(This essay was published in South China Morning Post on 25 May 2016.)


When the Cultural Revolution erupted fifty years ago, political ideology was veering to the left around the world. I was a fifth-form student at that time and quickly realized that students were blaming capitalism for inequality and injustice. But to me, capitalism was just an economic term.


In the summer of 1968 I read The Communist Manifesto to learn more about capitalism. I must have been quite affected by it because I then decided to study economics. By sheer chance, I ended up at the University of Chicago, whose economics department was the intellectual nemesis of Marxist reasoning.


At Chicago, I gained more than an understanding of capitalism as an economic system. I also learned how capitalism and socialism relate to different ideals of freedom and democracy. Three propositions stood out:


First, that capitalism provides better protection for individual freedom than socialism, while the latter threatens individual freedom and befriends collective freedom.


Second, that the political ideals of liberal democracy befriend capitalism, while the political ideals of populist democracy befriend socialism.


Third, that the political ideals of populist democracies lead to tyrannies.


Consider the first proposition. Under capitalism, a citizen can own private property and his rights over his property are recognized. If the state threatens those rights, he may choose to leave the state with his property before the threat materializes. Capitalism assures citizens a higher degree of freedom because of private property rights.


Under socialism, a citizen does not own private property, so when a person’s rights are threatened he is free to leave but has no property to bring with him. As a result his choices are materially reduced. The lack of private property rights under socialism represents a threat to individual freedom.


Next consider the second proposition. Building on the ideas of Thomas Hobbes (1588-1679), who argued that the state is a social contract chosen voluntarily by the people to escape from the anarchy and violence that characterize the state of nature, John Locke (1632-1704) proposed a model for liberal democracy that protects the private spheres of individual freedom and the capitalist economy.


In Locke’s view, the empowered person’s rights, including private property rights, are recognized, protected and defended by the state operating under the rule of law. The state is limited from interfering with individual freedom, normally through constitutional limits and the separation of powers.


By contrast, Jean-Jacques Rousseau (1712-1778) argued that man is a self-sufficient ”noble savage” in the state of nature, equal to and undifferentiated from other men, and that private property is the beginning of evil – the original source of inequality and injustice.


Rousseau’s solution is a social contract where everyone participates equally to constitute the “general will,” premised on the rejection of private property. The morally decadent and corrupt present must be overthrown to create a new future – an idea borne out in such upheavals as the French Revolution and one part of the Chinese Cultural Revolution.


Finally, consider the third proposition. Both Rousseau’s populist democracy and Locke’s liberal democracy operate according to majoritarian democratic rules. But a populist majoritarian democracy without the protection of individual and private property rights will tend towards coercion and socialism. Any individual not in the majority will be oppressed harder and more frequently. In a liberal democracy, on the other hand, life will be less coercive and capitalism will feel more at ease.


Most of the past century was characterized by the fear of populist majoritarian democracy, centered on whether minority and individual interests would be sacrificed. But that is increasingly being replaced by the fear of paralysis under the tyranny of (often shifting) minorities. This has led to the fragmentation of politics.


Groups have arisen who no longer trust politicians and prefer to bet on outsiders with no political experience. This delegitimizes political compromise – an essential element for protecting individual freedom by limiting the scope and scale of coercive measures.


The short term result is dysfunctional governments and political gridlock, which will only feed the demand for tyranny. The curse of the present generation is that liberal democracy will give way to populist democracy. Some argue Hong Kong does not have democracy, but we do have populism and elections that do not lead to any political solution.


Political reform in Hong Kong is a necessary condition for addressing our political problems. But more urgently, we must first answer whether we want a liberal or a populist democracy. Time may not be on the side of a liberal democratic solution.

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