Electoral Democracy, Hidden Oligarchy: A Multi-Theoretical Analysis of the Legitimacy of the Financial-Sector Omnibus Law, Law Number 4 of 2023
A Study of Political Configuration, Critical Legal Studies, and Oligarchy Theory Following the Enactment of Law Number 4 of 2026 on the Amendment to the Financial Sector Development and Strengthening Law
Abstract
The enactment of Indonesia's financial-sector omnibus law, Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (P2SK Law), later amended through Law Number 4 of 2026, presents a theoretical paradox: formal electoral democracy did not automatically produce responsive law as predicted by Mahfud MD's legal-policy theory. This study analyzes that legitimacy problem through a multi-theoretical framework comprising legal-policy theory (Mahfud MD), constitutionalism (Jimly Asshiddiqie), dignified-justice theory (Teguh Prasetyo), state theory (Abu Daud Busroh), oligarchy theory (Jeffrey Winters), and Critical-Legal-Studies. Employing a normative-juridical method with a library-research approach, the study examines statutes, Constitutional Court rulings, and scholarly literature. The findings show that the low public-participation score in the formation of the P2SK Law (8.91 out of 100, per the Indonesian Parliamentary Center) is not an anomaly but confirms Dahl's and Diamond's thesis that electoral democracy can operate without adequate liberal substance. Winters's oligarchy theory supplies the missing causal mechanism: Indonesia, as a civil oligarchy since 1998, allows capital elites'material power to dominate policy substance through lawful institutional channels without displacing formal democratic structures. Critical Legal Studies complements this by exposing how normative indeterminacy and technocratic narratives conceal distributive choices behind seemingly neutral legal language. The 2026 amendment is analyzed as evidence of the structural limits of Asshiddiqie's constitutionalist theory, which remains reactive and does not reach material or transnational power actors. The study recommends strengthening meaningful public-participation mechanisms and greater transparency regarding the relationship between domestic policy and multilateral institutional agendas in future financial-sector legislation.
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