From the six countries (Hong Kong, Congo, China, United State, Russia, and Japan) that we have examined, Karl Marx’s approach laid down the significant base of freedom for individuals to their economy as capitalism.
Solution
Thesis Statement:
How has Capitalism shaped political and economic realities of Hong Kong? Evidence from Hong Kong market system and industrial sector
Introduction
Political, economic systems are a consequence of developments in the realm of politics and economy. From the evidence, about changes or evolution of the political-economic system, we learn that generally, the changes occur organically. For instance, the need for a common currency, which could be used more broadly in the market, gave birth to various common currencies at different periods in civilization. Common currency not only ended barter system but also it gave birth to the new market system, which was more expanded and robust. Also, it facilitated a trade to grow. Further study of this subject makes it apparent that because of the changes in the economy, the political system also changed. We can call this sequential development, in the realms of politics and economy, as political-economic evolution, facilitated by natural causes (Desan, 2014).
However, it is also true that sometimes, political-economic systems are a consequence of political movement, as in the case of Cuba and the former Soviet Union. The political-economic systems of these countries were based on Marxian principles, which affected the market system, industrial growth, and societal evolution in a particular manner. Therefore, a political-economic system could be a consequence of evolution (an organic or natural process), or it could be a result of revolution (massive political movement with political-economic objectives). In this academic exercise, we will learn how economic and political changes have affected the political-economic landscape of Hong Kong. We will gather evidence from the Industrial sector and market system of Hong Kong. However, before that, we will methodically study how economic and political changes have affected political-economic systems and individuals (Ross, 2008).
Hong Kong-Study of History
We have already established that developments in political and economic realms accumulate into political-economic evolution. There is enormous evidence regarding the evolution of social-political-economic systems because of changes/development in economic realms. One of major and most quoted example is about the Industrial Revolution of the 17th century. Industrial Revolution not only altered method and volume of production but also it gave birth to new political ideas, such as Socialism/Marxism and Capitalism.
We learn that with the passage of time, these political-economic concepts matured into philosophies and eventually translated into political-economic systems. In Western Europe, Capitalist economies emerged, which strongly discouraged government interference (laissez-faire economy) and advocated the free market, where supply and demand forces determined prices.
In Eastern Europe, Latin America and in China, political-economic systems based on Marxian principles emerged. These political-economic systems were in fact command economies, where central authority determined the size of production and prices.
These contrasting systems were very different, and they used different instruments and tools to realize political, economic, and social objectives. Also, as the nature and attributes of these political-economic systems were different; therefore, these systems affected influenced/affected individuals and society differently. For instance, the Capitalist system was considered more free and robust than socialist systems, in which government interference was enormous (Rifkin, 2013 ).
Socialist political-economic systems claim to be based on Marxian principles; however, this not entirely true. From the writings of Karl Marx, it is apparent that he never truly admired capitalist system, as he considered it an exploitative system; however, he also suggested, “Capitalism is a necessary evil,” as it is a stronger catalyst for a change. Also, he discussed a state that was more responsible; however, he did not propose the idea of a state, which might grow so large that it would start infringing upon the rights of individuals. Therefore, we assert that capitalism could be a mean to an end (socialism) (McElwee, 2014).
The purpose of the academic exercise is to learn how political-economic system of Hong Kong influences its economic growth, the performance of its markets and growth of its industrial sector. We will also attempt to learn how these contrasting political-economic systems affect Hong Kong’s economy, politics, and society.
Hong Kong- Special Administrative Region of China
Hong Kong is a Special Administrative Region of China, which is on the East of Pearl River. This semi-autonomous region, of China, has a unique history, which augments its political and economic relevance in the contemporary world.
From the methodical study of Hong Kong’s history, we learn that after the end of the Opium War, British took control of the port city. Until 1997, Hong Kong remained a colony of the British, which used it to meet its strategic and economic objectives. In 1997, China got the control of Hong Kong; however, it did not try to import it a One-party political system in Hong Kong.
The semi-autonomous region has its own political and economic system, which is different from the political-economic system of mainland China. In fact, the political system of Hong Kong is based on the principle of one country two systems. It has allowed Hong Kong to have its legislature, Chief Executive and Constitution (Basic Law). These political developments give Hong Kong enormous economic and political freedom, which is why Hong Kong is a special region, which requires study (Rifkin, 2013 ).
In the context of the city, Hong Kong is a densely populated city. It has the population of 7.34 million, and most of the inhabitants are Chinese; however, people of other nationalities or belonging to other racial/ethnic groups also dwell in Hong Kong. Nonetheless, 92% of the total populations are Chinese, which speaks Chinese. Other than Chinese, the population also speaks/comprehends the English language; in fact, Hong Kong has two official languages, which includes English (the other is Chinese) (The World Bank, 2018).
Statistics reveal that population, Hong Kong, has steadily increased over the years. One of the primary causes, of this steady increase in population, is economic progress and prosperity, which facilitated a steady increase in population. Also, China’s One Child policy did not affect Hong Kong; therefore, the demographics of Hong Kong are slightly different China. However, despite no regulations regarding some children a couple may have, the birth rate of China has declined (abnormally) in the recent yards (growing at diminishing pace). In fact, the birth rate, of Hong Kong, is lower than China’s birth rate. It has affected not only size/pattern of consumption but also it has affected the labor market (Gonzales, 2017).
