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The Capitalist Threat by G. Soros

------------------------ BurmaNet ------------------------
"Appropriate Information Technologies, Practical Strategies"

The BurmaNet News: January 20, 1997


Background Information about George Soros and his Philanthropic Work

(from Building Open Societies: Soros Foundations 1994)

George Soros was born in Budapest, Hungary, in 1930.  His childhood
experiences hiding from the Nazis and living under communist rule taught him
valuable lessons about the oppressive power of closed societies.  He
emigrated in 1947 to England, where he granduated from the London School of
Economics, and in 1956 to the United Staes, where he began to accumulate a
large fortune through an international investment fund he founded and managed.

Soros established his first foundation, the Open Society Fund, in New York
in 1979, and his first Eastern European foundation in Hungary in 1984.  From
the fledgling operation in Hungary, the independent entities created and
supported by Soros have increased in number and size until today they
operate out of some 50 offices worldwide, employ over 1000 staff, and spend
approximately $300 million a year for the development of open societies. 

To transform closed societies into open ones and to protect and expand the
values of existing open societies is the mission of the foundations.  The
concept of open society is based on the recognition that people act on
imperfect knowledge and nobody is in possession of the ultimate truth.
Unlike closed societies dominated by the state, open societies are
characterized by a reliance on the rule of law, the existence of a
democratically elected government, a diverse and vigorous civil society,
respect for minorities and minority opinions, and a free market economy.  A
closed society expends most of its energies in preserving the existing
order, whereas an open society takes law and respect for the rights of
otehrs as its starting point and creates progres and prosperity from that base.


(from The Burma Project, Open Society Institute Information sheet)

What is the Burma Project?

The Burma Project, established by the Open Society Institute in 1994, is
dedicated to increasing international awareness of conditions in Burma and
to helping the country make the transition from a closed to an open society.
To this end, the Burma Project initiates, supports, and administers a range
of programs and activities around the globe including:

Efforts by and for multi-ethnic, grassroots organizations dedicated to the
restoration and preservation of fundamental freedoms, including political,
economic, environmental, and human rights for all the people of Burma
regardless of race, ethnic background, age, or gender.

Education programs for Burmese students, especially those whose schooling
was disrupted by the military takeover of 1988.

Professional and vocational training for young Burmese abroad who plan
eventually to return to live and work in a democratic Burma.


(BurmaNet Editor's Note)

The BurmaNet News is supported by the Burma Project, OSI.

February 1997

	In the Philosophy of History, Hegel discerned a disturbing
historical pattern-the crack and fall of civilizations owing to a morbid
intensification of their own first principles.
Although I have made a fortune in the financial markets, I now fear that
the untrammeled intensification of laissez-faire capitalism and the spread
of market values into all areas of life is en-dangering our open and
democratic society. The main enemy of the open society, I believe, is no
longer the coinmunist but the capitalist threat.
	The term "open society" was coined by Henri Bergson, in his book
"The Two Sources of Morality and Religion" (1932), and given greater
currency by the Austrian philosopher Karl Popper, in his book "The Open
Society and Its Enemies" (1945). Popper showed that totalitarian ideologies
like communism and Nazism have a common element: they claim to be in
possession of the ultimate truth. Since the ultimate truth is beyond the
reach of humankind, these ideologies have to resort to oppression in order
to impose their vision on society.

