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Centers of Progress, Pt. 27: Hong Kong (Non-Interventionism)

Introducing a city transformed by economic freedom and exchange.

Chelsea Follett — Apr 30, 2021

Today marks the twenty-seventh installment in a series of articles by HumanProgress.org called Centers of Progress. Where does progress happen? The story of civilization is in many ways the story of the city. It is the city that has helped to create and define the modern world. This bi-weekly column will give a short overview of urban centers that were the sites of pivotal advances in culture, economics, politics, technology, etc.

Our twenty-seventh Center of Progress is Hong Kong during its rapid free-market transformation in the 1960s. After a lengthy struggle with poverty, war and disease, the city managed to rise to prosperity through classical liberal policies.

Today, the freedom that has been so key to Hong Kong’s success is being stripped away. The Chinese mainland has cracked down on the city’s political and civil liberties, leaving its future uncertain. But as my colleague Marian Tupy has noted, “No matter what lies ahead for Hong Kong, we should admire its rise to prosperity through liberal reforms.”

The area where Hong Kong now stands has been inhabited since Paleolithic times, with some of the earliest residents being the She people. The small fishing village that would later become Hong Kong came under the rule of the Chinese Empire during the Qin Dynasty (221–206 BC). After the Mongol conquest in the 13th century, Hong Kong saw its first significant population increase as Song dynasty loyalists sought refuge in the obscure coastal outpost.

Hong Kong’s position on the coast allowed its people to make a living by fishing, collecting salt, and hunting for pearls. However, it also left them under the constant threat of bandits and pirates. One particularly notorious pirate was Cheung Po Tsai (1786–1822), said to have commanded a fleet of 600 pirate ships before the government recruited him to become a naval colonel and fight the Portuguese. His purported hideout on an island six miles off the coast of Hong Kong is now a tourist attraction.

China ceded much of Hong Kong to Britain in 1842 through the Treaty of Nanjing that ended the First Opium War. As trade between China and Britain in silk, porcelain, and tea intensified, the port city became a transportation hub and grew quickly. That growth initially led to overcrowding and unsanitary conditions. Thus, it is unsurprising that when the Third Plague Pandemic (1855–1945) took some 12 million lives globally and devasted Asia, it did not spare Hong Kong.

In 1894, the Bubonic Plague arrived in the city and killed over 93 percent of those infected. The plague and resulting exodus caused a major economic downturn, with a thousand Hong Kongers departing daily at the pandemic’s peak. In total, around 85,000 of the city’s 200,000 ethnically Chinese residents left Hong Kong. The Bubonic Plague remained endemic on the island until 1929. Even after the Bubonic Plague departed, Hong Kong remained unhygienic and ravaged by tuberculosis, or the “white plague.”

Besides disease, life in Hong Kong was also complicated by war and instability on the Chinese mainland. In 1898, the Second Opium War (1898) brought Hong Kong’s Kowloon peninsula under British control.

The suffering in Hong Kong was well documented by journalist Martha Gellhorn, who arrived with her husband, the author Ernest Hemingway, in February 1941. Hemingway would later ironically refer to the trip as their honeymoon. Gellhorn wrote, “The streets were full of pavement sleepers at night … The crimes were street vending without a license, and a fine no one could pay. These people were the real Hong Kong and this was the most cruel poverty, worse than any I had seen before.” Yet things were about to get even worse for the city.

During the Second Sino-Japanese War (1937–1945), much of the material aid that China received from the Allied Nations arrived through its ports—particularly the British colony of Hong Kong, which brought in roughly 40 percent of outside supplies. In other words, the city was a strategic target. British authorities evacuated European women and children from the city in anticipation of an attack. In December 1941, on the same morning that Japanese forces attacked Pearl Harbor in Hawaii, Japan also attacked Hong Kong, starting with an aerial bombardment. The British chose to blow up many of Hong Kong’s bridges and other key points of infrastructure to slow the Japanese military’s advance, but to no avail.

Following the Battle of Hong Kong, the Japanese occupied the city for three years and eight months (1941–1945). The Hong Kong University of Science and Technology refers to the episode as perhaps “the darkest period of Hong Kong’s history.” The occupying forces executed around 10,000 Hong Kong civilians and infamously tortured, raped, and mutilated many others. The situation prompted many Hong Kongers to flee, and the city’s population rapidly shrunk from 1.6 million to 600,000 people during the occupation. After the Japanese surrendered to American forces in 1945, the British returned to Hong Kong.

