Post-1998 Changes in Rural Java: The Rapid Expansion of the Middle Class

Abstract

After the 1997–98 Asian financial crisis, for the first time the rural middle-class population in Indonesia grew faster than the urban population in relative terms. This was somewhat astonishing, given that in Indonesia the middle class has historically been synonymous with the urban population. This paper asks what factors allowed such a rapid expansion and what its impacts were on rural life. It argues that this phenomenon was partly the result of good governance, which dismantled most elements of state patronage. In tandem with the structural-economic changes characterized by a shift from the formal to the informal sector, this new setting paved the way for the aspiring lower class, which has historically been marginalized by the system, to climb the socioeconomic ladder. The transition also brought about a new morality regarding material affluence. Even though this new setting might suit the wishes of the aspirational lower class following the gradual dismantling of strong state clientelism, it has been accompanied by an increase in economic inequality.