3. economic and social conditions
Mr Henry Keswick, then chairman of Jardine Matheson, now owner of The Spectator, once said that Hong Kong is a place where "crude capitalism works " (The Times, 23 August 1974). Only those who have lived there know how crude capitalism can be and for whom it works. One hot humid afternoon in the old walled city in Kowloon I saw a child, aged about nine, chained by his ankle to a wall. The iron fetter had rubbed a groove in his flesh; the chain-about six feet long-allowed him a little movement. His parents were at work and the boy was touched" in the head. It was the only thing that could be done with him, we were told. That afternoon, among the open sewers and the underground work- shops, with the heroin addicts lying in dark alleyways, it was hard to believe capitalism was working" for that boy.
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Yet, a belief that "the system works" is asserted daily in the speeches of business- men and civil servants. It is tempting to say that this is because it does-for them; but they have a case and, in a nutshell, it is this. In a world obsessed by the need for economic growth Hong Kong is an example of success. It has created a great export trade in manufactures out of next to nothing, accepted refugees by the mil- lion yet achieved full employment, and raised wages to the second highest in Asia after Japan. Electricity consumption increased seven and a half times between 1956 and 1971 and government revenue increased six times over. Just between 1964 and 1971 registered motor vehicles almost doubled in numbers and telephone installations trebled. By 1971 there were seventeen telephones for every hundred people and installations were growing at the rate of 20 per cent a year. All avail- able indices of economic growth far out- strip the rate of population increase (Eng- land and Rear, op cit). This spectacular progress owes nothing to protectionism or centralised planning. Faith in the free workings of a market economy has cre- ated conditions in which competitive capi- talism has been able to blossom and swiftly bear fruit.
There is strength in this argument but it fatally ignores two things: the peculiar
circumstances which made such growth possible; and the costs incurred in human drudgery and suffering to achieve such statistics of "growth." Some recent his- tory will make this clear.
recent history
Between 1945 and 1949, 1.3 million people entered Hong Kong from China. A vast reservoir of labour, skilled and unskilled, became available for employ- ment. In addition to a very large propor- tion of under-employed, a quarter of the labour force was estimated to be com- pletely without work in 1950. But among these refugees were some of the most ex- perienced and ruthless capitalists in China.
In October 1947 Fortune magazine esti- mated that as much as US$50 million of Chinese wealth had taken refuge in Hong Kong and that 228 Shanghai concerns had shifted their registration to the Colony. They injected
injected comparatively more capital, more skilled labour, more knowledge of markets, more entre- preneurial flair, and more sheer industrial expertise than probably any non-indus- trial state has received in modern times, including Israel. And awaiting these entre- preneurs was a highly developed com- mercial infrastructure of banks, insurance houses, import/export firms, docks, ware- houses, and a business community with a century of trading experience behind it. And communist China supplied food and basic raw materials at cheap rates. The peculiar circumstances were peculiar in- deed.
The outbreak of the Korean War, which resulted in the United Nations embargo on essential materials trade with China, practically severed the traditional re- export market on which Hong Kong had depended. But the new industrialists were already set upon a familiar and successful path-manufacturing raw materials into finished goods for export. The 1950s were therefore years of rapid industrial ex- pansion which soaked up the huge reser- voir of unemployed labour. Unemploy ment was down to 12.2 per cent in 1954 and 1.7 per cent in 1961. Yet the pool of
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