That same year, a 30-year-old civil servant from Scotland named Sir John James Cowperthwaite came to the colony to help oversee its economic development as part of the Department of Supplies, Trade, and Industry. He was originally assigned to go to Hong Kong in 1941, but the Japanese occupation forced his reassignment to Sierra Leone. When he finally arrived in Hong Kong, he observed a war-ravaged city in an even worse state of poverty than Gellhorn had described. It was appropriately nicknamed “the barren island.” With the entrepot business stalled, the British considered handing the seemingly hopeless city filled with war refugees back to China.

But Cowperthwaite had some ideas that would help transform Hong Kong from one of the poorest places on the planet to one of the most prosperous.

What was the miraculous intervention that he proposed? Simply allowing Hong Kong’s people to rebuild their shops, engage in exchange, and ultimately save themselves and make their city rich. Cowperthwaite trusted in the capabilities of ordinary people to run their own lives and businesses. He and his fellow administrators provided the city freedom, public security, the rule of law, and a stable currency, and left the rest to the people. To put it simply, he enacted a policy of doing nothing. That isn’t to say he actually did nothing; keeping the other bureaucrats in check kept him plenty busy. He would later claim one of the actions he was most proud of was to prevent collection of statistics that could potentially justify economic intervention.

Cowperthwaite rose steadily through the bureaucracy and eventually became Hong Kong’s Financial Secretary, a post he occupied from 1961 to 1971. During the 1960s, many countries experimented with centralized economic planning and high degrees of public spending financed by heavy taxes and large deficits. The idea that governments should attempt to steer the economy, from industrial planning to intentional inflation, was virtually a global consensus. Cowperthwaite resisted the political pressure to follow suit. From 1964 to 1970, Britain was ruled by a Labour Government that favored heavy-handed economic intervention, but Cowperthwaite ran constant interference to keep his compatriots from meddling with Hong Kong’s market.

As the Communist-controlled Chinese mainland violently purged any remnants of capitalism (among other things) during the reign of terror later called the Cultural Revolution (1966–76), Hong Kong went down a markedly different path.

In 1961, in his first budget speech, Cowperthwaite opined, “In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster.”

He turned out to be right. Once freed, Hong Kong’s economy became breathtakingly efficient and saw explosive economic growth. The city was among the first in East Asia to fully industrialize and just as rapidly moved to post-industrial prosperity. Hong Kong soon became an international center of finance and commerce, earning its nickname, “Asia’s World City.” Hong Kong’s economic rise dramatically improved the local standard of living. During Cowperthwaite’s tenure as Financial Secretary, Hong Kong’s real wages rose 50 percent, and the number of households in acute poverty fell by two-thirds.

When the Scotsman arrived in Hong Kong in 1945, the average income in Hong Kong was less than 40 percent that of Great Britain. But by the time Hong Kong was returned to China in 1997, its average income was higher than Britain’s.

Cowperthwaite’s successor, Sir Philip Haddon-Cave, named Cowperthwaite’s strategy the “doctrine of positive non-interventionism.” Positive non-interventionism became the official policy of the Hong Kong Government and remained so as recently as the 2010s. For years, the city boasted the world’s freest economy, with bustling financial and trade industries and a human rights record far superior to that of the Chinese mainland.

Then in 2019, Beijing began requiring extradition of fugitives in Hong Kong to the mainland—eroding the independence of Hong Kong’s legal system. In response to the resulting mass protests, the mainland Chinese government implemented a brutal crackdown on Hong Kong’s political and economic independence. In July 2020, a new national security law imposed by the Communist government in Beijing criminalized protests and stripped away several other freedoms previously enjoyed by Hong Kongers. Sweeping changes continue, most recently with an overhaul of Hong Kong’s education system.

Hong Kong was returned to China on the condition that it would remain autonomous until 2047. But the “autonomous territory” is, sadly, no longer truly autonomous.

From a starving city plagued by war and poverty to a shining beacon of prosperity and freedom, Hong Kong’s rise exemplified the potential of limited government, rule of law, economic freedom, and fiscal probity. Sadly, the pillars upon which Hong Kong’s success was built are now crumbling in the tightening fists of the Chinese Communist Party. Whatever the future may hold for the island city, its transformation reflects how much people can achieve when given the freedom to do so. This historic policy lesson merits Hong Kong’s place as our 27th Center of Progress.

Blog Post | Science & Education

Introducing Our Upcoming Book, Heroes of Progress

Human Progress Team — Feb 27, 2024

Over the past two centuries, humanity has become massively more prosperous, better educated, healthier, and more peaceful.

