Hong Kong and Shenzhen exemplify the natural development of market contract networks
The essence of the market is a profound concept, and the author believes that one key aspect is a “contract network” that continuously expands and deepens over time.
Author: GUDORDI | 2024-12-18
政治經濟學被視為一門研究政治家或立法者的一個分支，它提出了兩個清晰的目標：首先，為人民提供豐足的收入或生活，或更準確地說，是令人民能夠為自己創造和提供豐足的收入或生活；其次，為國家或聯邦提供足夠的收入，以支持它的公共服務開支。因此，它的提議，是讓人民和國家同時得到富足。
Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.
── 亞當·史密斯（Adam Smith）
上回筆者提到，在上世紀80年代末，全球局勢和世界和平的前途是曾經出現過一次難得的突破機會，而有關的機遇，是由蘇聯的戈爾巴喬夫提出，並是可以理解為甘迺迪「世紀大刁」的延續。正如筆者在上回指出，有關構想是符合蘇聯的和西方國家的長遠利益，因此是具現實可行性。
An Important Step Beyond the Westphalian System?
Do not underestimate the significance and breakthrough of this proposal, as it could mark a turning point in humanity’s departure from the global political framework that has dominated for the past 400 years. The modern international political order traces its roots back to the Treaty of Westphalia in 1648. This treaty ended decades of religious wars in Europe and introduced two major shifts: first, it separated state governance from religion, establishing the state as the central entity in global politics and economics; second, it introduced the concept of sovereignty, making it the fundamental principle for managing international relations.
Looking back, the impact of these changes has been profound. Since then, competition between states has become the norm, and with the rise of nationalism and various ideologies, international relations have grown increasingly complex. Today, the concept of sovereignty remains ambiguous in many ways. Simply put, sovereignty is ultimately upheld by military power. In political science terms, what has shaped the global political landscape for the past 400 years is the doctrine of realpolitik—the pursuit of national interests through pragmatic, often power-driven strategies.
A Realpolitik-Based System Is Like Walking a Tightrope
For centuries, European nations maintained a delicate balance through a mix of diplomacy, alliances, colonial expansion, and strategic maneuvering. Between 1648 and 1914, large-scale wars were largely avoided. Even the most significant disruption—the Napoleonic Wars—was ultimately resolved by a coalition of European powers. However, while European elites saw this as a testament to their diplomatic skill, the entire system functioned more like a precarious balancing act. At its core, it was not so different from territorial disputes between rival factions; a single misstep could trigger catastrophe.
That misstep came in the form of an assassination—the killing of a prince from a small European nation. This seemingly minor event unleashed a chain reaction, leading to World War I. Worse still, the Treaty of Versailles, which sought to resolve the postwar crisis, was filled with punitive measures, short-sighted policies, and deep-seated animosities. This fueled resentment in Germany, creating the conditions for the rise of the Nazi Party and, ultimately, World War II. In many ways, the Second World War was simply a continuation of the first.
Kennedy’s Ambition to Break the System
From multiple perspectives, a world order based purely on realpolitik is inherently unstable and fraught with risks. Kennedy’s 1963 peace strategy speech was a rare and bold statement in history—it demonstrated that he not only recognized the flaws of the existing system but also had the ambition to challenge it. Unfortunately, his vision was cut short by his assassination.
Yet, the momentum of change may have persisted. More than 20 years later, Gorbachev’s policies—his outreach to the West, his concept of a new world order, and his approach to Eastern Europe—can be seen as a continuation of Kennedy’s vision. In some ways, Gorbachev’s approach may have been even more progressive and better aligned with the Soviet Union’s long-term interests than Kennedy’s original framework. At just 54 years old when he took power, Gorbachev had both the motivation and the long-term perspective to pursue systemic change.
The Natural Synergy of Hong Kong and Shenzhen
From this perspective, failing to seize the opportunities of the era represents a significant historical loss. However, in the long run, perhaps the most regrettable missed opportunity lies in the economic sphere. The essence of the market is a profound and complex subject. One fundamental aspect of the market, as the author argues, is its nature as a self-expanding network of contracts—a system that continuously evolves and deepens.
The experience of Hong Kong, Shenzhen, and the Pearl River Delta suggests that the most effective way to introduce market institutions is from the bottom up, allowing market participants to establish them organically. Once a region successfully integrates into the global network of contractual economic relationships, the potential economic benefits are immense.
Given the deep cultural, historical, and ethnic ties between Eastern and Western Europe, the post-Cold War period provided a rare opportunity for research and experimentation in market-based economic integration. Unfortunately, many Eastern European nations—and later, Russia—failed to capitalize on this opportunity. They were misled by the naive belief that transitioning to a market economy could happen almost overnight. As a result, they implemented systems that were misaligned with economic realities, creating long-term structural weaknesses.
This fundamental misalignment may also be one of the greatest hidden risks for Hong Kong’s economy today. I will explore this issue further in the next discussion.