        Popper juxtaposed with these totalitarian ideologies another view of
society, which recognizes that nobody has a monopoly on the truth; different
people have different views and different interests, and there is a need for
institutions that allow them to live together in peace. These institutions
protect the rights of citizens and
ensure freedom of choice and freedom of speech. Popper called this form of
social organization the "open society." Totalitarian ideologies were its
	Written during the Second World War, "The Open Society and Its
Enemies" explained what the Western democracies stood for and fought for.
The explanation was highly abstract and philosophical, and the term "open
society" never gained wide recognition. Nevertheless, Popper's analysis was
penetrating, and when I read it as a student in the late 1 940s, having
experienced at first hand both Nazi and Communist rule in
Hugary, it struck me with the force of revelation.
	I was driven to delve deeper into Karl Popper's philosohy, and to
ask, Why does nobody have access to the ultimate truth? The answer became
clear: We live
in the same: universe that we are trying to understand, and our perceptions
can influence the events in which we participate. If our thoughts belonged
to one universe and their subject matter to another, the truth might be
within our grasp: we could formulate statements corresponding to the facts,
and the facts would serve as
reliable criteria for deciding whether the statements were true.
        There is a realm where these conditions prevail: natural science.
But in other areas of human endeavor the relationship between statements and
facts is less clear-cut. In social and political affairs the participants'
perceptions help to determine reality. In these situations facts do not
necessarily constitute reliable
criteria for judging the truth of statements. There is a two-way
connection-a feedback mechanism-between thinking and events, which I have
called "reflexivity." I have used it to develop a theory of history.
	Whether the theory is valid or not, it has turned out to be very
helpful to me in the financial markets. When I had made more money than I
needed, I decided to set up a foundation. I reflected on what it was I
really cared about. Having lived through both Nazi persecution and Communist
oppression, I came to the
conclusion that what was paramount for me was an open society. So I called
the foundation the Open Society Fund, and I defined its objectives as
opening up closed societies, making open societies more viable, and
promoting a critical mode of thinking. That was in 1979.
	My first major undertaking was in South Africa, but it was not
successful.  The apartheid system was so pervasive that whatever I tried to
do made me part of the system rather than helping to change it. Then I
turned my attention
to Central Europe.  Here I was much more successful. I started supporting
the Charter 77 movement in Czechoslovakia in 1980 and Solidarity in Poland
in 1981. I established separate foundations in my native country, Hungary,
in 1984, in China in 1986, in the Soviet Union in 1987, and in Poland in
1988. My engagement accelerated with the collapse of the Soviet system. By
now I have established a network of foundations that extends across more
than twenty-five countries (not including China, where we shut down in
1989). Operating under Communist regimes, I never felt the need to explain what
"open society" meant; those who supported the objectives of the foundations
understood it better than I did, even if they were not familiar with the
expression. The goal of my foundation in Hungary, for example, was to
support alternative activities. I
knew that the prevailing Communist dogma was false exactly because it was a
dogma, and that it would become unsustainable if it was exposed to
alternatives. The approach proved effective. The foundation became the main
source of support for civil society in Hungary, and as civil society
flourished, so the Communist
regime waned.
	After the collapse of communism, the mission of the foundation
network changed. Recognizing that an open society is a more advanced, more
form of social organization than a closed society (because in a closed
society there is only one blueprint, which is imposed on society, whereas
in an open society each citizen is not only allowed but required to think
for himself), the foundations shifted from a subversive task to a
constructive one-not an easy thing to do when the believers in an open
society are accustomed to subversive activity. Most of my foundations did a
good job, but unfortunately, they did not have much company. The open
societies of the West did not feel a strong urge to promote open societies
in the former Soviet empire. On the contrary, the prevailing view was that
people ought to be left to look after their own affairs. The end of the Cold
War brought a response very different from that at the end of the Second
World War. The idea of a new Marshall Plan could not even be mooted. When I
proposed such an idea at a conference in Potsdam (in what was then still
East Germany), in the spring of 1989, I was literally laughed at.
	The collapse of communism laid the groundwork for a universal open
society, but the Western democracies failed to rise to the occasion. The
new regimes that are emerging in the former Soviet Union and the former
Yugoslavia bear little resemblance to open societies. The Western alliance
seems to have lost its sense of purpose, because it cannot define itself in
terms of a Communist menace. It has shown little inclination to come to the
aid of those who have defended the idea of an open society in Bosnia or
anywhere else. As for the people living in formerly Communist countries,
they might have aspired to an open society when they suffered from
repression, but now that the Communist system has collapsed, they are
preoccupied with the problems of survival. After the failure of communism
there came a general disillusionment with universal concepts, and the open
society is a universal concept.
	These considerations have forced me to re-examine my belief in the
open society. For five or six years following the fall of the Berlin Wall,
I devoted practically all of my energies to the transformation of the
formerly Communist world.
	More recently I have redirected my attention to our own society.
The network of foundations I created continues to do good work;
nevertheless, I felt an urgent need to reconsider the conceptual framework
that had guided me in establishing them. This reassessment has led me to
the conclusion that the concept of the open society has not lost its
relevance. On the contrary, it may be even more useful in understanding the
present moment in history and in providing a practical guide to political
action than it was at the time Karl Popper wrote his book--but it needs to
be thoroughly rethought and reformulated. If the open society is to serve
as an ideal worth striving for, it can no longer be defined in terms of the
Communist menace. It must be given a more positive content.


