The Moving Target

No single person has done more to promote the open society—a society in which free expression and political opposition are protected—over the past thirty years than George Soros. During the Communist era he used his Open Society Foundation to support greater freedom in the Soviet bloc and China. After the Communist system imploded his foundations acted to mitigate the impact of ethnic war in former Yugoslavia. Later they backed reform movements in Georgia and Ukraine, and Soros formed close relationships with the new leaders who emerged, such as President Mikhail Saakashvili of Georgia. This led Russian President Vladimir Putin to accuse him of orchestrating the “color revolutions.”

For many years his global network of foundations has helped people in many countries suffering from persecution—women, gays and lesbians, gypsies, and others—to achieve a secure place in society. In the United States the Open Society Institute has contested current policies on illegal drug use, HIV/AIDS, and health care during terminal illness. More recently it has addressed the ” resource curse”—the damaging effect of sudden oil wealth in developing countries. Soros has also taken a strong stand against US foreign policy, opposing the Iraq war and attacking the “war on terror” as misconceived and counterproductive. Aiming to make the world safe from terrorism and at the same time to entrench American supremacy, the Bush administration has made the world more dangerously unstable while causing a steep decline in American power.

In The Age of Fallibility—his most important book to date and a stark warning of the dangers facing open societies today—Soros attempts to explain this turn of events. Much of the book is a probing reexamination of the conceptual frame that underpins Soros’s activities both as an investor and as a philanthropist; but some of its most interesting passages have to do with Soros’s personal experiences of what he calls “far-from-equilibrium situations”—conditions in which accepted rules of human behavior are suspended or destroyed.

Such a situation came into being with the Nazi invasion of Hungary in 1944, when like other members of the country’s Jewish population Soros and his family faced mortal danger. Soros survived owing to the foresight and courage of his father, Tivadar, who acted decisively to help the family and many others. “It was his finest hour,” Soros writes.1 Tivadar Soros, he writes, was mentally prepared for the collapse of normal life by his time in Siberia after having been taken prisoner by the Russians when serving as a volunteer in the Austro-Hungarian army in World War I. He instilled in his fourteen-year-old son the fact that “there are times when the normal rules do not apply, and if you obey the rules at those times you are liable to perish.” Soros describes this as “the formative experience of my life,” and there can be little doubt that it imbued in him a willingness to depart from established expectations and wipe the slate clean each day that has shaped his career as an investor. At the same time it implanted in him questions that have pursued him ever since. How could human beings be seized by irrationality as so many were in the Nazi period? What are the flaws in human reason that make such “far-from-equilibrium situations” possible?

The range of social and political causes to which Soros has contributed is remarkably wide, but this is not simply a large-scale exercise in philanthropy of the sort that is now commonly practiced by some among the seriously rich. Uniquely, Soros has used his wealth to promote a view of human knowledge and progress that confronts some of the central dilemmas of liberal thought at the present time. In managing his foundations—which he does with the active intensity he brought to his hedge funds—Soros has been guided by a version of Karl Popper’s view of human knowledge. Mainstream Western philosophy has traditionally aimed to secure a foundation for knowledge that is beyond reasonable doubt, but according to Popper we should not seek any such foundation. In science, which Popper sees as the model for all branches of inquiry, false theories are eliminated so that better ones can be developed; but no theory can claim to contain the final truth. Rejecting any method of induction in which past experience is used as a guide to the future, Popper advocated a method of trial and error in which knowledge grows by a process of falsification. Our most rational beliefs are not those that are most strongly verified, but those that have best survived criticism and refutation.

This philosophy is often called “fallibilism”—a term coined by the American pragmatist Charles Sanders Pierce, which has also been applied to describe John Stuart Mill’s theory of knowledge. Popper’s fallibilism is distinctive in rejecting induction, and many philosophers think that in leaving no reason for thinking that we can approach truth it may in the end be closer to skepticism. In contrast, for Popper an acceptance of fallibility facilitates the growth of knowledge and is also the defining feature of a progressive society. As he explained it in The Open Society and Its Enemies (1945), an open society is one whose public policies are formulated and tested as scientific theories, with those that fail being revised or abandoned. Accepting their fallibility and employing trial and error, open societies can bring about a cumulative improvement of human life that parallels the growth of knowledge in science.

