Contradictions in the Development of Malay Capital: State, Accumulation and Legitimation

Abstract

Economic and political developments in Malaysia since independence are marked by two major and interrelated events — the growing participation of the state in the economy and the rapid growth of the Malay bourgeoisie. By the late 1970s state ownership had become dominant in the banking, plantation and mining sectors of the economy. Scholars who have observed this phenomenon interpret its significance differently. For most, it represents a movement towards a “mixed economy” — a market economy where the state attempts to regulate production and distribution through planning as well as ownership of state enterprises. Within this school, there are those who see state enterprises as indications of socialism (Milne and Mauzy, 1978) and others who see them as instruments of affirmative action for the Bumiputras i.e.: as institutions which undertake to correct economic inequality between Malays and non-Malays (Wheelwright, 1966). There are still others who see the significance of state economic participation in terms of the impact on class formation. In particular, Jomo (1977) puts forward the thesis that state enterprises have spawned a new class identified as the bureaucratic bourgeoisie.