Yash Ghai: Are democracy and the market in conflict?

Apple Daily
June 14, 2004

Ms Maria Tam, a confidant of the CPG and a member of the Committee for the Basic Law, says that the pace of constitutional reform is faster than the growth of the economy. She wishes to see a better 'balance' between the market and democracy. She considers that the economy is more important than democracy, and says that the people of Hong Kong think so too. She is quoted as saying, 'I have not seen any one commit suicide by burning charcoal because there is no universal franchise. It is the economy that drives people to despair'. This line of thinking is also reflected in the second report of the Task Force on constitutional reform, which was endorsed by the Chief Executive and submitted to the Standing Committee of the NPC. The decision of the Standing Committee on the permitted scope of reform was informed by the second report, although it would be fair to say that the Task Force itself was influenced by various Mainland pronouncements on its vision of Hong Kong-as a commercial city which should eschew politics and find its true identity and destiny in engaging in economic activities.

Let us explore the implications of Ms Tam's remarks. Is it true that democratisation is moving faster than the economy? If so, Hong Kong people have not noticed it. On the one hand, there are many optimistic predictions of a resurgent economy. On the other hand, the Standing Committee has put a brake on constitutional reform and we are unlikely to escape from the straitjacket of the Basic Law for the foreseeable future. Second, it is not clear what is meant by the 'balance' between democracy and the economy. Ms Tam seems to imply that if you have more democracy the economy will suffer, so that the only way to revive the economy is to reduce democracy. There are undoubtedly echoes of the 'Asian Values' stance in her position, although the matter has not been put in this form.

There is considerable literature on the relationship between democracy and economic development. It would not be accurate to say that there is any real consensus, but the predominant view seems to be that democracy facilitates economic growth. This is particularly the case if the vehicle of growth is the market which cannot co-exist for long under an authoritarian government, particularly in these days of globalisation. Moreover the market can be exploitative and oppressive without some degree of political regulation. An important role of democracy has been to legitimise the market by involving the people in key decisions of the state and by moderating the predatory tendencies of capitalism. There was the great political compromise between capitalists and workers, involving rights for workers and ultimately full franchise, in Europe in the late nineteenth and early twentieth centuries which led to the full flourishing of the market. Without it, Marx's prediction of the collapse of capitalism might well have come true.

In Hong Kong by vesting so much power in functional constituencies, for the most part representing business interests, the Basic Law puts power where it most needs to be regulated. When I first came to Hong Kong more than 14 years ago, it was quite common to hear that the locus of power was in the following descending order: the Jockey Club, the chair of the Hong Kong Bank-and the Governor. This appears not to have changed. The mechanisms of the Basic Law put the Chief Executive at the mercy of the business community. The result is still a somewhat predatory capitalism in which welfare has become a dirty word. Ms Tam please note: why are people driven to suicide, and not only of the charcoal variety, out of economic despair when we are one of the richest societies on earth? The stranglehold of a dozen tycoons or so will only be prised away if we truly democratise Hong Kong. Otherwise the economy will continue to decline in the long run and persons with technological and managerial skills, at a premium in a globalised economy, will vote with their feet-and this time not to return.

Hong Kong's economy, we are frequently told, is at a cross roads. We cannot rely on business tycoons, the principal beneficiaries of the present system, to tell us how to get out of our present predicament. We need a wider debate, with genuine participation of all key political, social and economic sectors. The modern market thrives on information, ideas, accountability-and vigorous debates. These things seem to be lacking in Hong Kong, in part because of the constraints of the Basic Law, and the prevailing laissez-faire economic ideology, joined in by even the Mainland authorities ostensibly committed to socialism. Deprived of this stimulus, and driven by the business community who seem to have excellent relations with Mainland leaders, Hong Kong may increasingly be driven towards crony capitalism.

To return to Ms Tam. How do know that people are not driven to despair by the nineteenth century economic and political system of Hong Kong? How do you account for the anger of people manifested so dramatically on 1 July last this year and last week in Victoria Park? Do you not think that economic despair may be born out of our political system, where among other results, the lack of democracy has rendered our autonomy meaningless and people feel no longer in control of their destiny. Men and women cannot live by bread alone. That, Ms Tam, is the lesson of history.

The writer is Sir YK Pao Professor of public Law at the University of Hong Kong