Ethical Policy And Economic Development: Some experiences of the colonial past

Abstract: At the end of the nineteenth century colonial Java was in a state of rural poverty and misery just as it now is. The standard of living was declining due to a combination of crop failures, a rapidly growing Javanese population, onerous tax burdens and an expensive Aceh war. Colonial exploitation was at its highest point. A small elite of Dutch entrepreneurs (in particular the owners of sugar-factories) and Javanese chiefs, working closely together, enriched themselves. The rich became richer, the poor poorer. The old liberal axiom that, with few exceptions, the state should not interfere with economic life and regulations still prevailed. The free play of forces in society, or 'free labour', dominated the market economy with hardly any legal protection of the poor and the powerless, the small peasant, the coolie on the plantation or in the factory. It was therefore misleading to call the last decade of the last century a period of 'lesser or declining welfare' (mindere welvaart) as the Dutch used to do. The reality was much more disastrous than the official terminology suggested. Keywords: Ethical Policy And Economic Development, colonia