Sistem Ekonomi Indonesia

A. Definition of System

1. definition the system in general :
the system is a unity that consists of components or elements that are linked together to facilitate the flow of information, materials or energy to achieve a goal.The word System comes from the Latin (systēma) and the Greek (sustēma).Can be interpreted that the System is the unity of the interconnected parts that are within a region and has the movers items, general example such as country.
2. Salisbury :
System is a group of components or parts that work together as a single function.
3. James Havery :
The system is a rational and logical procedure, useful for designing or performin a series of interconnected components with each other.
4. John Mc. Manama :
The system is a conceptual structure that is composed of various interrelated functions and work as a unity in achieving the expected results effectively & efficiently.
5. Henry Prat Fairchild & Eric Kohler :
They propose the system as an interconnected circuit between parts of the smallest, if a part /sub-part is interrupted, then the other part will share the annoyance.
6. Murdick, R. G :
System is a set of elements that form a collection of various procedures or various processing schemes to find a common goal by operating data and goods to produce information, energy and goods.

B. The Relationship of Economic System to Political System

Economics and politics are two of the most important aspects of a country. These two aspects can not be separated because they have a very close relationship, if they stand alone there will be a big problem in a country. Economics is the science that learns about the financial order of a country. While politics is a science that learn the ins and outs about the state structure, whether related to development or justice. The relationship between economy and politics can be seen from various aspects, from its history, its development and others. All this shows that there is indeed a close relationship between economy and politics. These relationships include:

1. The historical aspect

Earlier thinkers thought that economics was a branch of political science. Because at that time the principal or core of a country's financial or financial affairs was seen and extracted from a source of state income that had entered into the realm of political science. This causes economics considered as a branch of political science.

2. Collaboration between economics and political science

Along with the development of the era of economics is considered a branch of political science has stood alone or become independent. Where the science of economics has its own study that is in the form of, what, how, where, and how a society can make money and process its finances. Yet even though independent economics is also linked at several points of political science, so this is what causes experts to combine economics and politics into a discipline called political economy. This study of political economics focuses on the study of economic phenomena as a whole or universal, which runs and studied and examined to be more specific, namely to see and understand the interactions that occur between economic factors and factors that are owned by politics.

3. Achieving the goals of a Country
All countries certainly have a goal to prosper the people and create conditions that support for the development and progress of his country. In this case the government does some breakthroughs as well as making policies and a law protecting the weak and creating a justice, this is discussed in political science. In addition to the welfare and prosperity needs of the name of development in various aspects, such as job creation, job training, complete public facilities and others associated with the realization of growth, stability and efficiency in a country. It is discussed in economics. For that purpose to achieve a state goal needs a relationship or interrelationship between economics and political science.

4. Cooperation between experts (scholars) in each field
In this case between economic scholars and political scholars can exchange knowledge or cooperate in achieving a certain goal. When seeking to pursue a specific economic policy or strategy, an economics scholar can ask a political scholar about whether it is effective and efficient to achieve economic goals. In addition, when proposing policies that can be used to enlarge national production, economics scholars can also ask political scholars how to overcome the political obstacles they will encounter in achieving their goals. An example is the five-year development in Indonesia that takes into account the social and political aspects that are changing due to the shift in the Indonesian economy. Conversely, political scholars can also ask economics scholars about the conditions related to economics in the fulfillment of the achievement of certain political goals, especially those relating to the fostering of democratic life.

5. National development analysis.

As time goes by economics becomes progressively improved, there is progress here and there, especially in the international economy. With the rapid progress of this economic presence and cooperation between economics and political science. Cooperation between these two studies is needed to analyze what might happen when development or international economic interaction takes place, so that it can prepare a strategy and strategy to face or stare at all the things that might happen at the time.

6. The condition of a country

The presence and relationship between economics and politics is clearly visible in accordance with the state or condition of the country's suata. For example, during the collapse of the New Order era in Indonesia, there was a monetary crisis that showed that politics greatly affect the economic condition of a country. In addition there are also events that occurred in Egypt or Libya, the economy when it declined and got a big problem, the country suffered massive losses in the country when the political condition is chaotic. In the United States, we can also see a very strong political and economic relationship, although the country implements free figures, but the economy remains strong and has great influence in elections. The above reviews are facts that show that economics and politics have a very close relationship, even when one of them disappears or does not walk then the country will experience and get a big problem. So in essence the economy and politics have interrelationship with each other.

