Is Hong Kong the world’s foremost frontier in carrying out the Smith experiment so far?
Since the 1960s, no matter how great or how numerous the storms and challenges Hong Kong has experienced, it has always managed to rise again, with each recovery reaching even greater achievements than before — far beyond what almost anyone had anticipated beforehand.
Author: GUDORDI | 2026-01-14
國家不能只靠幼稚地不斷積聚金屬而變得富有；國家的財富只會隨着其人民的生活不斷改善而持續增加。 A nation is not made wealthy by the childish accumulation of shiny metals, but enriched by the economic prosperity of its people.
── 亞當·史密斯（Adam Smith）
In the previous article, the author mentioned another way of interpreting Adam Smith’s ideas — namely, that throughout his life, he was contemplating how human society could be made better. He may already have had an answer he was fairly confident in, but because the theoretical framework and evidence had not yet reached the extremely rigorous standard he demanded of himself, he never formally stated it outright.
However, if we closely read his two major works, The Theory of Moral Sentiments and The Wealth of Nations, along with his words and actions throughout his life, the answer is in fact already quite apparent.
Most scholars refer to it as a ‘free commercial society,’ but the author believes that the term ‘free market commercial society’ would be more appropriate.
Smith’s ideas have been mythologized and oversimplified.
However, the kind of ‘society that can make people better’ envisioned by Adam Smith was certainly not what many people imagine as a ‘simplistic laissez-faire capitalist economy.’ Later economists and the media overly mythologized and oversimplified his understanding of the market system.
Anyone who has carefully read his works and understood his life and conduct would sense that Smith was someone deeply sympathetic toward the poor and disadvantaged, while also highly alert to the dangers of merchants interfering in politics.
There is no doubt that Smith believed government had important and irreplaceable roles to play in the functioning of society. However, one important principle was that although government possesses power, it should exercise restraint in using it, and should consciously delegate as much as possible to the market wherever the market is capable of handling matters itself.
But looking across history and around the world, how many governments are truly willing to voluntarily set aside their power and patiently allow the market to gradually resolve issues on its own?
For Smith, the fact that the country is full of small shop owners, merchants, and traders is not a problem, but rather a “strong signal,” a manifestation of resilience and potential. (Shutterstock)
The rise of a nation filled with small shopkeepers.
Napoleon Bonaparte once said, “England is a nation of shopkeepers.” When he said this, the remark carried a tone of contempt. In Napoleon’s view, the pursuit of military glory was the true mark of a great power. Therefore, he believed that Britain — a country mainly composed of small shopkeepers — was limited in stature and could not possibly be his rival. However, judging from the quotation at the beginning of this article, Adam Smith clearly did not share this view.
To Smith, a nation filled with shopkeepers, merchants, and traders was not a problem; rather, it was a “sign of strength” — evidence of resilience and potential. Smith did not explain this in great detail, but the likely reason is that shopkeepers, merchants, and traders are all essential participants in a free-market commercial society.
These people are usually self-reliant individuals. Rarely are they large enough to monopolize an entire industry or collude with government to create artificial monopolies. As a result, they must constantly face competition — not only from local rivals, but also potentially from overseas competitors.
The pressure created by competition often stimulates innovation, forcing them to continuously seek opportunities, improve technology, or gradually discover and strengthen the areas in which they are most skilled. This reflects specialization and division of labor, which Smith regarded as the key to wealth creation and the source of national prosperity.
Perhaps this was also one of the important reasons why Britain, once merely a country on the fringes of Europe, was eventually able to rise into the world’s largest empire.
In the 1960s, Hong Kong’s Financial Secretary, Kwok Pak-wai, launched what was described as “the boldest and most ambitious” political and economic experiment in human history. (Wikimedia Commons)
A unique political and economic experiment in history?
In any case, history proved that even the military genius Napoleon Bonaparte was ultimately unable to defeat Britain, a nation composed largely of small shopkeepers. However, after Britain became the world’s largest empire, it no longer continued developing in the direction of a small-shopkeeper society.
In the 1980s, Margaret Thatcher, who was determined to rebuild Britain’s national character, often spoke about the virtues of such a culture. Her father himself was a grocery store owner. Looking back today, Thatcher accomplished many remarkable things, but although she remained in power for 11 years, she ultimately could not fully achieve her goals and was forced to resign under political pressure. This clearly shows that building a free-market commercial society is by no means an easy task.
Whether it was merely a coincidence of history, or whether the century-long struggles and hardships of the Chinese nation somehow moved heaven itself — or perhaps heaven intended to create a place where Eastern and Western civilizations could naturally merge through experimentation — Hong Kong, in the late 1960s, unexpectedly produced a senior official who truly understood the ideas of Adam Smith. Moreover, he was able to convince many top government officials at the time that Smith’s philosophy was the best way to govern Hong Kong.
Some have said that Hong Kong’s Financial Secretary John James Cowperthwaite carried out what may have been the ‘laziest and lowest-cost’ political-economic experiment in human history, while at the same time also being the ‘boldest and most ambitious.’ Whether this statement is entirely accurate or not, it is certainly thought-provoking and worthy of reflection.
In any event, since the 1960s, no matter how severe or how numerous Hong Kong’s crises and hardships have been, it has always managed to rise again, with each achievement surpassing the last — far beyond what almost anyone had expected beforehand.
Looking back today, has the blessing of Smith truly disappeared forever, or have we simply not yet found a way to reignite it? The author will continue discussing this later.
