Decentralization and Democracy in Indonesia: A Critique of Neo‐Institutionalist Perspectives

Abstract This article assesses some of the major premises of neo‐institutionalist explanations of decentralization policy and practices, but focuses especially on the relationship between decentralization and democracy, in the context of the recent and ongoing Indonesian experience with decentralization. In the last two decades ‘decentralization’ has become, along with ‘civil society’, ‘social capital’ and ‘good governance’, an integral part of the contemporary neo‐institutionalist lexicon, especially that part which is intended to draw greater attention to ‘social’ development. The concern of this article is to demystify how, as a policy objective, decentralization has come to embody a barely acknowledged political, not just theoretical, agenda. It also suggests alternative ways of understanding why decentralization has often failed to achieve its stated aims in terms of promoting democracy, ‘good governance’, and the like. What is offered is an understanding of decentralization processes that more fully incorporates the factors of power, struggle and interests, which tend to be overlooked by neo‐institutionalist perspectives. The current Indonesian experience clearly illustrates the way in which institutions can be hijacked by a wide range of interests that may sideline those that champion the worldview of ‘technocratic rationality’.