The political-economic system of Hong Kong
Political System of Hong Kong
The Political system of Hong Kong Springs out of the Basic Law, which suggests various methods to elect/select Chief Executive. For instance, the Basic law states that, “Chief Executive shall be selected by election or through consultations held locally and be appointed by the Central People’s Government…. the ultimate aim is the selection of the chief executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures” (Albert, 2017).
This clause of the Basic Law is open for interpretation, and it exploited by both Hong Kong and China to augment and exert influence. Certain political parties in Hong Kong consider the clause an obstacle in developing Hong Kong’s quasi-democracy into full-fledged democracy, based on capitalistic principles. They argue that the political system, based on capitalist notions and principles, will give birth to more robust, free, and fair economic system, which will effectively address the economic disparity.
It is quite apparent that the political system of mainland China takes measures to increase its political influence and to maintain the political status quo. The terms such as a key (can/may), is responsible for political ambiguity, which is causing various sorts of challenges about the development of Hong Kong’s quasi-democratic system into a full democracy. Also, because of the ambiguity regarding constitutional clauses, political freedom is curbed (Albert, 2017).
Economic System of Hong Kong
The economic system of Hong Kong is based on the principles and notions of Free-market. When Britain took over Hong Kong, it’s not only introduced its political system (democracy) but also it introduced the free-market system. Britain allowed international firms to invest in Hong Kong and it allowed goods and services from around the world to penetrate local markets. Britain, authorities refrained from regulating markets, which gave enormous freedom to investors and consumers. For instance, investors invested in various sectors of Hong Kong’s economy, which not only swelled its GDP growth but also modernized its economy. It influenced China’s economy positively, which also opened up its economy in the late 1970s through reforms, which were the brainchild of Deng Xiaoping (Chow, 2015 ).
The dividends, of an open and unregulated economic system, seem to be enormous. For instance, China’s GDP per Capita is $8, 124, whereas the GDP per capita of Hong Kong is $43, 681. The difference is enormous, which suggests that Hong Kong citizens are more prosperous (economically). This economic disparity gives birth to various political-economic prospects (World Bank, 2016).
As per one of the perceptions and assertions, the economic prosperity of Hong Kong grantees its autonomous status and compels its citizens to demand more freedom and autonomy.
Market System
Hong Kong relies on consumption primarily and trades for economic growth. The imports and exports strongly influence Hong Long’s economy, as Hong Kong’s economy relies heavily on trade. Also, as the trade is a large component of the economy; therefore, consumer surplus is huge, which accelerates consumption, which is considered an engine of economic growth.
China ensured, after 1997, that economic freedom of Hong Kong remains intact, as the economic freedom was directly associated with the economic performance of Hong Kong’s economy. Therefore, not only the monetary system is independently fair, but also government integrity is very high. One the Freedom Score Index, Hong Kong’s score is 90.2, which suggests that not only the economy and market are unregulated, but also investors/producers and consumers have an enormous choice. These economic and market freedoms translate into high economic performance, which influences not only the economic system (evolves the economic system) but also exerts some influence on the political system, which is maturing (Chang, 2002).
Industrial System
The industrial system, of Hong Kong, is very robust and vibrant. However, it’s industrial system slightly different from mainland China. For instance, the four Key industries of China are 1) Financial Services, Logistics, 3) Tourism and 4) Producer Services.
Financial Services primarily include banking services. For instance, the financial industry of Hong Kong is very autonomous and unregulated, which is why provides a range of services to its clients. Also, because of autonomy, the financial industry (especially banking system) has evolved significantly in last three decades. In fact, the banking or financial services of Hong Kong can be compared to banking or financial services of any full post-industrial country.
As Hong Kong is a robust port territory and shopping destination; therefore, it has also evolved into a tourist destination. We can compare Hong Kong to New York, Singapore, and Dubai, which are also major ports and travel destinations. As Hong Kong’s competitive advantage is its strategically located port; therefore, the logistics industry has great significance, and over the years, the logistics industry has evolved evidently. The freedom of investment and operations has allowed companies to innovate and the innovation has reduced the cost about the process of planning, implementing, and regulating the movement and storage of goods and services from the point of start to the destination (Haraway, 1991).
Research and Development is another sector of the economy, which has evolved significantly over the years. Evidence, about Research and Development (R&D), suggests that innovation is a consequence of competition. Firms, which operate in highly competitive industries, innovate. Innovation, which is a result of investment in Research and Development, facilitates companies in attaining a competitive edge against its rivals. It is also quite evident from the study of Research and Development sector of Hong Kong that Hong Kong authorities are also investing in Research and Development sector; however, the size of the investment, by Hong Kong authorities, is very small in comparison to China, which is spending enormous capital on Research and Development Sector. In fact, After United States, China is spending most on Research and Development (Xinhua, 2018).
Hong Kong does not have to spend heavily on its Research and Development sector because 1) industrial system is primarily based service industry (rather than manufacturing) and 2) the competitive nature of the market and industry (a by-product of capitalism) pushes firms themselves to become more innovative.