Capitalism is defined as an economic system in which the means of production, trade, and industry are owned and controlled by the private individuals or corporations for profit. Also known as the free market economy or laissez-faire economy. Socialism is defined as an economy in which the resources are owned, managed and regulated by the State. The central idea of this kind of economy is that all the people have similar rights and in this way, each and every person can reap the fruits of planned production. Their distinctions are many, but perhaps the fundamental difference between capitalism and socialism lies in the scope of government intervention in the economy. The capitalist economic model allows free market conditions to drive innovation and wealth creation; this liberalization of market forces allows for the freedom of choice, resulting in either success or failure. The socialist-based economy incorporates elements of centralized economic planning, utilized to ensure conformity and to encourage equality of opportunity and economic outcome.

C. Key Differences Between Capitalism and Socialism

The following are the major differences between capitalism and socialism

The economic system, in which the trade and industry are owned and controlled by private individuals is known as Capitalism. Socialism, on the other hand, is also an economic system, where the economic activities are owned and regulated by the state itself.
The basis of capitalism is the principal of individual rights, whereas socialism is based on the principle of equality.
Capitalism encourages innovation and individual goals while Socialism promotes equality and fairness among society.
In the socialist economy, the resources are state-owned but in the case of the capitalist economy, the means of production are privately owned.
In capitalism the prices are determined by the market forces and therefore, the firms can exercise monopoly power, by charging higher prices. Conversely, in Socialism government decides the rates of any article which leads to shortages or surfeit.
In Capitalism the competition between firms is very close whereas in Socialism there is no or marginal competition because the government controls the market.
In Capitalism, there is a large gap between rich class and poor class because of unequal distribution of wealth as opposed to socialism where there is no such gap because of equal distribution of income.
In Capitalism, every individual works for his own capital accumulation, but in Socialism, the wealth is shared by all the people equally.
In Capitalism every person has the right to freedom of religion which also exists in Socialism, but Socialism gives more emphasis on secularism.
In Capitalism, the efficiency is higher as compared to Socialism because of the profit incentive that encourages the firm to produce such products that are highly demanded by the customers while in a socialist economy there is a lack of motivation to earn money, which leads to inefficiency.
In Capitalism, there is no or marginal government interference which is just opposite in the case of Socialism.

D. Controlled Competition

To know the economic system adopted by a country, it is necessary to analyze the content of factors mentioned above. Indonesia's economic system (controlled competition system) :

Not capitalist and not socialist. Indonesia acknowledges individual ownership of economic resources, unless the economic resources that affect the livelihood of the people are controlled by the state in accordance with the 1945 Constitution.
Recognition of competition among individuals in improving living standards and inter-business enterprises for profit, but the government also regulates education, employment, competition, and open business priorities.
Recognition of the acceptance of rewards by individuals for work performance and business entities in the search for profit. Government regulates minimum wage and labor law.
Economic management does not fully trust the market. The government also plays in the economy through BUMN and BUMD and technical departments to help improve entrepreneurship (SME) capabilities and assist capital.

Examples related to Controlled Competition:

With regard to individual competition, the government does not limit, for example in the choice of a person to enter the field of education or expertise of interest. But it also does not let people enter the field of education that has saturated the labor market. In the case of business-to-business competition, there is no obstacle for the company to enter certain business areas. But to avoid unhealthy competition in certain saturated goods markets, the government controls it by opening business priorities. In this case the acceptance of awards for work performance, also no obstacles. A very open opportunity for every worker or financier to get more rewards than just his needs. The government actually regulates minimum wage requirements for workers, to meet the minimum standard of living that is feasible

E. LEVELS OF CAPITALISM AND SOCIALISM

The elements of capitalism and socialism that exist in the Indonesian economic system can be seen from the following angle:

a. The factual structural approach is to examine the role of government in the economy

Approach to measure government intervention levels using Keynesian Aggregate similarities.