Soros has always acknowledged the vital importance to him of Popper’s philosophy, but he is by no means an uncritical disciple. When it is applied to human affairs, he believes, Popper’s theory of fallibility does not go far enough. Popper believed the same methods could be used in natural science and in social inquiry; but we cannot study the human world in the way we study natural objects. Social objects are not like stars or stones, which exist independently of how humans think about them; social objects are partly created by human perceptions and beliefs, and when these perceptions and beliefs change, social objects change with them. This introduces an element of uncertainty into our view of the world that makes us even more prone to error than Popper believed: we can never have objective knowledge of society, if only because our shifting beliefs are continuously changing it.

Soros calls this relationship “reflexivity,” and argues that it undermines standard economic theories. Believers in laissez faire—or market fundamentalists, as Soros sometimes calls them—claim that when left to their own devices markets tend to equilibrium. But as Soros rightly notes, this theory “is just as much a perversion of supposedly scientific verities as Marxism-Leninism is.”2 Since they are created and run by fallible human beings, markets have a built-in tendency to overshoot and collapse in recurrent cycles of boom and bust. It is not only that our prevailing economic theories may be mistaken. Rather, they are bound to give a distorted picture of social reality. For example, money is not something that can be measured unproblematically in the way physical processes can be. It is embodied in human practices, which may change when it is known that an attempt at measurement is being made. When we act on a theory about society we always risk altering the reality to which the theory refers. As a result of this fact—which Soros terms “radical fallibility”—the condition of coordination postulated in economic models of equilibrium, which rests on an assumption of perfect knowledge, is not even a theoretical possibility.

Soros believes this insight into reflexivity has been vitally important in his investment career; but his extraordinary success, which includes remarkable financial results over long periods and developing the hedge fund model of investment beyond anything that existed before, may owe more to his early experiences and his intuitive gifts than to his theoretical beliefs. That does not mean his insight may not, in essence, be sound.

In a well-known critique the Nobel Prize winner Robert Solow argued that Soros neglects well-established theories of disequilibrium while his account of the boom-bust process “is not a theory at all.”3 No doubt Solow is right that many economists have questioned equilibrium models—most obviously John Maynard Keynes, who identified a large-scale breakdown of equilibrium in his analysis of the Great Depression.4 It is also true that Soros is not always consistent in his account of how reflexivity operates, sometimes referring to the paradoxes that arise when we try to predict our own behavior, sometimes to the dynamic interactions that occur in public settings where others are influenced by what we do or say, and sometimes to self-reinforcing shifts of mood of the kind that have been studied in the psychology of crowds. When in The Age of Fallibility Soros illustrates the workings of reflexivity in financial markets he refers to all of these processes without clearly distinguishing them, and it would be clarifying if he could do so in future writings.

Even so, it seems to me Soros is right to think that the fact of reflexivity implies a basic limitation in our knowledge of the social world. Like other aspects of human life, economic activity is shaped by volatile beliefs. The goal of natural science is to develop theories that contain universal laws; but the social sciences deal with unique historical processes, and the shifts of human beliefs cannot be expressed in such laws. To object to Soros’s account of reflexivity on the ground that it is not a consistent theory is to miss the central point, which is that theories of the kind that have been developed in natural science are not possible in the study of society.

Soros is not alone in thinking that the phenomenon of reflexivity limits the ambitions of the social sciences. Philosophers such as Ludwig Wittgenstein and Peter Winch have thought likewise, as have hermeneutic theorists such as Alfred Schutz and Charles Taylor and sociologists such as Anthony Giddens. All these thinkers accept that the project of a unified science—which was central in the Vienna School of Logical Positivism, and which, despite his hostility to that school, Popper shared—breaks down when it is applied to the human world. In also rejecting this project Soros has moved away from Popper’s philosophy, but he continues to share Popper’s belief that progress can be achieved in ethics and politics by using the methods of science. Like Popper he assumes that when public policies prove to be ineffective or disastrous the reason can only be that they embody mistaken hypotheses, whose errors can be corrected by criticism. This assumption is central to Popper’s brand of rationalism, and it also shapes much of Soros’s analysis of the failings of the Bush administration. The trouble is that the view of the world expressed in Bush’s foreign policies may not be formed from beliefs that can be falsified.

In an earlier book, The Bubble of American Supremacy (2004), for example, Soros noted that the outlines of the Bush doctrine were set out in a 1997 mission statement of the neoconservative Project for the New American Century.5 Noting that at the close of the twentieth century the United States was the world’s preeminent power, the signers proposed a number of policies aiming to entrench this position. Soros argued that as a result of these policies the United States entered

far-from-equilibrium territory. I see a certain parallel between the pursuit of American supremacy and the boom-bust pattern that can be observed from time to time in the stock market. That bubble is now bursting.