The underlying cause of this progress is innovation. Human innovation―whether it be new ideas, inventions, or systems―is the primary way people create wealth and escape poverty.

Our upcoming book, Heroes of Progress: 65 People Who Changed the World, explores the lives of the most important innovators who have ever lived, from agronomists who saved billions from starvation and intellectuals who changed public policy for the better, to businesspeople whose innovations helped millions rise from poverty.

If it weren’t for the heroes profiled in this book, we’d all be far poorer, sicker, hungrier, and less free―if we were fortunate enough to be alive at all.

Considering their impact on humanity, perhaps it’s time to learn their story?

Heroes of Progress book advertised on Amazon for pre-order

Heroes of Progress Book Forum

On March 21st, the author of Heroes of Progress, Alexander Hammond, will present the book live at the Cato Institute in Washington, D.C. He will be joined by Marian Tupy, the editor of Human Progress, and Clay Routledge, the Archbridge Institute’s Vice President of Research, who will speak on the individual’s role in advancing human progress and the need for a cultural progress movement.

Learn more about the event here.

Praise for Heroes of Progress

Making an inspiring case for progress at this time of skepticism and historical ingratitude is no easy feat. Yet, by relentlessly outlining the extraordinary ability of individuals to shape our world for the better, Alexander Hammond does just that.
— Steven Pinker, author of Enlightenment Now: The Case for Reason, Science, Humanism, and Progress

Innovation is a team sport achieved by people working together, using precious freedoms to change the world, so it’s sometimes invidious to single out one person for credit. But once an idea is ripe for plucking, the right person at the right time can seize it and save a million lives or open a million possibilities. Each of these 65 people did that, and their stories are both thrilling and beautiful.
— Matt Ridley, author of How Innovation Works: And Why It Flourishes in Freedom

The figures in this book are the overlooked and often unknown figures who have transformed the lives of ordinary people, for the better… This book is a correction to widespread pessimism and is both informative and inspirational.
— Dr. Stephen Davies, author of The Wealth Explosion: The Nature and Origins of Modernity

Superman and the Avengers are all very well, of course, but the real superheroes are thinkers, scientists, and innovators of flesh and blood who saved us from a life that used to be poor, nasty, brutish, and short. Alexander Hammond tells their inspiring stories in this magnificent book that will leave you grateful to be living in the world these men and women created.
— Johan Norberg, author of Open: The Story of Human Progress

The 65 innovators honored here made us happier, healthier, and longer-lived. Indeed, it is thanks to some of them that we are here at all. Their story is the story of how the human race acquired powers once attributed to gods and sorcerers―the story of how we overcame hunger, disease, ignorance, and squalor. I defy anyone to read this book and not feel better afterwards.
— Lord Daniel Hannan, president of the Institute for Free Trade

The 65 fascinating stories in Heroes of Progress are
testaments to the ingenuity of humankind in delivering a richer,
healthier, and hopefully freer world. Alexander C. R. Hammond
provides an inspirational reminder that when individuals are
free to speak, think, innovate, and engage in open markets, the
heroic potential of humanity knows no bounds.
— Lord Syed Kamall, Professor of politics and international relations, St. Mary’s University

In Heroes of Progress, Alexander Hammond reminds us that human minds are the fundamental driver of every discovery, invention, and innovation that has improved our lives. By telling the stories of pioneering men and women who have advanced civilization, this book not only honors past heroes of progress, but also provides inspiration for the next generation to use their uniquely human imaginative and enterprising capacities to build a better future.
— Clay Routledge, Vice President of Research and Director of the Human Flourishing Lab at the Archbridge Institute

Blog Post | Politics & Freedom

Underrated Industrialist, Josiah Wedgwood

Josiah Wedgwood was an entrepreneur, abolitionist, inventor, and in many respects the first modern philanthropist.

Paul Meany — Feb 22, 2024

Summary: Josiah Wedgwood challenged the prevailing perspective on entrepreneurship, rising from humble beginnings to become an esteemed industrialists and advocates of Enlightenment ideals. Wedgwood’s story exemplifies the transformative power of entrepreneurship, philanthropy, and innovation, reshaping not only the economy but also societal perceptions of wealth and social responsibility.

This article was published at Libertarianism.org on 12/18/2023.

We use and encounter the word “entrepreneur” constantly in our daily lives. Entrepreneurs are an indispensable part of the modern economy, but for much of the Western world’s history, aristocratic elites looked down on merchants as crass money-makers. A long tradition stretching back to antiquity enforced the aristocratic view of property ownership and agriculture as the only honorable ways of making money. But in the 18^th century, things started to change dramatically.