Y = C + I + G + (X-M)

Y is the national level.

Based on the humus can be seen the role of government through variable G (government spending) and I (investments made by the government) and (X-M) conducted by the government.

Measurement of government levels can also be seen from the role of government sectorally, especially in business arrangements and pricing. The government almost regulates business and price for every business sector.

b. The historical approach of tracing the organization of the Indonesian economy from time to time.

Historically, Indonesia in economic management has never been too heavy on capitalism or socialism.

Attempts to follow the capitalist system by various cabinets resulted in economic downturn until the end of 1959.

Attempts to follow the socialist system by President I resulted in the economic downturn of hiinggá end of 1965.

sample case 1

The Liberal Economic System is known as the Capitalist / Market economic system. The liberal economic system is an economic system in which the economy is governed by market forces (demand and supply), the liberal economic system demands the freedom of individuals to engage in economic activity. So in this economic system, every individual in the conduct of economic action does not get interference from the government, this is said as a condition in which the government completely disengaged in economic decision making in economic terms called laissez-faire.
Countries that embrace the liberal economic system are the United States, Britain, France, Belgium, Ireland, Switzerland, Canada, and Indonesia who once embraced the liberal economic system in the 1950s.
Liberal Economic System has several characteristics such as:
1. The profit-seeking motive is centered on individual interests
2. Implement a free competition system
3. The role of government is limited
4. Activities always consider the state of the market
5. Consumer sovereignty and freedom in consumption
6. The role of capital is very important
7. Communities are given the freedom to own sources of production
8. Society is divided into two groups, namely the group of resource owners
production and labor society (labor)
9. Incidence of competition in society, especially in seeking profit.

Advantages of Liberal Economic System:
1. Cultivate community initiatives and activities in economic activities, as the community no longer needs to wait for orders from the government.
2. Competition emerging spirit to move forward from society.
3. Every individual is free to have for production resources, which will encourage public participation in the economy.
4. Efficiency and high effectiveness, because every economic action is based on profit-seeking motives.
5. Produce high-quality goods, because of the spirit of competition among communities.

Disadvantages of the Liberal Economic System:
1. Occurrence of unhealthy free competition.
2. Many occurrences of turmoil in the economy due to misallocation of resources by individuals.
3. A lot of public monopoly.
4. The rich are richer, the poor are getting poorer.
5. Income income is difficult, because of the free competition.

Examples of Liberal Economic Cases in Indonesia are Freeport in Papua controlled by foreign Infestors from America:

PT. Freeport Indonesia (PTFI or Freeport) is a mining company majority owned by Freeport-McMoRan Copper & Gold Inc. The company is the largest gold producer in the world through the Grasberg mine. Freeport Indonesia has been exploring in two places in Papua, each of the Ertsberg mines (from 1967 to 1988) and the Grasberg mine (since 1988), in the Tembagapura area of Mimika Regency, Papua Province. Freeport-McMoRan developed into a company with revenues of US $ 6.555 billion in 2007.
Mining International, a trade magazine, calls the Freeport gold mine the largest in the world. Freeport had the opportunity to extract minerals in Papua through the Ertsberg mine in accordance with the Generation I Contract of Work (KK I) signed in 1967. Freeport was the first foreign company to benefit from KK I. In its journey, Freeport has grown into one of the giants in the industry mining world, from a relatively small company. This is largely derived from the spectacular and problematic benefits gained from copper, gold and silver mining operations in Irian Jaya, Papua.
. This KK I with Freeport is very loose, since most of the material of the contract is a proposal submitted by Freeport during the negotiation process, which means it is more organized for the benefit of Freeport. In mining operations, the Indonesian government does not get a proportional benefit with the enormous economic potential in the mining area. Whereas the Indonesian government's bargaining position on Freeport is very high, since Indonesia's mining reserves in Papua's mining area are huge and even the largest in the world.
.In addition, demand for copper, gold and silver products in the world market is increasing. With large reserve conditions, Freepot has guaranteed future earning. Moreover, when coupled with the fact that the production cost should be relatively low due to the characteristics of the open pit mine. Similarly gold which was originally merely a by-product, rather than copper, has turned into one of the major mining outputs. Freeport has long been interested in obtaining a copper mining concession in Irian Jaya.
KK I Freeport is based on Law No. 1/67 about PMA. KK between the Indonesian government and Freeport Sulfur Company granted the right to Freeport Sulfur Company through its subsidiary Freeport Indonesia Incorporated (Freeport) to act as a sole contractor in the exploration, exploitation and marketing of Irian Jaya copper. The exploration field covers an area of 10,908 hectares for 30 years, starting from the first commercial activity. KK I contains many fundamental weaknesses and is very beneficial for Freeport and a handful of people seated in power.