	POPPER showed that fascism and communism had much in common, even
though one constituted the extreme right and the other the extreme left,
because both relied on the power of the state to repress the freedom of the
individual. I want to extend his argument. I contend that an open society
may also be threatened from the opposite direction--from excessive
individualism. Too much competition and too little cooperation can cause
intolerable inequities and instability.

	Insofar as there is a dominant belief in our society today, it is a
belief in the magic of the marketplace. The doctrine of laissez-faire
capitalism holds that the common good is best served by the uninhibited
pursuit of self-interest. Unless it is tempered by the recognition of a
common interest that ought to take precedence over particular interests,
our present system-which, however imperfect, qualifies as an open society,
is liable to break down.
        I want to emphasize, however, that I am not putting laissez-faire
capitalism in the same category as Nazism or communism. Totalitarian
ideologies deliberately seek to destroy the open society; laissez-faire
policies may endanger it, but only inadvertently. Friedrich Hayek, one of
the apostles of laissez-faire, was also a passionate proponent of the open
society. Nevertheless, because communism and even socialism have been
thoroughly discredited, I consider the threat from the laissez-faire side
more potent today than the threat from totalitarian ideologies. We are
enjoying a truly global market economy in which goods, services, capital,
and even people move around quite freely, but we fail to recognize the need
to sustain the values and institutions of an open society.
	The present situation is comparable to that at the turn of the past
century. It was a golden age of capitalism, characterized by the principle
of laissez-faire; so is the present. The earlier period was in some ways
more stable. There was an imperial power, England, that was prepared to
dispatch gunboats to faraway places because as the main beneficiary of the
system it had a vested interest in maintaining that system. Today the
United States does not want to be the policeman of the world. The earlier
period had the gold standard; today the main currencies float and crush
against each other like continental plates. Yet the free-market regime that
prevailed a hundred years ago was destroyed by the First World War.
Totalitarian ideologies came to the fore, and by the end of the Second
World War there was practically no movement of capital between countries.
How much more likely the present regime is to break down unless we learn
from experience!
	Although laissez-faire doctrines do not contradict the principles
of the open society the way Marxism-Leninism or Nazi ideas of racial purity
did, all these doctrines have an important feature in common: they all try
to justify their claim to ultimate truth with an appeal to science. In the
case of totalitarian doctrines, that appeal could easily be dismissed. One
of Popper's accomplishments was to show that a theory like Marxism does not
qualify as science. In the case of laissez-faire the claim is more
difficult to dispute, because it is based on economic theory, and economics
is the most reputable of the social sciences. One cannot simply equate
market economics with Marxist economics. Yet laissez-faire ideology, I
contend, is just as much a perversion of supposedly scientific verities as
Marxism-Leninism is.
	The main scientific underpinning of the laissez-faire ideology is
the theory that free and competitive markets bring supply and demand into
equilibrium and thereby ensure the best allocation of resources. This is
widely accepted as an eternal verity, and in a sense it is one. Economic
theory is an axiomatic system: as long as the basic assumptions hold, the
conclusions follow. But when we examine the assumptions closely, we find
that they do not apply to the real world. As originally formulated, the
theory of perfect competition~of the natural equilibrium of supply and
demand-assumed perfect knowledge, homogeneous and easily divisible
products, and a large enough number of market participants that no single
participant could influence the market price. The assumption of perfect
knowledge proved unsustainable, so it was replaced by an ingenious device.
Supply and demand were taken as independently given. This condition was