At the forefront of change was Josiah Wedgwood, a man born the child of a potter, who ended his life as an esteemed industrialist, a trendsetter for English society, and an advocate of Enlightenment ideals. He is also one of first examples of the entrepreneurial philanthropist in the modern sense, using his profits to build schools, homes, and improve the working conditions of his employees. Most famously, he was a staunch advocate for the abolition of slavery.

Wedgwood’s Upbringing

Josiah Wedgwood was born on the 12th of July 1730 in Burslem, Staffordshire. He was the eleventh child of Thomas and Mary Wedgwood. Wedgwood’s family, while not poor, was not particularly rich either.

Wedgwood’s father and his father’s father had both been potters. According to all conventional wisdom, Wedgwood would follow in his ancestors’ footsteps and earn a similarly modest living. Though there were many potters in his hometown of Staffordshire, potters only sold their wares locally. To sell to London was rare; to sell abroad was unheard of. Staffordshire was not the cosmopolitan center of the United Kingdom. By the end of Wedgwood’s life, this all radically changed.

From a young age, Wedgwood showed great promise as a potter, but at the age of nine he contracted smallpox, permanently weakening his knee, meaning he could not use the foot pedal on a potter’s wheel. But Wedgwood took this tragedy in stride despite his young age. While healing, he used his spare time to read, research, and most importantly, experiment. Instead of making the same pots his family had always crafted, he dedicated himself to innovating.

Combining Science and Faith

After his father’s death, Wedgwood’s mother took charge of educating her son imparting to him a deep appreciation for curiosity. Wedgwood came from a family of English dissenters, Protestants who broke off from the English state-supported Anglican church to start their own religious establishments. Specifically, Wedgwood and his family were Unitarian: they emphasized the importance of humans using reason to interpret scripture. Unlike many of their contemporaries, Unitarians did not see science and religion as conflicting ways of viewing the world but complementary. Because of this attitude, Unitarians were often found defending freedom of speech and conscience as indispensable rights for political and religious life.

Where Unitarians split most noticeably from the established Anglican church was their view of Original Sin. Growing up, Wedgwood was taught that the world could be made a better place through human effort. A modern observer views progress and making the world a better place as a common aspiration, however, few of our ancestors believed there was such a thing as consistent material or moral progress. It is easy to see why, given that belief system, most people were content to work the same job their father had using the same tools that had been used for hundreds if not thousands of years.

The Beginnings of a Business

At the age of 30, Wedgwood began his own business in Staffordshire at his Ivy House factory. Because of England’s vast colonial territories, tea and coffee were making their way to England in larger quantities. The emerging middle class began to frequent coffee and tea houses to converse with their peers, dramatically increasing the demand for pottery. Wedgwood observed an increased demand for pottery, but also an increased demand for beauty and style in everyday items.

In Wedgwood’s early days of business, elaborate designs were not popular; what was demanded was the pure simplicity of materials like porcelain. Porcelain, however, was in short supply and extremely fragile. To remedy this, Wedgwood began developing cream glaze that would give earthenware the appearance of porcelain with none of the downsides. After conducting over 5,000 painstaking tests, Wedgwood perfected what came to be known as creamware, something few of his competitors replicated.

Increasingly known for his high-quality products, Wedgwood was invited to participate in a competition with all the potteries of Staffordshire to provide a tea service or set for Queen Charlotte. Knowing this was a crucial opportunity, Wedgwood went all-in on creating a creamware set, even painstakingly using honey to help stick 22-karat gold to his pure white creamware. Wedgwood won the competition and was made the Queen’s potter. Wedgwood was light years ahead of his competition when it came to marketing and branding, and from this point onwards, all of the company’s paperwork and stationery boasted the royal association.

Wedgwood and the Consumer Experience

Wedgwood established showrooms in London to sell his wares. In the 18th century, most stores were cramped and dingy places. Wedgwood also pioneered a range of services we expect as standard today, including money-back guarantees, free delivery, illustrated catalogs, and even an early form of self-checkout. More than any of his contemporaries, Wedgwood focused on perfecting the retail experience. His showrooms were immediately popular, establishing his reputation throughout London, Bath, Liverpool, Dublin, and Westminster. Some showrooms were so popular they caused traffic jams with long-winding lines stretching through the street.

