Rethinking the Concept of "Dual Economy": Medieval Poland, Majapahit and Modern Java Compared

Abstract The concept of "Dual Economy" is reconsidered with two main results: 1. It is not so much one concept as the label for quite a number of different concepts. These diverse concepts are based on a common preoccupation: They take more or less for granted that rural/peasant economies are the strongholds of conservative, static, uninnovative, backward people, whereas commercial/urban economies are, in contrast, the basis of modern, dynamic, innovative, advanced societies. The present contribution, therefore, disputes the view that "dual" economies are simply the result of a clash of a modern capitalist/colonial, commercial economy with a traditional precapitalist, domestic subsistence economy. 2. Instead, anattempt is made to show that "dual" features are the result of a combination of two mutually dependent subsystems within one economic system. Taking Poland and Majapahit as examples it is argued that the development of the conditions for external trade tends under certain conditions to reduce a large part of the economy to a "traditional" subsistence economy. The "traditional sector" of a "dual economy", therefore, is no obstacle for the success of the "modern sector". Quite on the contrary, such a "traditional subsistence sector" is the condition for the viability of the "modem sector". That the appearance of "dualism" conceals the basic unity of one economic system is shown to have consequences also for the analysis of the dynamics within the respective social developments: The leading groups in the history of Java are thus seen no longer as rival, even antagonistic classes, but as distinct strategic groups within one class.