In The Age of Fallibility, Soros goes further: “In the years since 9/11, America’s power and influence in the world have declined more than at any other time in its history.” The proximate cause of this change is the invasion of Iraq, which Soros describes as “an ill-conceived and ill-executed adventure that would undermine the American supremacy that it was meant to underpin.” The goal of the Bush administration may have been to secure American primacy in a stable world order, but the upshot has been to create a situation in which “the main obstacle to a stable and just world is the United States.”

In The Bubble of American Supremacy Soros argued that the Bush administration adhered to a far-reaching ideology. Market fundamentalism, religious fundamentalism, and the neoconservative doctrine of American supremacy came together to support a foreign policy that emphasized rivalry between states rather than the possibilities of international cooperation. In The Age of Fallibility, Soros modifies this view: “The current regime has the support of disparate groups unified only by the desire for political power and influence.” Soros is right to accept that his original analysis was faulty. For much of the time since Iraq was invaded, the administration has been floundering, unable to mount a coherent response to the calamitous developments it has set in motion. It would be fanciful to suppose that it has been implementing any rationally defensible theory or strategy.

But that does not mean it lacks a definite view of the world. Though Soros notes “the rise of religious fundamentalism which until recently stayed at the fringes of politics,” he says little in The Age of Fallibility about the role of religion in the Bush administration. Yet it is here more than anywhere else that it has departed from its predecessors. Some of the most dangerous features of its approach to foreign policy betray the influence of beliefs deriving from Christian fundamentalism. Consider strategies for dealing with terrorism. Soros acknowledges fully that terrorist threats exist; but he suggests that the “war on terror” embodies a mistaken metaphor. Successful counterterrorist strategies have focused chiefly on security measures and political initiatives rather than conventional military operations. These strategies may include concentrated military action—as when Taliban bases were destroyed by America and its allies in Afghanistan—but campaigns of the kind that the US is fighting in Iraq tend to alienate the general population and boost terrorist recruitment. These facts are well understood by military and intelligence analysts in the United States and throughout the world. If the administration persists in its counterproductive policies the reason cannot be that it is unaware of their effects. No doubt intellectual inertia plays a part, but the administration’s view of the world has a delusional quality that goes beyond such errors of judgment.

The “war on terror” is not just a mistaken metaphor. It embodies a tendency to think of international conflict in theological terms that has long been present on the American right, which the increased power of evangelical Christianity has reinforced. A Homeland Security Planning Scenario document published in July 2004 describes the terrorist threat facing the United States as being perpetrated by the Universal Adversary—a description that is echoed in Bush’s many references to a “war against evil.”6 Conservative evangelicals count heavily both in funding the Republican Party and as voters. There is not much doubt that they form the principal intended audience of Bush’s apocalyptic rhetoric.7 The Christian right’s role in the Bush administration is not simply that of an ally that must be courted and appeased, however. There is a clear affinity in worldview. Millennialist beliefs shape the administration’s thinking, in secular as well as overtly religious forms.

In his seminal study of late medieval millenarian movements,8 Norman Cohn argued that the beliefs that animated these movements did not die out in modern times. They were reproduced in twentieth-century totalitarian ideologies. In different ways, Nazism and communism claimed to be based on science but were actually vehicles for apocalyptic myths. Each believed a major rupture in history was imminent that would usher in a new world. Cohn’s analysis of the political role of millenarian beliefs may be relevant today. Though they may present their news as based on social-scientific theories of modernization, neoconservatives who believe that humankind is on the brink of an American-led “global democratic revolution” in which tyranny will be overthrown forever are voicing a chiliastic faith. They are engaging in prophecy, no less clearly than their allies among Christian evangelicals when they speak of Armageddon and the End Time. The belief that a catastrophic conflagration in the Middle East would inaugurate a new world order to which some on the Christian right subscribe is not an empirical hypothesis that can be revised on the basis of experience. For those who accept it, it is a revealed truth. Equally, no reverse will alter the belief of neoconservatives that the world is destined to adopt an American version of democracy. Inasmuch as it is shaped by such millenarian beliefs the Bush administration’s foreign policy is a faith-based mission rather than a rational engagement with the world.

Soros tries to account for the disastrous foreign policy record of the Bush administration since September 11 as the result of a series of errors, but he is plainly dissatisfied with this explanation. “Who would have thought,” he asks, that “the oldest, most well-established, and most powerful open society in the world could pose a threat not only to the concept of open society at home but also to peace and stability in the world? Yet that is what has happened in the aftermath of the terrorist attack of 9/11.”

