[Date Prev][Date Next][Thread Prev][Thread Next][Date Index
GEORGE SOROS -- THE ANTI-CAPITALIST
- Subject: GEORGE SOROS -- THE ANTI-CAPITALIST
- From: cd@xxxxxxxxxxxxxxx
- Date: Tue, 28 Jan 1997 14:50:00
Subject: GEORGE SOROS -- THE ANTI-CAPITALIST (economist)
Dear One and All, this just in from the most interesting Keith Hudson,
and i pass it on
> Poacher-turned-gamekeeper George Soros has written an article recently in
> Atlantic Monthly which has criticised the system that has allowed him the
> opportunity to make a more than adequate fortune over the years. The
> following leader in The Economist refers to this.
> I once read many years ago that many chief executives of large corporations
> are, quite simply, lucky people. The argument goes that, looking back over a
> chief executive's career, he has probably had to make no more than about
> eight to ten important decisions. Most of those decisions involve some
> crisis or opportunity to which there's usually a straightforward Yes or No
> answer to a particular set of circumstances put to him. Starting out in
> business life, as a young executive he might well have had 100 or 200
> contemporaries of his age and abilities potential high-flyers all. But every
> time he -- and they -- made their important decisions, half of them would be
> wrong. It doesn't take too many of these junctures over the years to reduce
> the cohort of potential high-flyers to one.
> A month or two ago I was listening to a talk on the radio by an investment
> banker who had just retired. Among many other interesting things he said
> was: "Over the long term, no-one can make more profits than the average. You
> lose as often as you win. There is no system. There is no-one intelligent
> enough to buck the trend."
> How then, one asks, can someone like George Soros have made fabulous
> fortunes for himself and investors in his Quantum Fund? The answer is, quite
> probably, that he was lucky. If, in the course of his business lifetime, he
> made, say, a dozen really important decisions on currency changes, then he
> could quite easily have been lucky in making eight, nine or ten correct
> forecasts. But how many other potential George Soroses have there been who
> made as many incorrect guesses?
> Some readers may remember Black Wednesday some years ago when the UK was
> forced out of the ERM after George Soros and others had speculated their
> money against the pound. It wasn't actually much of a speculation. Millions
> of others also saw that the pound was far too overvalued at the time.
> Nevertheless, George Soros made, it is said, $1 billion out of it.
> What made me chuckle, however, was that, not long afterwards, he bet against
> the yen -- and lost. In fact, he was reputed to have lost $600 million. This
> was never given the same wide publicity as his raid on the pound (though I
> guess his Quantum Fund investors were none too pleased).
> It wasn't long after that that George Soros retired from the Quantum Fund. I
> wonder why? Had he got tired of it, or was it because he was smart enough to
> realise he had been mostly lucky hitherto?
> Therefore, I never much rated George Soros as a poacher, and I certainly
> don't rate him as a gamekeeper in the far more complex matters in which he
> is now pontificating.
> >From The Economist 26 January 1997
> PALINDROME REPENTS
> George Soros has made too much money to be written off as a duffer. But his
> recent diatribe against capitalism took him out of his depth
> It is a matter of record that some people get listened to more attentively
> than others, regardless of what they have to say. You may, for example,
> want very much to be alone; but you have to be Greta Garbo to become
> immortal for having expressed this banal preference. By the same token, a
> lot of people will sit up and listen now that George Soros has said in an
> article in America's Atlantic Monthly that the free market is a bad and
> dangerous thing. They may expect a man who on a good day makes $1 billion
> by speculating in the financial markets, and was a doughly campaigner
> against communism, to know whereof he speaks. In this case they would be
> wrong. Mr Soros has made a preposterous argument that is in danger of being
> taken seriously just because of who he is.
> The argument, in sum, is this. Fascism and communism were once the
> chief enemies of the "open society". But now that both have been
> discredited the threat from laisser-faire capitalism is a more potent one.
> The doctrine of laisser-faire, says Mr Soros, holds that the common good is
> best served by the uninhibited pursuit of self-interest. Though not in the
> same category as Nazi, Marxist-Leninist or other totalitarian ideologies, it
> has something important in common with them, in that "all try to justify
> their claim to ultimate truth with an appeal to science". But the science
> in question is economics, which is inherently flawed. Unless the world
> dethrones the doctrine of laisser-faire, excessive individualism will render
> individuals and states incapable of cooperating. The likely result will be
> instability and collapse.
> It is hard to know exactly where to begin to pick this apart, so
> numerous are the errors. But for simplicity's sake the Soros syndrome can
> be split into three: a hallucination about the present state of the world,
> an ignorance of economic theory, and a failure to notice the main difference
> between the ideologies of liberals and those of totalitarians.
> Mr Soros can only be hallucinating to portray a world in which
> laisser-faire doctrine rules supreme, crushing all other ideas, choking
> collective action and denying the possibility of redistribution. No such
> place exists, and very few people would wish it to. In America, which is
> often depicted as the acme of the free market, politicians at present
> appropriate a third of the national income to spend on purposes they deem to
> be in the collective interest -- much of which consists, in one way or
> another, of transfers from rich to poor. Can it have escaped Mr Soros's
> notice that Americans havejust re-elected a Democrat as president, and that
> Britons are probably about to replace a Conservative government with a
> Labour one?
> At most, it might be claimed that liberal economics -- not extreme and
> dogmatic laisser faire -- has been in the ascendant since the end of
> communism. And yet Mr Soros seems genuinely to believe that the
> discipline's mainstream rules out any kind of state intervention in the
> niarket. Little could be further from the truth. Economic textbooks are
> full of proofs that in many instances markets fail and it is right for
> governments to intervene: to regulate monopolies, for example, or to pay for
> "public goods" such as street lights and aircraft carriers. His further
> claim that economics is inherently flawed on some deep epistemological level
> is just embarrassing. Here his confusion arises from having mistaken some
> of the simplifying assumptions (perfect information, unchanging personal
> preferences) that economists consciously make when they model the economy
> for an attempt to describe the real world in all its complexity.
> The most damaging thing of all about the Soros argument, however, is
> not that he misrepresents what economists say, but that he seems to have
> forgotten the main thing that separates those on the liberal side of the
> debate from those on the collective side. This difference is not a
> technical quarrel about whether or not markets allocate resources more
> efficiently than governments. In the sort of context Mr Soros invokes -- the
> end of communism, threats to freedom, world instability -- the underlying
> disagreement is political.
> The big difference
> Mr Soros allows that the champions of laisser-faire are not in the same camp
> as Nazis and communists. But actually, they are in the enemy camp. Far
> from laying claim to some "ultimate truth" of their own, liberals in
> Politics and economics are sceptics who want to limit the power of any
> government to impose some versiori of truth on its people. This requires
> limits to the state's economic power. As Friedrich Hayek argued in 1944,
> "economic control is not merely control of a sector of human life that can
> be separated from the rest; it is the control of the means for all our
> ends." But not even Hayek advocated the abolition of government altogether.
> He would have been horrified by the "uninhibited" pursuit of self-interest
> that is currently running riot -- but only, thank goodness, in Mr Soros's
> Keith Hudson, 6 Upper Camden Place, Bath BA1 5HX, England
> Tel:01225 312622/444881; Fax:01225 447727; E-mail:ac972@xxxxxxxxxxxxxx