The Division of Labor and International Markets

The increasing demand led to Wedgwood being so successful he founded a new factory in 1769 named “Etruria” after the Etruscans of ancient Italy. Here Wedgwood dreamed of becoming “Vase Maker General to the Universe.” Despite being named after an ancient land, it was arguably at the time the most modern industrial space in the world. To minimize mistakes, Wedgwood broke down the process of making earthenware into a series of smaller tasks. Like the contemporaneous Adam Smith, Wedgwood observed that the division of labor dramatically increases productivity. As an employer, Wedgwood was an exemplar of humane business. Knowing the hot conditions of factories, he attempted to develop a form of air conditioning. He paid his employees well and provided cottages for his workers around Etruria.

With his modernizing practices, Wedgwood brought artistic perfection to an industrial scale. Though many of his popular products were initially purchased by the aristocracy, he eventually reduced the prices to appeal to an increasingly broader market. Wedgwood noticed that a high price was necessary to make the vases esteemed ornaments for palaces, but once aristocrats popularized his products, he would then reduce the price accordingly. Everyday people began to drink from mugs and decorate their homes with vases that for centuries had been exclusively owned by aristocrats.

Wedgwood had transformed Staffordshire from a town that nearly always sold their produce locally to a place that supplied goods for the whole nation. But Wedgwood saw the potential for further expansion abroad. Wedgwood began to ship to Europe but then rapidly expanded across the globe to places like Mexico, the United States, Turkey, and China. By the 1780s, Wedgwood was exporting most of his products abroad. Though during this period of his life business was booming, Wedgwood’s smallpox afflicted knee worsened, resulting in his leg being amputated without anesthetic and replaced with a wooden prosthetic. Seemingly unbothered, Wedgwood Christened the event “St. Amputation Day” and resumed work.

Business for a Good Cause

As Wedgwood shipped more goods abroad, he increasingly frequented London’s port, the largest slave-trading port in the world at the time. Wedgwood saw the whip-scarred bodies of enslaved people being shipped in from abroad. Wedgwood abhorred slavery, not only because it was immoral, but because for Wedgwood, it was not befitting of the national character and the esteem Britain ought to hold as a free nation. At its inception, in 1787 Wedgwood joined the Society for Effecting the Abolition of the Slave Trade.

He campaigned against slavery by using his craft to create mass-produced cameos of a black man in chains on his knees against a white background with an inscription beneath reading “Am I Not a Man and a Brother?” Wedgwood gave away these medallions free of charge to abolitionist groups, even sending medallions to Benjamin Franklin, then to the president of the Pennsylvania Abolition Society. Franklin praised his medallions, saying their effectiveness was equal to the best written works against slavery. Gentlemen had this image inlaid in their snuff boxes, and ladies wore it on bracelets and hairpins.

A friend of Wedgwood and fellow abolitionist wrote of Wedgwood’s medallions, “the taste for wearing them became general, and thus fashion, which usually confines itself to worthless things, was seen for once in the honorable office of promoting the cause of justice, humanity and freedom.” Wedgwood saw how fashion could be a vehicle for political change. His medallions perfectly captured the message of the abolitionist cause, two hundred years before the advent of the t-shirt, today’s preferred method of displaying one’s political affections.

Wedgwood was not only a master craftsman, an industrialist, and an activist: he was also a scientist. In 1765, he joined the Lunar Society of Birmingham, a group of industrialists, scientists, and philosophers who met during the full moon because the light made the journey at night easier. Members included people such as Joseph Priestly and Matthew Bolton. In 1783, Wedgwood was elected to The Royal Society of London for Improving Natural Knowledge by inventing the pyrometer, a device used to measure the high temperatures of kilns while firing pottery.

Death and Legacy

After a life dedicated to his work and the betterment of the world, Wedgwood passed away on the 3rd of January 1795 at the age of 64. The name Wedgwood became synonymous with excellence in pottery, and remains so today.

Throughout Western history, aristocrats, nobles, and other elites often peddled a narrative that prosperity was achieved through familial ties of property ownership and military prowess. People like Josiah Wedgwood challenged this narrative by showing a new path for the Enlightened industrialist and philanthropist. Instead of making his fortune from familial connections and war, Wedgwood showed the peaceful path to wealth by simply fulfilling consumers’ desires. His marketing practices were light years ahead of his time, and his penchant for building a distinct brand through advertising and high-quality goods was an unprecedentedly modern strategy at a time when the wealthy still wore powdered wigs.

Wedgwood used his wealth to benefit the world by treating his workers with dignity while advocating for humane causes like the abolition of slavery. Stories like Wedgwood’s counter the anti-capitalist narrative of the corrupting tendencies of private enterprise, showing how business can be humane, cosmopolitan, and most importantly, for Wedgwood, beautiful.