presented as a methodological requirement rather than an assumption. It was 
argued that economic theory studies the relationship between supply and
demand; therefore it must take both of them as given.
	As I have shown elsewhere, the condition that supply and demand are
independently given cannot be reconciled with reality, at least as far as
the financial markets are concerned and financial markets play a crucial
role in the allocation of resources. Buyers and sellers in financial
markets seek to discount a future that depends on their own decisions. The
shape of the supply and demand curves cannot be taken as given because both
of them incorporate expectations about events that are shaped by those
expectations. There is a two-way feedback mechanism between the market
participants' thinking and the situation they think about-"reflexivity." It
accounts for both the imperfect understanding of the participants
(recognition of which is the basis of the concept of the open society) and
the indeterminacy of the process in which they participate.
	If the supply and demand curves are not independently given, how
are market prices determined? If we look at the behavior of financial
markets, we find that instead of tending toward equilibrium, prices
continue to fluctuate relative to the expectations of buyers and sellers.
There are prolonged periods when prices are moving away from any
theoretical equilibrium. Even if they eventually show a tendency to return,
the equilibrium is not the same as it would have been without the
intervening period. Yet the concept of equilibrium endures. It is easy to
see why: without it, economics could not say how prices are determined.
	In the absence of equilibrium, the contention that free markets
lead to the optimum allocation of resources loses its justification. The
supposedly scientific theory that has been used to validate it turns out to
be an axiomatic structure whose conclusions are contained in its
assumptions and are not necessarily supported by the empirical evidence.
The resemblance to Marxism, which also claimed scientific status for its
tenets, is too close for comfort.
	I do not mean to imply that economic theory has deliberately
distorted reality for political purposes. But in trying to imitate the
accomplishments (and win for itself the prestige) of natural science,
economic theory attempted the impossible. The theories of social science
relate to their subject matter in a reflexive manner. That is to say, they
can influence events in a way that the theories of natural science cannot.
	Heisenberg's famous uncertainty principle implies that the act of
observation may interfere with the behavior of quantum particles; but it is
the observation that creates the effect, not the uncertainty principle
itself. In the social sphere, theories have the capacity to alter the
subject matter to which they relate. Economic theory has deliberately
excluded reflexivity from consideration. In doing so, it has distorted its
subject matter and laid itself open to exploitation by laissez faire
	What allows economic theory to be converted into an ideology
hostile to the open society is the assumption of perfect knowledge-at first
openly stated and then disguised in the form of a methodological device.
There is a powerful case for the market mechanism, but it is not that
markets are perfect; it is that in a world dominated by imperfect
understanding, markets provide an efficient feedback mechanism for
evaluating the results of one's decisions and correcting mistakes.
	Whatever its form, the assertion of perfect knowledge stands in
contradiction to the concept of the open society (which recognizes that our
understanding of our situation is inherently imperfect). Since this point
is abstract, I need to describe specific ways in which laissez-faire ideas
can pose a threat to the open society. I shall focus on three issues:
economic stability, social justice, and international relations.


ECONOMIC theory has managed to create an artificial world in which the
participants' preferences and the opportunities confronting participants
are independent
of each other and prices tend toward an equilibrium that bnngs the two
forces into balance. But in financial markets pnces are not merely the
passive reflection of independently given demand and supply; they also play
an active role in shaping those preferences and opportunities. This
reflexive interaction renders financial markets inherently unstable.

