make such preparations. The military was deeply involved in politics from the first. There were also powerful Islamic and leftist currents that also were not democratic in their leanings. The first general election took place in 1955 (Frederick and Worden, 1992, 47-48).
The form of rule under Sukarno was based on the concept of Guided Democracy, and the leader played different forces against one another in order to shape the culture as he desired. At that time, the economy was poor and became worse as Sukarno ignored the recommendations of technocrats and foreign aid donors, eyed overseas expansion, and built expensive public monuments and government buildings at home. In late 1960 he published an eight-year economic plan, though it was not very good as an example of economic planning. The result was hyperinflation and food shortages (Frederick and Worden, 1992, 52).
The first five-year plan, from 1956 to 1960, proposed a realistic level of government investment in the public infrastructure but offered little regulation or overall guidance to the private sector. The plan was superseded by dramatic developments in the political and economic sphere. The state expanded during these years, and this was accompanied by a general policy shift to justify greater state intervention in the economy. The Guided Economy was instituted in 1959 as an eight-year plan that entailed a twelve-fold increase in governmental project expenditure over the previous plan without any clear sources of finance. Deficit spending contributed to the development of inflation, which peaked at 1,500 percent in 1966. Foreign debt mounted at the same time. After the downfall of Sukarno, the New Order regime under Suharto gained financial assistance from the International Monetary Fund for a variety of emergency stabilization measures to put the economy back on course. The New Order was committed to a stable economic environment encouraged by responsib...