Economic System of Indonesia
History of progress:
- 1950-1959 (liberal economic sisetm / liberal democratic period)
   Initially Indonesia adopted a liberal economic system, in which all economic activities were left to    the people.
- 1959-1966 (economic system of etatism / guided democracy period)
   Due to the influence of communism spread by the Indonesian Communist Party, the economic    system in Indonesia changed from the liberal economic system to the socialist economic system.
- 1966-1998 (Pancasila economic system)
   In the economic system of Pancasila, the government and all the people are active in the effort to    achieve the nation's prosperity. In addition, the state plays a role in planning, guiding, and directing    economic activities. Thus there is cooperation and mutual assistance between government, private,    and community.
- 1998-present (democratic economic system which in practice tends to be liberal.
Indonesia's economic system based on Pancasila and the 1945 Constitution is called the economic system of democracy. Thus the economic system of democracy can be defined as a national    economic system which is a manifestation of the philosophy of Pancasila and the 1945 Constitution which based on kinship and mutual cooperation from, by, and for the people under the leadership and supervision of the government.

Conclusion:

Indonesia's economic system has various forms of economic system that tend to change. This can be seen from the history of the Indonesian economy that began with the liberal economic system, socialist, then economic Pancasila and economic democracy (which tend to be liberal). The existence of such changes can indicate that Indonesia embraces a mixed economic system. Where in a mixed economy certain sectors of business will be nationalized and run by the government and others will lie within the scope of private enterprise. Apart from that history, for now based on the 1945 Constitution the Indonesian economic system is reflected in articles 23,27,33 and 34 which indicate that the Indonesian economy does not allow for the existence of free fight liberalism, etatism and monopoly. From the change of economic system so until now the economic system in accordance with the national identity is the economic system of Pancasila which is the embodiment of the philosophy of Pancasila and the 1945 Constitution based on the ideology of a nation that characterizes an economy that based on kinship and mutual cooperation from, by, and for the people under the leadership and supervision of the government.

sample case 2

Publish 16 Package Policy, Darmin: Investors Still Complain This

TEMPO.CO, Jakarta - Coordinating Minister for Economic Affairs Darmin Nasution said there are still investors who complained about policies issued by the government. Whereas the previous government tried to encourage investment by releasing at least 16 policy packages to improve the business climate and fix the regulation.

"There are still many technical issues that have not been touched, which is what most investors are feeling lately," Darmin said in a speech at a seminar titled Encouraging the Creation of Financial Inclusion through the Utilization of Digital Systems at the Office of the Coordinating Ministry of Finance, Jakarta, Wednesday, 14 February 2018. Minister Darmin said it would focus on developing investment, export and soft infrastructure policies. Those three things are the policy focus which always reminded by President Joko Widodo or Jokowi. "Because, if we survive only rely on domestic demand we will only stop with economic growth of about 5-5.5 percent," he said.

Moreover, Darmin said, currently the world economy is strengthening and seen starting to rise again. Therefore, the Government should be able to take advantage of the momentum for the economic development of Indonesia. In addition, Darmin also said, President Jokowi also asked to identify and open a new export market. To support the policy, the Government will accelerate the settlement of bilateral and regional agreements, such as CEPA and FTA. Darmin continued, for soft government infrastructure will increase the problem of human resource capacity. And, in particular, the government will include the digital economy as a part of its development. "There are two areas of practice and we will definitely face and we must be able to enter and follow them, which is about financial inclusion and e-commerce issues," he said. According to Darmin, these two things are expected to help to increase community involvement in the economy directly. And, at the same time, also able to increase the capacity of community human Resources