of economic regionalism in many parts of the globe has been a matter of scholarly debate concerning the forms, instruments, and mechanisms of regional governance. The existing literature has developed around three different emphases, namely the functional objectives of regional economic integration, the nation-state’s strategy in order to survive, and the political and economic sources of regional institution building. These emphases emerged from the international relations theory and have been associated with three different groups of literature: the liberal framework of regionalism (functionalism and neoliberal institutionalism); the realist approach; and the political economy approach respectively. This chapter provides an analysis that finds that these existing approaches have limitations in explaining the social forces that drive the regional economic institution. The chapter shows that it is essential to place the broader structural context of the transformation of capitalist class in defining the economic project at regional level.

This chapter provides a theoretical framework for analyzing the social forces and political coalitions shaping the trajectories of regional economic integration projects, and how this is caused by the capitalist transformation. The key to the theoretical argument here is to explain the form and structure of regional economic integration as the consequence of the internationalization of capital. The framework developed in this chapter emphasizes that the internationalization process of capital accumulation does not mean that the state becomes less important in the regional economic project development. Rather, the state plays a substantial political and economic role in mediating the process of internationalization. It is worth emphasizing that the scale of capital expansion is located at the international level, but the process of accumulation is always bound to a specific space and governed within the territorial boundaries of the ‘national state’.

This chapter examines the state restructuring of the ASEAN member countries and how it is crucially linked to the emergence of internationally oriented fractions of capital and the process of international expansion that follows. It will look at the case study of Singapore, Malaysia, and Thailand. The discussion of these countries provides a broader context of the state restructuring and the internationalization of capital across the Southeast Asian region, before looking into a close study of Indonesia which will be explained in two separate chapters. This chapter explains the way in which the internationalization of capital is linked to the process of state restructuring. With the transformation of new internationally oriented fractions of capital, the state helps reproduce the social relationships that underpin capitalist expansion beyond territorial frontiers.

This chapter explains the social foundations of regional economic integration of ASEAN, specifically with the recent initiative of the ASEAN Economic Community (AEC). The international political economy (IPE) literature has provided important explanations of economic regionalism in Southeast Asia which are superior to the prominent neofunctional and liberal perspectives. The IPE approaches mainly focus on two methods of analysis: the AEC is seen as a strategy that was initiated in response to the competition within the global economy, and as a process which has been enhanced through domestic politics. The limitation of this scholarship lies in its focus on the AEC institutions and their governance. It overlooks the significance of the broader structural dimensions of capitalist transformation within ASEAN member economies that underpin the formation and characteristics of institutional projects. This chapter argues that the recent project of ASEAN regional economic integration in the form of the AEC has established foundations for the internationalization of capital across the region. In turn, this regional capital accumulation has promoted the regionalization process of economic arrangements. In this context, big businesses have become the motor force of this regionalization of capital.

This chapter focuses on the international expansion of Indonesian capitalists across the region as a way of understanding the social forces and their coalitions in conditioning the political support for the regional economic integration project. The chapter moves beyond the methodological nationalism of existing literature on Indonesian capitalist formation which tends to emphasize their position within domestic political and economic structures. The chapter argues that Indonesian capitalists have continued to emerge into international fractions of capital, which are linked to the circuits of capital beyond the nation-state. Such a transformation denotes a shift from capitalists which are only interested in protecting domestic markets, to those with an interest in the unrestricted regional economy, especially through the project of ASEAN economic integration. In this context, regional trade governance is viewed as a new spatial fix for economic regulatory coordination beyond state territories. It is noteworthy that the regionalization of these capitalists has been facilitated by the state, specifically through foreign economic policies that support regional economic initiative as well as economic liberalization packages.

This chapter examines the international expansion of capital and the way it structured the political support for regional economic governance in Southeast Asia through the case study of the Salim Group—Indonesia’s largest and most prominent conglomerate. The Salim Group was selected due to its increasingly internationalized economic activity and the way this activity promoted the regional economic project through political coalitions within the state—capital relations. The emergence of Salim as a major political and economic actor provides a window into the structural architecture of the internationalization of key Indonesian capitalist groupings across the Southeast Asian region. This chapter argues that the emergence of the Salim Group as an internationally oriented corporate group is a part of a broader story about the fundamental restructuring of the capitalist class. It is this internationally oriented fraction of capital that has supported and reinforced the project of regional economic integration.

This chapter provides the conclusion of the book by answering the question “How do we understand the tentative steps toward regional integration?” The core argument of the book is that beneath the recent intensification of regional economic cooperation in ASEAN lies a set of social forces that have shaped the political economies of Indonesia, and Southeast Asia in general, over more than three decades. These social forces have emerged out the internationalization of capital—where corporate profit-making activities operate beyond territorial boundaries—that has subsequently transformed national political institutions and internationalized parts of the state policy-making apparatus. It is this twin process of internationalization of capital and state that has underpinned the various projects of regional economic integration.