A Prize for the Village Ruling Class: “Village Funds” and Class Dynamics in Rural Indonesia

Abstract

The Village Fund in Indonesia has been praised as a breakthrough policy in eradicating rural poverty. This article, based on a study of a “best practice village” in central Java, however, reveals that the Village Fund has simply facilitated the triumph of the village ruling class. Though village political institutions have adopted good governance measures (participation, transparency, accountability, and so on), the poor remain largely powerless and are unable to gain a significant share of the Village Fund. In contrast to existing “elite capture” literature which has often highlighted local elite domination, this article moves beyond this limited view. By looking at the economic bases of the powerful actors occupying village political positions and institutions, this article shows how members of the village ruling class are primarily capitalist farmers whose power lies in land ownership and agricultural commodity production. As a result, development projects in rural areas continue to be the “prize” for the village ruling class when there is no re-organisation in the structure of land ownership and production relations in the countryside.