India and Indonesia, relegated to the ranks of the "fragile five" economies, have witnessed a sudden uptick in foreign investment as they go to the polls. Financial markets have responded exuberantly to the prospect of Mr Narendra Modi and Mr Joko "Jokowi" Widodo assuming power in New Delhi and Jakarta, respectively, where they are expected to initiate more "reforms" - a much bandied-about word that, in this context, means enhanced opportunities for quick profit-making. Contrary to what punters seem to think, Mr Modi and Mr Joko do not share much, let alone an economic vision.
Mr Modi, Gujarat's Chief Minister, is a veteran manipulator of party machineries for the sake of personal power. Much of his public-relations-burnished appeal is insidiously sectarian, predicated upon aggressive indifference, if not malign brutality, to minorities. Mr Joko's charisma derives from his genuine outsider status in Indonesia's nepotistic political system; the Jakarta governor has deliberately chosen candidates from ethnic and religious minorities as his running mates in past elections.
Mr Modi is unabashedly the choice of India's biggest corporate houses, which have used their ownership of the media to sell him as a saviour to the Indian masses. He is also supported by such influential non-resident Indians as Columbia University economists Jagdish Bhagwati and Arvind Panagariya. Mr Joko, on the other hand, owes his rise to the Indonesian masses, who are fed up with inequality and corruption.
Mr Modi's record of "development" in the state of Gujarat seems to amount to showering gifts - land, tax concessions and other subsidies - on a handful of big businessmen. Mr Joko's resume suggests a greater sympathy for small and medium-sized enterprises, the real backbone of Indonesia's, as well as India's, economy; he has also raised wages for labourers. His free health-care plan for low-income people in Jakarta immediately distinguishes him from Mr Modi, whose administration has produced one of the weaker records of human development in India.
This divergence of outlooks and priorities tracks the two competing narratives of development playing out across the world. Most countries in Latin America, for instance, have experimented with a neoliberal regime of financial liberalisation and privatisation led by strongmen and Ivy League-educated economists. The results were disastrous.
In the past decade, many Latin American governments have moved to embrace an alternative development strategy, one that cannot easily be pigeonholed as "left" or "right". Brazil, for instance, has tried to combine open markets with social democratic policies; it has mixed fiscal discipline and foreign investment with interventionist policies, including price control and taxation, to help build a social welfare system for the poor.
In Indonesia, the fetish of liberalisation has been replaced by a similar pragmatism. The country already had its own Modi: former dictator Suharto, who built up, with foreign assistance, a domestic industrial class and acquired some fervent supporters among the middle class with his promises of stability and prosperity.
A nexus of bureaucrats, who were in charge of rent allocation, and big-business conglomerates used Suharto's economic reforms of the 1980s to create a new Latin American-style oligarchy. Spiralling inequality, corruption, incompetence and the Asian financial crisis eventually brought down
Suharto's regime in 1998, but the oligarchs reinvented themselves for a democratic age by allying themselves with Indonesia's politicians.
Mr Joko's popularity reflects a revolt against this ancient regime, which cemented its hold on power through democratic politics. No wonder he has been largely ambiguous about what economic policies he will adopt as president. Certainly, his actions - banning foreign investment in a tourism project off Jakarta's northern coast, for example - are not in perfect accord with his frequent rhetoric about open markets.
More broadly, economic nationalism has been on the rise in Indonesia, reflected in the government's decision to ban mineral exports and force miners to build smelters locally. Even Mr Joko's fiercest political opponent, Mr Prabowo Subianto, a holdover from the Suharto era, promises to build a "people economy" and to increase investment tenfold in agriculture, which 70 per cent of Indonesians still depend on for a living.
This populism may seem repellent to ratings agencies and their camp followers. But, as I have pointed out in previous columns, the forms of capitalism that privilege private wealth creation and shareholder value above all are ultimately incompatible with democratic politics, especially in large and poor countries.
Mr Joko's studied ambiguity reflects that awareness; he knows that as Indonesia's president, he will have to think about development in social and national terms rather than purely economic ones. Mr Modi and his fans, on the other hand, represent not so much India's future as the widely discredited and despised past of several countries: one in which politicians struck deals with big business and foreign investors while their loud cheerleaders drowned out all alternative discourse with the repetitive mantra of "reforms".
This is why Indonesia may gain in the next few weeks what India may not until the next general election: a leadership compelled by disgruntled masses to focus on growth as a means of creating jobs, not just as a playground for plutocrats.
BLOOMBERG