	Laissez-faire ideology denies the instability and opposes any form
of government intervention aimed at preserving stability. History has shown
that financial markets do break down, causing economic depression and
social unrest. The breakdowns have led to the evolution of central banking
and other forms of regulation~ Laissez-faire ideologues like to argue that
the breakdowns were caused by faulty regulations, not by unstable markets.
There is some validity in their argument, because if our understanding is
inherently imperfect, regulations are bound to be defective. But their
argument rings hollow, because it fails to explain why the regulations were
imposed in the first place. It sidesteps the issue by using a different
argument, which goes like this: since regulations are faulty, unregulated
markets are perfect.
	The argument rests on the assumption of perfect knowledge: if a
solution is wrong, its opposite must be right. In the absence of perfect
knowledge, however, both free markets and regulations are flawed. Stability
can be preserved only if a deliberate effort is made to preserve it. Even
then breakdowns will occur, because public policy is often faulty. If they
are severe enough, breakdowns may give rise to totalitarian regimes.
	Instability extends well beyond financial markets: it affects the
values that guide people in their actions. Economic theory takes values as
given. At the time economic theory was born, in the age of Adam Smith,
David Ricardo, and Alfred Marshall, this was a reasonable assumption,
because people did, in fact, have firmly established values. Adam Smith
himself combined a moral philosophy with his economic theory. Beneath the
individual preferences that found expression in market behavior, people
were guided by a set of moral principles that found expression in behavior
outside the scope of the market mechanism. Deeply rooted in tradition,
religion, and culture, these principles were not necessarily rational in
the sense of representing conscious choices among available alternatives.
Indeed, they often could not hold their own when alternatives became
available. Market values served to undermine traditional values.
	There has been an ongoing conflict between market values and other,
more traditional value systems, which has aroused strong passions and
antagonisms. As the market mechanism has extended its sway, the fiction
that people act on the basis of a given set of nonmarket values has become
progressively more difficult to maintain. Advertising, marketing, even
packaging, aim at shaping people's preferences rather than, as
laissez-faire theory holds, merely responding to them. Unsure of what they
stand for, people increasingly rely on money as the criterion of value.
What is more expensive is considered better. The value of a work of art can
be judged by the price it fetches. People deserve respect and admiration
because they are rich. What used to be a medium of exchange has usurped the
place of fundamental values, reversing the relationship postulated by
economic theory. What used to be professions have turned into businesses.
The cult of success has replaced a belief in principl!
 es. Society has lost its anchor.


BY taking the conditions of supply and demand as given and declaring
government intervention the ultimate evil, laissez-faire ideology has
effectively banished income or wealth redistribution.  I can agree that all
attempts at redistribution interfere with the efficiency of the market, but
it does not follow that no attempt should be made. The laissez-faire
argument relies on the same tacit appeal to perfection as does communism.
It claims that if redistribution causes inefficiencies and distortions, the
problems can be solved by eliminating redistribution--just as the
Communists claimed that the duplication involved in competition is
wasteful, and therefore we should have a centrally planned economy. But
perfection is unattainable. Wealth does accumulate in the hands of its
owners, and if there is no mechanism for redistribution, the inequities can
become intolerable. 'Money is like muck, not good except it be spread."
Francis Bacon was a profound economist. The laissez-fai!
 re argument against income redistribution invokes the doctrine of the
survival of the fittest. The argument is undercut by the fact that wealth
is passed on by inheritance, and the second generation is rarely as fit as
the first.
	In any case, there is something wrong with making the survival of
the fittest a guiding principle of civilized society. This social Darwinism
is based on an outmoded theory of evolution, just as the equilibrium theory
in economics is taking its cue from Newtonian physics. The principle that
guides the evolution of species is mutation, and mutation works in a much
more sophisticated way. Species and their environment are interactive, and
one species serves as part of the environment for the others. There is a
feedback mechanism similar to reflexivity in history, with the difference
being that in history the mechanism is driven not by mutation but by
misconceptions. I mention this because social Darwinism is one of the
misconceptions driving human affairs today. The main point I want to make
is that cooperation is as much a part of the system as competition, and the
slogan "survival of the fittest" distorts this fact.


