1 Hong Kong Economic Journal, 7 October 2015 Civil Law, Common Law, and Social Control Yue Chim Richard Wong Discordance over “one-country two-systems” has been growing, with Beijing insisting on implementing “one-country” and Hong Kong persisting in defending the “two- systems”. A central issue creating this divide lies with the fact that China operates on a civil law system and Hong Kong the common-law system. Tensions between civil and common law systems are the ultimate cause of some of the incongruences in political cultures, social lifestyles, and economic organizations. If not properly understood, these characteristics fuel misunderstandings, some of which are avoidable. Those that are difficult to avoid have to be resolved through wise accommodations, not stubborn confrontations. Recognizing that these deep differences are rooted in the incongruences of the two legal systems could be a first step toward political dialogue that could lead to accommodation. Successful resolution of these conflicts through this approach would be beneficial for all parties. Legal systems reflect different styles of control over economic and social activities. The common law strategy seeks to support private and market-originated initiatives, whereas civil law seeks to replace such outcomes with state-desired outcomes. Civil law, which originated with the French, is thus “policy implementing,” while common law, which originated in England, is “dispute resolving.” Civil law embraces “socially-conditioned private contracting,” in contrast to common law’s support for “unconditioned private contracting.” The contrast between the two legal systems is most prominent in terms of their influence on financial market development. The fact that after two centuries of modernization, London is an international financial center but Paris is not, speaks volumes about the difference between British common law and French civil law. This idea that the legal system is the primary driver of different forms and styles of societal development comes from the Legal Origins Theory that emerged out of the pioneering work developed chiefly by Harvard economist Andrei Shleifer. It demonstrates that legal systems exercise pervasive and persistent influence not only over finance, but also the economic life of a place, the beliefs of its people, and its politics. Some have criticized such an interpretation and argued that legal origins are merely a proxy for culture or politics or something else. But the more impressive evidence is in favor of the Legal Origins Theory because the influence of legal systems is present even after their introduction into foreign societies of different cultures and