Hong Kong and Shenzhen Are a Model of the Natural Development of Market-Driven Contractual Networks
The nature of the market is a profound subject. The author believes that one aspect of the market is that it is a continuously expanding and evolving contractual relationships network.
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）
In the previous article, the author mentioned that in the late 1980s, there was a rare opportunity for a breakthrough in global affairs and the future of world peace. This opportunity was proposed by Mikhail Gorbachev and can be seen as a continuation of John F. Kennedy’s “deal of the century.”
As the author pointed out earlier, this vision was consistent with the long-term interests of both the Soviet Union and Western countries, making it a realistic and achievable proposal.
An Important Step Toward Moving Beyond the Westphalian System?
The importance and groundbreaking nature of this proposal should not be underestimated, as it may have represented a crucial step toward humanity finally moving beyond the political framework that has dominated global affairs for more than 400 years. The structure of international politics over the past four centuries can largely be traced back to the Treaty of Westphalia (1648).
This treaty ended decades of religious wars in Europe and brought about two major changes. First, it separated the state from religion, establishing the nation-state as the most important unit in global political and economic affairs. Second, it introduced the concept of sovereignty and established it as a fundamental principle for managing relations between nations.
Looking back, the impact of these developments was profound. From that point onward, competition among states became the norm. Combined with the rise of various ideologies and nationalist movements, international relations became increasingly complex.
In retrospect, the concept of sovereignty itself contains many ambiguities. Ultimately, the strongest foundation of sovereignty is military power. To use the language of political science, what has truly dominated international politics for the past four centuries is what is known as realpolitik—the pursuit of national interests based on practical power rather than ideals.
A System Based on Realpolitik Is Like Walking a Tightrope
Over the past 400 years, European nations maintained a degree of balance through royal marriages, alliances, diplomacy, colonial expansion, and various strategic arrangements. As a result, Europe largely avoided major large-scale wars during the four centuries leading up to 1914.
During this period, the greatest threat to the system was arguably Napoleon Bonaparte, but a coalition of European powers ultimately succeeded in eliminating that threat. Nevertheless, medium-sized and smaller conflicts continued to occur from time to time.
European politicians and aristocrats often viewed this stability as evidence of their diplomatic skill. In reality, however, the entire system was somewhat like walking a tightrope. At its core, it was not fundamentally different from rival groups dividing up territory among themselves. A single mistake could easily trigger a crisis.
Subsequent events demonstrated just how fragile the system was. Through a series of unfortunate circumstances, the assassination of an archduke from a small European state—an incident that might otherwise have seemed limited in scope—set off a chain reaction that ultimately led to World War I.
Even worse, the Treaty of Versailles, which was intended to resolve the aftermath of World War I, was marked by resentment, short-sightedness, and irrationality. It left German society with a deep sense of grievance and injustice, creating the conditions that later facilitated the rise of the Nazi Party. In this sense, World War II can be viewed as a continuation of World War I rather than a completely separate conflict.
Kennedy's Ambition to Break the Existing System
From many perspectives, a global order governed solely by realpolitik is inherently risky and unstable. Against this backdrop, John F. Kennedy’s 1963 Peace Strategy speech stands out as a rare and visionary declaration in modern history. At the very least, it demonstrated that Kennedy genuinely sought to move beyond the existing international system and possessed the ambition to do so.
Unfortunately, Kennedy’s grand vision came to an abrupt end with his assassination. Even so, the momentum for change may not have completely disappeared. More than twenty years later, Mikhail Gorbachev’s proposals can be understood as a continuation of Kennedy’s vision. In some respects, Gorbachev’s approach may have been even more far-reaching and better aligned with the Soviet Union’s long-term interests.
When Gorbachev came to power, he was only 54 years old. There is good reason to believe that he was sincere in pursuing these ideas and viewed them as serving the Soviet Union’s long-term strategic interests.
The Natural Integration of Hong Kong and Shenzhen
From this perspective, the failure to seize that historical opportunity was a significant missed chance. In the long run, however, an even greater missed opportunity may have been in the economic sphere.
The nature of the market is a profound question. The author believes that one important aspect of a market is that it functions as a continuously expanding and evolving network of contractual relationships.
Drawing on the experiences of Hong Kong, Shenzhen, and the Pearl River Delta, the most effective way to introduce a market system is through a bottom-up process, allowing market participants themselves to develop and establish the necessary arrangements. Once a region successfully integrates into the mainstream global network of contractual and commercial relationships, the economic benefits that can be generated are potentially enormous.
Eastern and Western Europe share deep historical, cultural, and ethnic connections, making the region a rare and valuable setting for studying and experimenting with the development of market institutions. Unfortunately, many Eastern European countries—and later Russia—failed to make full use of this opportunity. Instead, they embraced the somewhat unrealistic and naïve idea promoted by certain commentators that a transition to a market economy could be achieved within a matter of days.
As a result, they ended up creating institutions that were often incomplete, inconsistent, or poorly adapted to their circumstances. According to the author, when institutions become dysfunctional or lack coherence, serious economic problems can emerge. The author argues that this kind of institutional inconsistency may represent one of the greatest underlying risks facing Hong Kong’s economy today.
The author notes that this issue will be explored further in future discussions.