LAISSEZ FAIRE ideology shares some of the deficiencies of another spurious
science, geopolitics.  States have no principles, only interests,
geopoliticians argue, and those interests are determined by geographic
location and other fundamentals. This deterministic approach is rooted in
an outdated nineteenth-century view of scientific method, and it suffers
from at least two glaring defects that do not apply with the same force to
the economic doctrines of laissez-faire. One is that it treats the state as
the indivisible unit of analysis, just as economics treats the individual.
There is something contradictory in banishing the state from the economy
while at the same time enshrining it as the ultimate source of authority in
international relations. But let that pass. There is a more pressing
practical aspect of the problem. What happens when a state disintegrates?
Geopolitical realists find themselves totally unprepared. That is what
happened when the Soviet Union and Yugosl!
 avia disintegrated. The other defect of geopolitics is that it does not
recognize a common interest beyond the national interest.
	With the demise of communism, the present state of affairs, however
imperfect, can be described as a global open society. It is not threatened
from the outside, from some totalitarian ideology seeking world supremacy.
The threat comes from the inside, from local tyrants seeking to establish
internal dominance through external conflicts. It may also come from
democratic but sovereign states pursuing their self-interest to the
detriment of the common interest.
	The international open society may be its own worst enemy. The Cold
War was an extremely stable arrangement. Two power blocs, representing
opposing concepts of social organization, were struggling for supremacy,
but they had to respect each other's vital interests, because each side was
capable of destroying the other in an all-out war. This put a firm limit on
the extent of the conflict; all local conflicts were, in turn, contained by
the larger conflict. This extremely stable world order has come to an end
as the result of the internal disintegration of one superpower. No new
world order has taken its place. We have entered a period of disorder.
	Laissez-faire ideology does not prepare us to cope with this
challenge. It does not recognize the need for a world order. An order is
supposed to emerge from states' pursuit of their self-interest. But, guided
by the principle of the survival of the fittest, states are increasingly
preoccupied with their competitiveness and unwilling to make any sacrifices
for the common good.
	There is no need to make any dire predictions about the eventual
breakdown of our global trading system in order to show that a
laissez-faire ideology is incompatible with the concept of the open
society. It is enough to consider the free world's failure to extend a
helping hand after the collapse of communism. The system of robber
capitalism that has taken hold in Russia is so iniquitous that people may
well turn to a charismatic leader promising national revival at the cost of
civil liberties.
	If there is any lesson to be learned, it is that the collapse of a
repressive regime does not automatically lead to the establishment of an
open society. An open society is not merely the absence of government
intervention and oppression. It is a complicated, sophisticated structure,
and deliberate effort is required to bring it into existence. Since it is
more sophisticated than the system it replaces, a speedy transition
requires outside assistance. But the combination of laissez-faire ideas,
social Darwinism, and geopolitical realism that prevailed in the United
States and the United Kingdom stood in the way of any hope for an open
society in Russia. If the leaders of these countries had had a different
view of the world, they could have established firm foundations for a
global open society.
	At the time of the Soviet collapse there was an opportunity to make
the UN function as it was originally designed to. Mikhail Gorbachev visited
the United Nations in 1988 and outlined his vision of the two superpowers
cooperating to bring peace and security to the world. Since then the
opportunity has faded. The UN has been thoroughly discredited as a
peacekeeping institution. Bosnia is doing to the UN what Abyssinia did to
the League of Nations in 1936.
	Our global open society lacks the institutions and mechanisms
necessary for its preservation, but there is no political will to bring
them into existence. I blame the prevailing attitude, which holds that the
unhampered pursuit of self-interest will bring about an eventual
international equilibrium. I believe this confidence is misplaced. I
believe that the concept of the open society, which needs institutions to
protect it, may provide a better guide to action. As things stand, it does
not take very much imagination to realize that the global open society that
prevails at present is likely to prove a temporary phenomenon.


