Dutch trade unionist Henk Sneevliet helped found the Indonesian Social Democratic Association in 1914 together with a young railway worker, Semaun. Inspired by the Russian Revolution, it became the first Communist Party in Asia: the PKI. A rash move to insurrection led to bloody defeat in 1926—27, but the party rose again during the war of independence in the late 1940s.

Again it suffered defeat, after pro-PKI soldiers seized the city of Madiun (East Java) in 1948 during the war against the Dutch. Probably the party leaders didn’t intend this, but once the rebellion was underway, PKI leader Musso assumed leadership. The main armed forces of the independence movement crushed the Madiun rising. But the party soon bounced back and within three years was leading strikes.

The nationalist leader Sukarno emerged as the key leader of Indonesia after independence. After a chaotic and highly corrupt phase of parliamentary democracy, Sukarno established a presidential dictatorship in the 1960s which he called "guided democracy." The country’s economy languished, but he held power by balancing between the military and the PKI. The PKI supported the government, believing that Sukarno was carrying out the democratic revolution that must precede the struggle for socialism. There were constant tensions, however.

In September 1965, a number of generals were murdered and their deaths blamed on the PKI. General Suharto used the events to seize power and launch a murderous attack on the communists, in which perhaps a million people died. Sukarno spent the rest of his life under house arrest. The PKI, which had relied on Sukarno to protect it, was destroyed. By some estimates, 500,000 people were slaughtered after the 1965 coup.

Suharto ruthlessly restructured the economy and society, finally achieving significant economic growth in the early to mid-1990s, but succumbed to the 1997—98 Asian crisis.

Marxism and socialism became taboo after 1965, but some elements of a left survived. A social democratic strand remained, partly reflecting the tradition of the old Indonesian Socialist Party and partly more recent European influences. Remnants of the PKI continued to operate, with great caution and on a politically very moderate line. Finally there was a student-based new left that sought to reconstitute Indonesian Marxism. Some of the latter elements established the People’s Democratic Union, which declared itself the People’s Democratic Party (PRD) in 1996, just in time to be scapegoated for the July 27 riots.

As the name implies, the PRD is officially campaigning for a "democratic revolution." It rejects Trotsky’s theory of permanent revolution, which argues for socialism as the only way democracy can be made meaningful for the people in a crisis-ridden Third World country like Indonesia. The PRD leaders generally don’t hesitate to describe themselves as socialists, but they sometimes hedge that by using terms like "democratic socialism." Their basic assumption is that the struggle for democracy will, when victorious, make a new stage possible in which the working class can fight for socialism. Within this general framework the group has sometimes seemed to argue in class terms, seeing the democratic revolution morphing rapidly into a socialist phase; at other times it seems to look for allies within bourgeois political movements.

In the late 1990s, the PRD was the key left-wing group, and to a degree retains that status, but it has suffered splits. The most important group to leave the PRD founded the Democratic Socialist Association (PDS) in 1990; the PDS experienced a split of its own and was stagnant for quite a while, but has recently claimed some encouraging growth. This group also rejects the theory of permanent revolution, but in discussion PDS leaders have referred to Lenin’s approach during the 1917 Russian Revolution, which is not far from permanent revolution in practice. They have a concept of democratic revolution which is close. In the cultural sphere and the punk scene, anarchism enjoys some support. However none of the left forces have achieved anything like a mass following.