The World on a String

Open Society: Reforming Global Capitalism

by George Soros
Public Affairs, 365 pp., $26.00

George Soros is the best-known financial speculator of our time, godfather of hedge funds, those fast-moving and largely unregulated raiders in the corporate jungle that make their killings from fluctuations in the prices of stocks, commodities, currencies. When he writes books readers might reasonably expect tips on how to make money. They will be disappointed. Soros’s ambitions are altogether more exalted. Having become a billionaire, he has set himself up as the philosopher and statesman of global capitalism, tirelessly telling the world that it now needs to remove the ladder by which he himself climbed to fame and fortune. On January 2 he was reported predicting a “hard and bouncy” landing for the US economy.

It is true that recently his predictions have been less successful. In his book The Crisis of Global Capitalism (1998), he foretold the imminent collapse of the world economy. However, it was not global capitalism that collapsed, but Soros’s reputation as a financial wizard and post-Communist guru. He was revealed as fallible, both as a moneymaker and as a thinker. As he now admits, he failed to foresee that the Federal Reserve Bank of New York would organize a bailout of Long Term Capital Management, the US hedge fund that found itself with capital of $600 million against debts of more than $1 trillion. He also failed to give “adequate weight” to the Internet revolution which pulled up the US economy and stock market to new heights, and locked peripheral countries ever more tightly into the global market. His “boom-bust” model, he now concedes, is silent on when the bust will happen. Chastened, he writes: “I made my bet and lost. It was a painful experience to endure both personally and professionally.”

His new book, Open Society: Reforming Global Capitalism, may be read as an effort at retrieval. It is a reworking of his much-criticized earlier work, but is more modest in its theoretical claims and predictions, though no less ambitious in its pol-icy proposals. He has added a new chapter, “Who Lost Russia?,” which has this somber passage: “Russia is not lost; on the contrary, it may revive under Putin. But the West has lost Russia as a friend and ally.” What survives is Soros’s conviction that the global capitalist economy is inherently unstable, and that new institutions of world government will need to be devised to keep the peace and prevent depressions. These are serious arguments. It is no longer so easy to dismiss his ideas as “at best an incoherent rendition of some common themes,” as the MIT economist Rudi Dornbusch did in 1998. Now that Soros is no longer a figure of fable, it is time to take him seriously.

1.

Soros’s has been one of the most extraordinary careers of the postwar era. He was the archetypal outsider, determined to break into a privileged world which refused to take him seriously. He was born in Budapest in 1930, of Hungarian Jewish parents. He and his family avoided the Holocaust and…


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