IT is easier to identify the enemies of the open society than to give the
concept a positive meaning. Yet without such a positive meaning the open
society is bound to fall prey to its enemies. There has to be a common
interest to hold a community together, but the open society is not a
community in the traditional sense of the word. It is an abstract idea, a
universal concept. Admittedly, there is such a thing as a global community;
there are common interests on a global level, such as the preservation of
the environment and the prevention of war. But these interests are
relatively weak in comparison with special interests. They do not have much
of a constituency in a world composed of sovereign states. Moreover, the
open society as a universal concept transcends all boundaries. Societies
derive their cohesion from shared values. These values are rooted in
culture, religion, history, and tradition. When a society does not have
boundaries, where are the shared values to be fo!
 und? I believe there is only one possible source: the concept of the open
society itself.
	To fulfill this role, the concept of the open society needs to be
redefined. Instead of there being a dichotomy between open and closed, I
see the open society as occupying a middle ground, where the rights of the
individual are safeguarded but where there are some shared values that hold
society together. This middle ground is threatened from all sides. At one
extreme, communist and nationalist doctrines would lead to state
domination. At the other extreme, laissez-faire capitalism would lead to
great instability and eventual breakdown. There are other variants. Lee
Kuan Yew, of  Singapore, proposes a so-called Asian model that combines a
market economy with a repressive state. In many parts of the world control
of the state is so closely associated with the creation of private wealth
that one might speak of robber capitalism, or the "gangster state," as a
new threat to the open society.
	I envisage the open society as a society open to improvement. We
start with the recognition of our own fallibility, which extends not only
to our mental constructs but also to our institutions. What is imperfect
can be improved, by a process of trial and error. The open society not only
allows this process but ac tually encourages it, by insisting on freedom of
expression and protecting dissent. The open society offers a vista of
limitless progress. In this respect it has an affinity with the scientific
method. But science has at its disposal objective criteria-namely the facts
by which the process may be judged. Unfortunately, in human affairs the
facts do not provide reliable criteria of truth, yet we need some generally
agreed-upon standards by which the process of trial and error can be
judged. All cultures and religions offer such standards; the open society
cannot do without them. The innovation in an open society is that whereas
most cultures and religions regard the!
 ir own values as absolute, an open society, which is aware of many
cultures and religions, must regard its own shared values as a matter of
debate and choice. To make the debate possible, there must be general
agreement on at least one point: that the open society is a desirable form
of social organization. People must be free to think and act, subject only
to limits imposed by the common interests. Where the limits are must also
be deteimined by trial and error.
	The Declaration of Independence may be taken as a pretty good
approximation of the principles of an open society, but instead of claiming
that those principles are self-evident, we ought to say that they are
consistent with our fallibility. Could the recognition of our imperfect
understanding serve to establish the open society as a desirable form of
social organization? I believe it could, although there are formidable
difficulties in the way. We must promote a belief in our own fallibility to
the status that we normally confer on a belief in ultimate truth. But if
ultimate truth is not attainable, how can we accept our fallibility as
ultimate truth?
	This is an apparent paradox, but it can be resolved. The first
proposition, that our understanding is imperfect, is consistent with a
second proposition: that we must accept the first proposition as an article
of faith. The need for articles of faith arises exactly because our
understanding is imperfect. If we enjoyed perfect knowledge, there would be
no need for beliefs. But to accept this line of reasoning requires a
profound change in the role that we accord our beliefs.
	Historically, beliefs have served to justify specific rules of
conduct. Fallibility ought to foster a different attitude. Beliefs ought to
serve to shape our lives, not to make us abide by a given set of rules. If
we recognize that our beliefs are expressions of our choices, not of
ultimate truth, we are more likely to tolerate other beliefs and to revise
our own in the light of our experiences. But that is not how most people
treat their beliefs. They tend to identify their beliefs with ultimate
truth. Indeed, that identification often serves to define their own
identity. If their experience of living in an open society obliges them to
give up their claim to the ultimate truth, they feel a sense of loss.
	The idea that we somehow embody the ultimate truth is deeply
ingrained in our thinking. We may be endowed with critical faculties, but
we are inseparably tied to ourselves. We may have discovered truth and
morality, but, above all, we must represent our interests and our selves.
