School of Conflict Management, Peacebuilding and Development

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When Sukarno (1901-1970) led Indonesia towards independence from the Dutch, he rallied his supporters behind the vision of Pancasila (five principles). And although Sukarno used different wordings on different occasions and ranked the five principles differently in different speeches, Pancasila entered Indonesia’s constitution as follows: (1) Belief in one God, (2) Just and civilized humanity, (3) Indonesian unity, (4) Democracy under the wise guidance of representative consultations, (5) Social justice for all the peoples of Indonesia (Pancasila, 2013).

Pancasila is a normative value system. This requires that a Pancasila economic framework must be the means towards the realization of this normative end. McCawley (1982, p. 102) poses the question: “What, precisely, is meant by ‘Pancasila Economics’?” and laments that “[a]s soon as we ask this question, there are difficulties because, as most contributors to the discussion admit, it is all rather vague.” A discussion of the nature of Pancasila economics is therefore as relevant today as it was back then.

As far as the history of Pancasila economic thought is concerned, McCawley (1982, p. 103ff.) points at the importance of the writings of Mubyarto (1938-2005) and Boediono (1943-present). Both have stressed five major characteristics of Pancasila economics. These characteristics must be seen in the context of Indonesia as a geographically and socially diverse developing country after independence. They are discussed in the following five sub-sections.

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This piece was later published here:

Marktanner, Marcus, and Maureen Wilson. Pancasila – Roadblock or Pathway to Economic Development? Journal of Applied Economics in Developing Countries 1(1):1-13.