===== PAGE 1 =====

The Unseen Dimensions of Wealth:
Towards a Generalized
Economic Theory

Reviewed by Edward H. Kaplan

treatise. Nor does it succeed in laying bare the principles of how an

economy behaves under normal, that is, nonequilibrium, conditions.
That is just as well, since such principles almost certainly cannot be discovered
anyway. Much better, it is a slightly disguised but interesting and useful
economic history which succeeds in raising the economic experience of
post-1949 Hong Kong almost to the level of a Weberian ideal type of a par-
ticular sort of market economy.

If Henry Woo, a talented Hong Kong economic journalist, is more nearly
like George Gilder than Israel Kirzner, this is not to be despised. Like Gilder,
he has read some of the Austrians, and appreciates them, at least for their
understanding of the nonreality of equilibrium, but (also like Gilder) he has
not entirely mastered Austrian principles. Sometimes this leads him to rein-
vent the wheel, at other times to reinvent the triangle and call it the wheel.

Woo's notion of “human capital,” for example, is blessedly free of the nar-
row focus on formal education of Schulz or Becker, whose work has been so
mischievously exploited by apologists for a bloated U.S. tertiary education system.
Informal learning on the job and by thoughtfully scanning the evolving market
is, for Woo, much more important. Indeed, without quite indicating whether
he has derived it from the Austrians, he recapitulates the notion epitomized by
von Mises and Rothbard that there is no homogeneous Labor, but only a con-
geries of particular laborers, most of whose services constitute unique goods.

Woo also incorporates the von Mises-Hayek theory of the business cycle
into his analysis, but because he does so from the more visible perspective of
demand for credit rather than central-bank-induced increased supply of credit,
his argument is far less clear than the Austrian original both to the reader and
(one suspects, from his neglect of the role of government-induced increases in
the money supply as a cause of inflation) to himself as well.

D espite the large claims implied by its subtitle, this is not a theoretical

The Unseen Dimensions of Wealth: Towards a Generalized Economic Theory by Henry K.H.
Woo. Fremont, Calif.: Victoria Press, 1984.


===== PAGE 2 =====

244 « The Review of Austrian Economics

Of course, the good parts as well as the theoretically murky parts of his
general treatment are the consequence of Woo's frankly announced decision
to generalize from the modern Hong Kong experience. Hong Kong has barely
enough land to stand on. The adaptability of its labor force has counted for
far more than its relatively sparse and simple supply of capital goods. Its banks
are relatively free to respond to domestic and foreign pressures to create money,
so it is natural for Woo to focus on these pressures rather than on the increased
money supply itself.

Though in principle it need not be so, in practice it is reasonable for Woo
to emphasize the tendency of an unfettered market to spontaneously grow. Woo's
general stages of growth—a long stasis before the market is unchained, a rela-
tively short burst of unconstrained growth, followed by a long period of con-
strained growth (caused by, first, compounding manipulation from outside the
market and, second, a constantly shifting disequilibrium permitted by ineffi-
cient manipulation within the market)—all faithfully reflect the stages of Hong
Kong's actual economic history.

The book is also seeded with a number of bits of illuminating narrative,
such as Woo’s suggestion that the recent appearance of better housing across
the waters in the New Territories may be making for greater inefficiency because
workers commuting so far to their jobs can no longer as easily carry piecework
home during the busy season to be worked on by the grannies and children.
A bit of comparative historicizing on this point (which Woo does not do) will
allow one to recognize that the Hong Kong experience is not entirely unique,
and that even diligent Chinese at some stage begin to favor the leisure of a
decent apartment over labor, just as did diligent and then prosperous Jewish
refugees from the Russian Pale after 1920, when they abandoned the slums
of the Lower East Side of New York for the comparatively palatial apartment
houses of the South Bronx. :