Therefore, if there are such things as truth and justice--and we have come
to believe that there are--then we want to be in p05session of them. We
demand truth from religion and, recently, from science. A belief in our
fallibility is a poor substitute. It is a highly sophisticated concept,
much more difficult to work with than more primitive beliefs, such as my
country (or my company or my family), right or wrong.
	If the idea of our fallibility is so hard to take, what makes it
appealing? The most powerful argument in its favor is to be found in the
results it produces. Open societies tend to be more prosperous, more
innovative, more stimulating, than closed ones. But there is a danger in
proposing success as the sole basis for holding a belief, because if my
theory of reflexivity is valid, being successful is not identical with
being right. In natural science, theories have to be right (in the sense
that the predictions and explanations they produce correspond to the facts)
for them to work (in the sense of producing useful predictions and
explanations). But in the social sphere what is effective is not
necessarily identical with what is right, because of the reflexive
connection between thinking and reality. As I hinted earlier, the cult of
success can become a source of instability in an open society, because it
can undermine our sense of right and wrong. That is what is happening!
  in our society today. Our sense of right and wrong is endangered by our
preoccupation with success, as measured by money. Anything goes, as long as
you can get away with it.
	If success were the only criterion, the open society would lose out
against totalitarian ideologies-as indeed it did on many occasions. It is
much easier to argue for my own interest than to go through the whole
rigmarole of abstract reasoning from fallibility to the concept of the open
	The concept of the open society needs to be more firmly grounded.
There has to be a commitment to the open society because it is the right
form of social organization. Such a commitment is hard to come by.
	I believe in the open society because it allows us to develop our
potential better than a social system that claims to be in possession of
ultimate truth. Accepting the unattainable character of truth offers a
better prospect for freedom and prosperity than denying it. But I recognize
a problem here: I am sufficiently committed to the pursuit of truth to find
the case for the open society convincing, but I am not sure that other
people will share my point of view. Given the reflexive connection between
thinking and reality, truth is not indispensable for success. It may be
possible to attain specific objectives by twisting or denying the truth,
and people may be more interested in attaining their specific objectives
than in attaining the truth. Only at the highest level of abstraction, when
we consider the meaning of life, does truth take on paramount importance.
Even then, deception may be preferable to the truth, because life entails
death and death is difficult to accept!
 . Indeed, one could argue that the open society is the best form of social
organization for making the most of life, whereas the closed society is the
form best suited to the acceptance of death. In the ultimate analysis a
belief in the open society is a matter of choice, not of logical necessity.
	That is not all. Even if the concept of the open society were
universally accepted, that would not be sufficient to ensure that freedom
and prosperity would prevail. The open society merely provides a framework
within which different views about social and political issues can be
reconciled; it does not offer a firm view on social goals. If it did, it
would not be an open society. This means that people must hold other
beliefs in addition to their belief in the open society. Only in a closed
society does the concept of the open society provide a sufficient basis for
political action; in an open society it is not enough to be a democrat; one
must be a liberal democrat or a social democrat or a Christian democrat or
some other kind of democrat. A shared belief in the open society is a
necessary but not a sufficient condition for freedom and prosperity and all
the good things that the open society is supposed to bring.
	It can be seen that the concept of the open society is a seemingly
inexhaustible source of difficulties. That is to be expected. After all,
the open society is based on the recognition of our fallibility. Indeed, it
stands to reason that our ideal of the open society is unattainable. To
have a blueprint for it would be self-contradictory. That does not mean
that we should not strive toward it. In science also, ultimate truth is
unattainable. Yet look at the progress we have made in pursuing it.
Similarly, the open society can be approximated to a greater or lesser
	To derive a political and social agenda from a philosophical,
epistemological argument seems like a hopeless under-taking. Yet it can be
done. There is historical precedent. The Enlightenment was a celebration of
the power of reason, and it provided the inspiration for the Declaration of
Independence and the Bill of Rights. The belief in reason was carried to
excess in the French Revolution, with unpleasant side effects;
nevertheless, it was the beginning of modernity. We have now had 200 years
of experience with the Age of Reason, and as reasonable people we ought to
recognize that reason has its limitations. The time is ripe for developing
a conceptual framework based on our fallibility. Where reason has failed,
fallibility may yet succeed.
//end text//