W

ith the intractable scandal of “Centurygate” now reaching its critical stage, it seems timely to raise the following question: How is it going to be resolved?

But any answer to this question may itself be asking too much, for as we know too well the river of events has turned into a political morass. There is nothing unusual about this development, for purity of intentions matters little and is even dangerous in politics.

As expected, the details of the “truth” cannot but get embroiled in the game of horse trading, and it is this horse trading that is now being carried out in earnest. It is for this reason that perhaps we should not expect too much of “truth and only the truth” from the concluding verdicts coming out in the next few weeks.

This, however, should not detract us from remembering the core issues involved in the scandal. At least two stand out from the morass of legal technicalities. One is the legitimacy, if not in legal terms, of the bailout, and the other is the disbursement and channeling of the bank’s bailout funds. While the second is perhaps legally and technically interesting, it is the first issue that is more haunting.

As we remember well, this issue revolves around the claim of the systemic and non-systemic impact of Bank Century’s solvency, funding and liquidity crisis. For the defenders of the bailout, the jitters at the height of the 2008 global financial crisis claim the fall of Century would have caused devastating havoc in Indonesia’s banking system.

For their opponents, however, such a claim was an illusion deliberately fed to justify the bailout, as the tiny volume of Century’s turnover within the overall banking system in Indonesia would make such an impact avoidable.   

I must say there is something comical about these extravagant claims. Let’s be clear about the basis on which the systemic and non-systemic claims were made. In a series of attempts to cover up the ideological nature of the bailout, it was the dignity of economic science that was marshaled to advance the claims of a systemic impact.

Of course, the appearance of such a “scientific” claim could readily be turned down, for the opponents can easily marshal another type of “scientific” claim taken from economic science as well. The fact that proponents and opponents of the bailout pass each other like ships in the night can only be expected, for each camp marshal is from different schools of economic thought.

More than anything, this is rather farcical, for it is asking “scientific analysis” to do the deciding. Even from the very start, to ask scientific analysis to do the policy making is bound to fail. While scientific analysis can provide technically intricate data on the condition of the crisis in question, the decision making (public policy) is not the task that scientific analysis can undertake. In short, policy decisions are the task of the acting and willing persons, and this involves will and conscience, not scientific analysis.

The fact that these two moments may have been carried out by the same person(s) — e.g., as both economists and policy makers — does not invalidate the point. But here starts another problem that always struggles to remain hidden. Since policy decisions are an act of will, nothing can prevent one from stepping into a realm that is wrought with value-judgments. And once we talk about value-judgments, we cannot avoid talking about the espousal of certain values, and hence a rejection of certain other values.

It is here that what may seem to have started with the appearance that bloodless economic science cannot in the end shy away from the realms of full-blooded ideology in economic science. As “ideology” no longer dares speak its name in the policy making circle, it was only expected the decision to bail out Bank Century was coughed in the language of “systemic impact” presumed to be based on dispassionate analysis of economic science.

Of course, no one is conscious of his/her own ideology, anymore that he/she can smell his own breath. Alas, ideology more than facts usually has a far stronger influence on policy making. And if we are still adamant in claiming the systemic or non-systemic impacts of the bailout are based on accurate risk-modeling meticulously done by hordes of PhD-wielding quants, we should learn from a series of recent financial crises where the accuracy of such predictions was appalling.

This surely is not to be taken as a rejection of a better understanding of any crisis that may have dire impacts on the wider public. But it is clear that building any “scientific” models always involves stripping the real world down to its most essential features. That’s why economic science has that famous caveat, called ceteris paribus. The problem is, the real world by definition operates without ceteris paribus. Nothing can remedy this defect except heightened care and a sense of responsibility on the part of the policy makers.

So, if in the end either claim has courted an espousal of economic ideology, perhaps the end product of the Centurygate will simply be a matter of exposing an old game of ideology. The problem of course is that ideological belief cannot be legally sanctioned. But, what economic ideology is it? It is a full-blooded economic idea and ideology that socializing the losses of a few persons’ colossal wealth brings beneficial effects downward. Alas, it has now worked in reverse: wealth has been looted, while ordinary people go to the wall.

Economists are fond of saying that good intentions can have bad consequences, and bad intentions good consequences. This means that motives belong to the realm of the unknown! But as it is clear by now, intentions and will (hence value-judgment and ideology) cannot but be central to policy makers. Indeed, policy making is not as technocratic as many would like us to believe.

This reminds me of an incident that took place some time in May 2009. At the height of public controversies about an ideology called “neoliberalism”, a high-ranking policy maker made an innocent remark: “I’ve been in the profession of economic science for more than 40 years, but still I don’t understand what neoliberalism is”.

For sure, any respectable science contains the intellectual and technocratic aspects. That one only learns the technocratic sides of it makes the intellectual aspects even more urgent.
As for the above remark, there is perhaps nothing to say except that we often find it hard to distinguish between innocence and naivety.          



The writer, a lecturer in the postgraduate program at the Driyarkara School of Philosophy, Jakarta, holds a PhD from The London School of Economics.