No doubt part of the answer is in the trauma induced by the terrorist attacks, which the administration exploited to stifle criticism of its policies. Yet this can hardly be the whole story. Soros tells us that he “watched events unfold after 9/11 with a bias rooted in my adolescent experience of Nazism and communism. My conceptual framework was also based on that experience.” He is far from claiming that the United States is becoming a totalitarian regime—it remains “a functioning democracy with an independent judiciary and the rule of law.” He suggests that there are some “similarities in propaganda methods” between totalitarian propaganda and opinion management by the Bush administration, and refers to the work of George Lakoff, whose work in cognitive science has enabled the manipulation of public opinion to be better understood.9 But he remains bemused by the success with which the administration has been able to impose its interpretation of reality: “How is that possible? It is almost as if people were clamoring to be deceived.”

The missing element here is the pivotal political role of millennialist religion. The attacks activated apocalyptic beliefs widely current in sections of the American population, which the Bush administration has been able to mobilize in support of its agenda. This was not simply cynical manipulation, for there seems little doubt that Bush shares these beliefs. Millenarian belief systems of the kind found on the Christian right are not explanatory theories that can be overturned by contrary evidence. They are myths, which serve a need for meaning rather than truth. The worldview of the Christian right embodies a view of history that is framed in eschatological concepts, according to which American power can be used to rid the world of evil. In theological terms the belief that human action can eradicate evil is decidedly heterodox. Judged by empirical standards it can only be termed irrational.

During much of the last century it seemed that the capture of power by irrational systems of belief could occur only in dictatorial regimes. Nazi Germany and the Stalinist Soviet Union were closed societies whose ruling ideologies could not be exposed to critical scrutiny. Given the success of liberal democracy in defeating its rivals and spreading throughout much of the world it was easy to assume that it has a built-in rationality that gives it an advantage over any kind of authoritarianism. Open societies were liberal democracies, almost by definition, and it seemed they would come into being wherever dictatorship had been overthrown.

Soros is clear that this was much too simple a view:

The collapse of a closed society does not automatically lead to an open society; it may lead to continuing collapse and disintegration that is followed by some kind of restoration or stabilization. Thus a simple dichotomy between open and closed society is inadequate…. Open society [is] threatened from both directions: too much liberty, anarchy, and failed states on the one hand; dogmatic ideologies and authoritarian or totalitarian regimes of all kinds on the other.

In fact, Popper’s taxonomy may need a more fundamental revision than Soros has yet realized. When closed societies collapse but fail to make the transition to openness the reason need not be that they languish in anarchy or suffer a return to dictatorship. It may be that they adopt an illiberal form of democracy. Along with the liberal democratic tradition that goes back to Locke and the English civil war there is a tradition, originating in the French Revolution and formulated theoretically by Rousseau, which understands democracy as the expression of popular will. The elective theocracy that is emerging in much of post-Saddam Iraq is a democratic polity in the latter sense, as is the current regime in Iran; so is the Hamas government in Palestine.

To be sure, these regimes often lack freedom of information and expression and legal limitations on government power, which are essential features of democracy in the liberal tradition. In these respects they are closed societies; but they are not dictatorships. It is often forgotten that democracy, defined chiefly by elections and the exercise of power in the name of the majority, can be as repressive of individual freedom and minority rights as dictatorship—sometimes more so.

To the extent that they repress intellectual freedom, authoritarian regimes necessarily depart from any ideal of the open society; but they may on occasion apply reason in the formulation of their policies more consistently and successfully than the most well established liberal democracy. This is illustrated in the ongoing expansion of Russian power. With characteristic candor Soros declares himself “astounded” by the reemergence of Russia as a key player in the international system.

In part this is a side effect of the global energy crisis, which he examines in an incisive chapter. Russia is able to assert itself in international affairs and disregard Western disapproval of its regressive internal policies because it commands vast reserves of natural resources—above all, oil and natural gas—that are urgently needed during the present period of accelerating globalization. Russia’s revival as a major power is also, however, a product of the policies the Putin regime has pursued. Using European and international dependency on Russian energy supplies as a lever, Putin has skillfully advanced Russia’s geopolitical interests. He has made mistakes—such as his heavy-handed intervention in Ukraine—but they have arisen from miscalculations rather than irrationality. Except with respect to the intractable problem of Chechnya, Russian policies have been highly effective in achieving their goals. Chinese foreign policy has followed a similarly pragmatic pattern, and if anything has been even more successful. While Russia and China are advancing, America has suffered an unprecedented loss of power and influence. No doubt the Bush administration has committed many avoidable mistakes; but its central folly has been to implement a faith-based foreign policy in which the identification and correction of errors play hardly any part.

