People’s Economic System – Economic system Democracy has been in effect in Indonesia since the Reformation in Indonesia in 1998.
People's Economic System
People’s Economic System

1. Understanding the People’s Economic System

People’s economy is an economic system in which the implementation of activities, their supervision, and the results of economic activities can be enjoyed by the whole community. Or another definition of people’s economy is an economic system that is built on the economic strength of the people, the people’s economy is an economic activity that can provide broad opportunities for the community to participate so that the economy can be implemented and develop properly.

The government is determined to implement a people’s economic system by issuing a decree of the People’s Consultative Assembly of the Republic of Indonesia Number IV/MPR/1999, concerning the Outlines of State Policy which states that the Indonesian economic system is a people’s economic system.

On economic system democracy, the community is actively involved in economic activities, while the government creates a healthy climate for the growth and development of the business world.

2. Characteristics of a People’s Economic System

Economic system Citizenship has the following characteristics:
  • Who controls the needs of people’s lives is the state or the state government. For example, such as: fuel oil, water and other natural resources.
  • Relying on a fair market mechanism with the principle of fair competition.
  • Paying attention to economic growth, the value of justice, social interests, and quality of life.
  • Able to realize environmentally sound and sustainable development.
  • Ensuring equal opportunities in business and work.
  • There is protection of consumer rights and fair treatment for all people.
  • The role of the state in this economy is very important but not dominant, and so is the role of the private sector whose position is important but not dominating either. So it is impossible for a liberal economic system or a command economy system to occur. The two parties, namely the government and the private sector, live side by side peacefully and support each other.
  • In this economy, the community is a very important part, because production activities are carried out, supervised and led by members of the community.
  • Labor and capital do not dominate the economy because this economy is based on the principle of kinship.

3. The Purpose of People’s Economy

The objectives of the people’s economy are as follows:

  • To build a country that is economically independent, politically sovereign, and has a cultured personality.
  • To encourage equitable distribution of income for the community.
  • Can encourage sustainable economic growth.
  • And to improve the efficiency of the national economy.

4. The Advantages of a People’s Economic System

Here are some of the advantages of a populist economic system, namely:

  • Poor people can get the same or fair legal treatment in economic matters.
  • Can give more attention to the underprivileged people through various real operational programs.
  • This economic system can realize people’s sovereignty.
  • It can stimulate more productive economic activities at the people’s level and at the same time give birth to an entrepreneurial spirit.
  • Transactions between production, distribution and consumption are very good.
  • The relationship between production, distribution and consumption will need each other and is very good.

5. Weaknesses of the People’s Economic System

Where there are advantages, there must also be weaknesses or shortcomings, here are the weaknesses of the populist economic system, namely:

  • In this economy there will be a practice of distributing money to the people, this practice is very unprofitable for any party, including the people themselves.
  • The act of distributing this money unconsciously can cause micro or small and medium enterprises and cooperatives, which have been powerless to compete in a market mechanism, can become very dependent on this action.
  • There is still a lack of people’s knowledge about investment, as a result, it can lead to poverty for too long or a slow rotation of the wheels.
  • Lack of implementation from management.
  • The absence of optimal support from the government, although the government’s role is very important but not dominant.
  • Must be monitored, if not supervised properly there will be many corruptors.

Reference :

  1. Sukirno, Sadono, Introduction to Macroeconomic Theory, Rajawali Press, 1994
  2. http://myilmu Lintas Hukum.blogspot.co.id/2015/12/pengertian-sistem-ekonomi.html
  3. Rahardja, Prathama, Introduction to Microeconomic Theory, University of Indonesia, 1999
  4. Salvatore, Dominic, Microeconomic Theory, Erlangga, 1992
  5. Sicat, Gerardo P., Economics. Manila: National Book Store, 1983

.