Economic Freedom
It is evident that an economic system of Hong Kong, which is comprised of the market and industrial systems, is very free. The primary reason for that is that it’s based on Capitalist principles, rather than Marxian principles. As per the classical interpretation of Marxian notions, the size of government must be large, and it must not allow the economic system to produce various classes.
In Hong Kong, government interference is minimized, which is why market system is free of any regulation. Also, investment companies can invest in any sector of the economy (in any industry), which depicts how free and transparent Hong Kong’s economic system is in comparison to China, where investment is allowed only in particular sectors of the economy.
However, we must also acknowledge that the capitalist economic model has caused an economic / income disparity. Hong Kong is richer than any urban center of China, which does have not only economic implications but also political and social. Also, economic hubs like Hong Kong, Singapore, Karachi, New York, etc. are centers where most of the wealth of the world has accumulated. Therefore, these international economic hubs are the cause of global wealth accumulation and cause economic disparity. It is the outcome precisely by the various projections, of Karl Marx, about capitalism. He had stated that Capitalism is exploitative and causes the accumulation of wealth. It makes rich richer and poor poorer. However, he acknowledged that Capitalism brings various kinds of positive changes in economy, political system and economy. For instance, it gives birth and rise to working class. It yields a robust industrial system, and it facilitates industrial sector of the economy to augment its potential and exploit it to maximal (McElwee, 2014).
Marx also asserted the Capitalism affects political system, which we are witnessing in Hong Kong. Despite all the political, military, and economic resources, China is unable to export its One-Party system in Hong Kong. In fact, the economic system of Hong Kong has subtly shaped its political system and landscape. For instance, regularly people come out and demonstrate in favor full-fledged democracy, which will ensure more rights and freedom (Gonzales, 2017).
In the case of Hong Kong, Capitalism is not necessary for Evil, but rather an instrument, which ensures more rights and freedom.
Comparison with Other Selected Countries
China: As a socialist country, China believes that free-market system in inherently unstable and produces undesired outcomes (frequently), which is why government must regulate the system. In comparison to Hong Kong, China’s economic/corporate/market system is highly regulated.
Russia: After the collapse of Soviet Union, Russia reformed its economy (adopted free-market system). However, Russia also regulates its economy and market to meet desired outcomes.
United States: United States project itself as a representative of capitalism, which is why it abstains from disturbing the forces of supply and demand, which determines output and price. However, to an extent United States influence markets and industries to realize price and output related objectives (gives subsidy to steel industry).
Japan: Japan is another capitalist economy, which generally avoids tampering with the economy through subsidies and use of the fiscal instrument.
Congo: It is a developing economy, which is highly regulated and therefore, the freedom (economic, political and social) is quite curtailed.
Conclusion
In the end, we have studied in detail history and political-economic evolution of Hong Kong. We have learned that capitalism or free-market economy facilitated the unprecedented growth and evolution of industrial and market system of the selected country. In fact, capitalism ensured more freedom and property rights, which are not easy to attain in a Socialist political-economic system; Cuba, China, former USSR are few such examples. From the systematic scrutiny of evidence, from the market and industrial system of Hong Kong, we can infer that Marx’s projections regarding Capitalism are quite accurate and capitalist is a catalyst of change.
References
Albert, E. (2017, June 22). Democracy in Hong Kong. Retrieved from https://www.cfr.org/backgrounder/democracy-hong-kong
Chang, H.-J. (2002). Kicking away the ladder: An unofficial history of capitalism, especially in Britain and the United States. Challenge, 45(5), 63-97.
Chow, G. C. (2015 ). China’s Economic Transformation. John Wiley & Sons.
Desan, C. (2014). Making Money: Coin, Currency, and the Coming of Capitalism. Oxford University Press.
Gonzales, S. (2017, July 4). Why Hong Kong’s birth rate is falling, and how sub-fertile couples can conceive. Retrieved from http://www.scmp.com/lifestyle/health-beauty/article/2100711/why-hong-kongs-birth-rate-falling-and-how-sub-fertile
Haraway, D. (1991). A Cyborg Manifesto: Science, Technology, and Socialist-Feminism in the Late Twentieth Century. New York: Routledge.
McElwee, S. (2014, January 30). Marx Was Right: Five Surprising Ways Karl Marx Predicted 2014. Retrieved from https://www.rollingstone.com/music/news/marx-was-right-five-surprising-ways-karl-marx-predicted-2014-20140130
Rifkin, J. (2013 ). The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World. Palgrave Macmillan Trade.
Ross, S. (2008). The Industrial Revolution. Evans Brothers.
The World Bank. (2018, January 1). Hong Kong. Retrieved from https://data.worldbank.org/indicator/SP.POP.TOTL?locations=HK
World Bank. (2016, January 1). GDP per Capita. Retrieved from https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=HK
Xinhua. (2018, February 13). China’s R&D spending up 11.6% in 2017. Retrieved May 2, 2018, from http://www.chinadaily.com.cn/a/201802/13/WS5a827ffea3106e7dcc13c829.html
+447462439809