Indeed, rather than recognizing and rectifying its errors the administration tends to compound them. It seems likely that some neoconservatives in the administration would welcome an escalation of the current conflict in the Middle East to the point where US military action against Iran could appear justified. In part their concern is caused by the rise of Iran as the predominant power in the Gulf—a development furthered by the war in Iraq, which by destroying Saddam’s secular despotism removed the chief counterweight to Iran’s regional power and created the conditions for the emergence of an Islamist regime that is bound to be increasingly subject to the influence of Tehran.

American air strikes on Iran would reinforce the negative consequences of the war. They would have a highly destabilizing effect on global oil supplies, damaging the US and benefiting Russia. They would also increase the influence in the Gulf and throughout the Islamic world of the apocalyptic Shia tradition expressed by Iranian president Mahmoud Ahmadinejad, and embroil the US in an expanded and intensified regional conflict. The overall result would be to accelerate the decline of American hegemony that began with the invasion and occupation of Iraq. Less than twenty years after the Communist collapse, the rising powers in the international system are authoritarian regimes that will not tolerate open political opposition. Closed or semi-closed societies are proving more capable of framing and executing rational strategies than the world’s premier open society, whose faith-based foreign policies have been consistently counterproductive. The “new American century” could last less than a decade.

Soros’s early experiences left him with a need to understand human behavior in extreme circumstances, which led to his lifelong engagement with the ideas of Popper. Popper never doubted that the ills of society could be remedied by the use of reason, and despite his criticisms of Popper’s philosophy Soros would like to agree. It is a belief—or hope—that has inspired him to promote intellectual and political pluralism throughout the world and it informs his admirable stand in opposing the follies of the Bush administration. Yet the searching self-criticism he undertakes in this book points in a different direction. If there cannot be a science of society, neither can society be expected to repeat the cumulative advance that has been achieved in science. The extreme situations that Soros experienced as a youth, and which in a different form he sees today, are not solely a result of fallibility—even of the radical kind he discusses in his account of reflexivity. They have a deeper source in irrational beliefs, which remain potent forces in politics. Over the long sweep of history, far-from-equilibrium situations are normal. Open societies can never be safe from the disorders of faith.

  1. 1

    Tivador Soros recounts his experiences in Masquerade: Dancing Around Death in Nazi-Occupied Hungary (Arcade, 2001).

  2. 2

    George Soros, “The Capitalist Threat,” The Atlantic Monthly, February 1997, pp. 45–58.

  3. 3

    Robert M. Solow, “The Amateur,” The New Republic, February 8, 1999, p. 29.

  4. 4

    In The Age of Fallibility (footnote on pp. 11–12), Soros acknowledges that a number of important twentieth-century economists “recognized that knowledge is imperfect and that this leads to fundamental difficulties in defining economic rationality,” and mentions F.A. Hayek, J.M. Keynes, and Frank Knight as examples.

  5. 5

    The text of the mission statement, signed by Dick Cheney, Paul Wolfowitz, and Donald Rumsfeld, is reprinted in The Bubble of American Supremacy: Correcting the Misuse of American Power (Public Affairs, 2004), pp. 5–7.

  6. 6

    The document can be viewed at

  7. 7

    For the role of evangelical Christianity in Bush’s rise to the presidency, see Kevin P. Phillips, American Theocracy: The Peril and Politics of Radical Religions, Oil, and Borrowed Money in the Twenty-first Century(Viking, 2006); and Michael Lind, Made in Texas: George W. Bush and the Southern Takeover of American Politics (Basic Books, 2003).

  8. 8

    Norman Cohn, The Pursuit of the Millennium: Revolutionary Millenarians and Mystical Anarchists of the Middle Ages, revised and expanded edition (Oxford University Press, 1970). Cohn has also analyzed the role of apocalyptic myths in fueling anti-Semitism. See his Warrant for Genocide: The Myth of the Jewish World Conspiracy and the Protocols of the Elders of Zion (London: Serif, 1996).

  9. 9

    See Lakoff’s recent book, Whose Freedom?: The Battle over America’s Most Important Idea (Farrar, Straus and Giroux, 2006).