Soros Gray Krygier – economic funamentalism as threat to open society

Discussion from Background briefing 10 years ago – good to remember in these supposedly post fundamentalist times.

Krygier excerpt: “I think if that’s what Soros believes out of Popper, he’s right to think that the enthusiasts for laissez faire capitalism who came to advise in post-Communist countries, and who seem to be in very prominent roles as advisors in Western countries, though their values are radically different and they don’t come with guns, nevertheless the certainty with which they espouse those values is similar [to totalitarian social engineering], and similarly flawed.”

Tom Morton: In many ways, George Soros’ recent article on The Capitalist Threat seems to have been inspired by his experiences in Eastern Europe and his frustrations with the process of change there.

Soros points to a connection between the hardline free-market reforms advocated by some Western advisors, and the growth of poverty, crime, and neo-nationalist movements in Russia.

In his article on The Capitalist Threat, Soros argues that there are certain similarities between totalitarian ideologies like Nazism and Communism, and the pure doctrine of laissez faire capitalism. Common to each of them, he says, is a belief that they are in possession of a scientific truth, and any ideology which believes that, tends to be intolerant of dissenting views.

So how seriously should we take this argument?

Martin Krygier.

Martin Krygier: I think it’s a serious issue. I think that Soros makes clear in that much-discussed and reviled article that he in no way suggests that there is anything evil in laissez faire capitalism to compare with the evils of totalitarianism. But he does spot a kind of similarity of temper in thinking about social fairs. What they have in common, and what is contrary to the Open Society as Popper outlined it, was a kind of overwhelming certainty that they had grasped the truth about this extraordinary complex phenomenon which is a society. Popper, in ‘The Open Society and its Enemies’ and also in a smaller book called ‘The Poverty of Historicism’ says that we can never know that much, and in science we never know that we know we should always be prepared to be proved wrong, and that’s the way science progresses. And so in social experiments, Popper insists that an ambition to change things overall, change things holistically – what he calls holistic social engineering – is bound to fail, and bound to have unintended and very often tragic consequences.

And so whatever your ideology, whatever your values, he says you should go for what he calls piecemeal social engineering. And I think if that’s what Soros believes out of Popper, he’s right to think that the enthusiasts for laissez faire capitalism who came to advise in post-Communist countries, and who seem to be in very prominent roles as advisors in Western countries, though their values are radically different and they don’t come with guns, nevertheless the certainty with which they espouse those values is similar, and similarly flawed.

Soros doesn’t say that there is anything in the consequences of economic rationalism which will spill the same blood, but he does – as Marxism more, or even more, Nazism – believe that this spirit of certainty is radically inconsistent with what he takes to be the openness to fallibility in an open society.

Tom Morton: Martin Krygier, Professor of Law at the University of New South Wales.

Soros may well have been right to think, as Rudi Dornbusch says, that a savage dose of economic rationalism was not the best thing for countries like Russia, which now has, according to Dornbusch, 20,000 millionaires and a hundred million people living in poverty.

But do Soros’ criticisms of market economics have any relevance for the West, where after all, we have social security systems to protect the poor?

Rudi Dornbusch.

Rudi Dornbusch: I think that as a philanthropist, he’s just exceptional, and he’s a strategist in that he’s immensely successful. As a philanthropist. As an economist, he would not get a passing grade. I don’t wake up in the morning and say, ‘God, I should be listening more to George to what he has to say about how the economy works.’ Don’t exaggerate the coherent decisiveness and definitiveness of his economic thinking; he’s a contrarian – he’ll try something out, and most of these things fail.

Tom Morton: It seems very extraordinary to me in a way, because you’d think that someone who’s made so much money would actually have a pretty good idea of economics. I don’t mean to be rude when I say that I mean he’s got his hands dirty in the marketplace, and you’re an academic economist – I mean, wouldn’t we be inclined to think that perhaps – ?

Rudi Dornbusch: No, I think that if you look at people who have amassed very substantial fortunes, you will not find that above all they’re good economists. They have for example, in the ‘87 Stock Market crash Soros was on the wrong side and lost a fortune, right? He’s an enormously successful trader; that takes something very different from an economist.

Tom Morton: Being sent to the bottom of the class by the economists hasn’t taken the wind out of George Soros’ sails. He’s as busy as ever – investing in oil and gold exploration here in Australia and supporting his latest controversial cause in America: women’s right to abortion and contraception.

Perhaps most of all, Soros likes to make trouble for those who believe that they’ve got a monopoly on the truth. And whether or not you agree with his views on capitalism will have a lot to do with whether or not you think economics is a science with immutable laws, or – as Soros believes – the flawed and fallible study of flawed and fallible humans.

Philosopher John Gray is putting his money on the Freedom Broker.

John Gray: I myself am more inclined to treat with respect a criticism of the Panglossian harmonies of free markets, which comes from someone like George Soros, who combines philosophical insight with practical experience. I’m less inclined to treat with any degree of reverence or uncritical acceptance, the re-assertion of economic rationalism by academic economists with a limited philosophical competence and an often narrow, practical experience.

The period of market romanticism, the period in which it was felt that all problems, practically speaking, had a market solution, and that the only thing to do with governments was to get them out of the way of the market, that period, that era, is I think, over.