Reinterpreting the Kowloon Walled City: From a “cesspool of iniquities” to an entrepreneurial discovery lab

The Kowloon Walled City (City), as curated to the world in the media, emerged in the 1960s and 1970s as the world’s most densely populated and “lawless” neighbourhood, but was demolished in the early 1990s to make way for a public park. It was institutionally unique: de jure once a Chinese exclave in Hong Kong under jurisdictional dispute, but a territory where few of Hong Kong’s and none of China’s laws or regulations were enforced. What resulted was neither the predicted tragedy of the commons nor the tragedy of the anti-commons, but an unusually permissive arena for bottom-up property boundary readjustment, property development and non-violent market entrepreneurship. The City exhibited an interesting interplay of minimal state intervention and expansive entrepreneurial action based on some state delimitation of property rights. Two case studies of its land assembly demonstrate high-rise densification, using documentary (cadastral, census and archival) information. The densification facilitated the entrepreneurial innovation of unlicensed medical and dental services that made up for colonial Hong Kong’s shortages in such services. These and similar outcomes represent a Kirznerian innovation lab on a Coasian property rights foundation.