Beneath the Gavel: Business Law and the Specter of Authoritarian Capitalism in Indonesia

Abstract

The evolution of the Indonesian government into authoritarian capitalism since the Reformation era, especially under Joko Widodo’s administration, has triggered significant legal issues in the development of economic policy. This study examines how authoritarian tendencies intersect with legal instruments and economic development, focusing particularly on legislative practices like the Job Creation Omnibus Law, which has drawn public criticism for undermining democratic principles and the supremacy of law. Using a normative juridical approach and the doctrinal legal method as defined by Terry Hutchinson, this research analyzes the principles and norms of economic law in the context of an authoritarian regime. The findings suggest that although laws like the Omnibus Law are claimed to attract foreign direct investment, the way they are drafted and enacted tends to reflect elite interests and lacks adequate public participation. This points to a broader pattern of authoritarian capitalism, where law functions more as a tool of political control than as a safeguard of social justice. Compared to countries like China and Singapore, Indonesia illustrates a weaker institutional capacity to uphold impartial and accountable legal frameworks. The study concludes that without substantive legal reform and stronger democratic oversight, the use of law for political gain will continue to undermine social stability and long-term economic sustainability. For that reason, legal development rooted in justice, participation, and the supremacy of law should be seen as a priority in improving Indonesia’s economic governance.