This article first appeared in Forum, The Edge Malaysia Weekly on May 25, 2026 - May 31, 2026

About 20 years ago, I had the pleasure of having dinner at the home of Robert Kuok and his wife Poh Lin. It was memorable for many reasons, not least for something he said which stuck with me for a long time — mainly because I found it intriguing but not quite comprehensible. At least not to me then.

This erudite man, incidentally Malaysia’s richest person, said to me that evening that he did not hold high opinions of economists: “Economics is simply people living their lives.”

Since then, much water has flowed under the bridge of my mind. I am beginning to understand what that line means. In recent months, I have been wondering what economics looked like under feudal systems. How might one describe a pre-modern economy?

This has led me to consider how political power would take advantage of unprotected masses of people and their wealth. Piracy and theft, and threats and extortion would play a big role in the creation of a polity. A productive society would be at the mercy of what we would easily recognise as an extortion racket. The wealth produced by that society is bound to be “taxed” sooner or later. “Rent” would be taken, in kind or in cash. Fees for services are created which were not needed before the racketeers turned up. The “crime of corruption” would still be an oxymoron.

The quantum of that tax or rent would be enormous. Large enough to create sovereigns richer than any single taxed personality under their “rule” can be.

As with extortion rackets, these leaders essentially offer protection for the original producers of wealth, namely the people in their daily lives — protection from the leaders themselves, to start with.

This is not a stable structure, however. And if kept at that level, the system is simply a despotic one, vulgarly based on violence and extortion. How is it to evolve and become legitimate, institutionalised and stable? How is it to become “scalable” even. This is where rituals and protocols, laws and regulations, religion and ideology, come into play. Through these, terms like “national interests”, “general will” and even “social contract” a la Rousseau come into being to give substantive meaning and discursive relevance.

Politics now sits as jailer and protector over economics, the latter term as understood in Kuok’s statement. But political power does not need to remain merely parasitic and self-serving. It actually has the means to facilitate the wealth-creating ability of society as a whole. It can organise, it can plan, it can coerce, it can facilitate wealth creation and it can bring social security and fairness to the whole of society.

Politics can now create economics as a field of knowledge, enabling it to predict and strategise. It can draw up budgets; build infrastructures to aid trade; manage excess wealth; build a military to protect, not so much “the people” as “the economy”; and ensure its own survival and growth.

Herewith appears political economy. The interplay between the powerful who collect taxes and the productive who get taxed and pay rent becomes so symbiotic that they can now act together for “the general will”.

Adam Smith’s 1776 book, The Wealth of Nations, comes at a crucial point in this process. One interpretation of that book is that it seeks to limit despotism — either exercised by empires and emperors or by mercantilists and pirates. Should politics manage to transform itself to be about facilitating and stimulating the productivity of society, managing redistribution of resources and opportunities, ascertaining internal security and defending the polity against outside threats, then something hugely positive would have come out of this human developmental history of coercion and exploitation.

Smith’s book also came in the midst of European colonialism, just before it would peak in the 1800s in the form of the British Maritime Empire. The political economy of European empires and the religions and ideologies developed to stabilise them would not and could not define and recognise the polities outside Europe as acceptable and progressive. Not even China.

This defined progress to be exclusively European. The coming of independence to the European colonies after WWII offered a chance for these new nation states to build their own political economy — to wield some power within the global economic system that continued to be managed by the West.

The key question to answer here is: Do these new governments understand sufficiently what historical process they are caught up in? How much of their understanding of power, of “the people”, of politics, and of economics, remains outdated and no longer fit for purpose? Is the notion of political economy as a source of sociocultural stability and global agency comprehended well enough to be developed effectively?

Or do rent-seeking habits and cronyism, along with casteism and feudal attitudes of governance, still pervade society? In short, one has to ask of every government whether it has evolved enough to act as the champion of societal freedom and fairness, growth and progress vis-à-vis other politico-economies, or is it recognisably and essentially still more an extortionist racket than a people-serving construction? Is corruption still not a crime?

Can we learn to see this conceptual struggle happening in Southeast Asian countries? Where lies Malaysia? Singapore? Comparisons between the history of the political discourses since independence would be most informative.

That difficult process of going from a society where politics and economics are still separate to one where the two have come to terms with each other and have realised the need to work as a unit, a political economy, is what I would call nation-building. Come to think of it, I have, in other contexts, perhaps more correctly, named it as national-economy building.

In the end, the creators of wealth are the people, through their daily achievements and creativity. They are the source of productivity. The state’s job is to help them and, through its concentrated power, bring benefits and fair distribution of opportunities and wealth to its citizens.

The state cannot be separate from them and their well-being. They are a symbiotic unit, and purposive, sincere and continuous dialogue between state and society constitutes the basis for any social contract we wish to proclaim.

That seems a workable definition of democracy to my ears.

Datuk Dr Ooi Kee Beng is the executive director of Penang Institute, founding editor of Penang Monthly, festival director of the George Town Literary Festival and senior visiting fellow at ISEAS – Yusof Ishak Institute. His books include the award-winning The Reluctant Politician: Tun Dr Ismail and His Time, In Lieu of Ideology: An Intellectual Biography of Goh Keng Swee and The Eurasian Core and Its Edges: Dialogues with Wang Gungwu on the History of the World.

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