I would like to bring to your attention some systems-theoretic ideas which are relevant to the point of view you present in The Crisis of Global Capitalism . From my perspective, your book, especially Part I: Conceptual Framework , is in both orientation and content an essay in “systems theory.” My connection to what you have written is still more direct. I’m working on a book which integrates systems ideas and theories around the theme of “imperfection.” This is close to (...) the centrality of “fallibility” in your framework, since “imperfection” is to ontology what “fallibility” is to epistemology. (shrink)

This paper examines many similarities in the methodological and ontological views of George Soros and Friedrich Hayek.

Résumé La recherche économique contemporaine a perdu (de) sa puissance explicative. Bien que cela transparaisse déjà depuis un bon moment, ce n’est que depuis la récente crise économique que cet état de fait est reconnu de manière plus générale. Cependant, plusieurs initiatives ont étés lancées dans l’espoir d’améliorer la situation. Une initiative phare fut celle qu’a lancée George Soros, à partir du constat suivant: si la réflexivité est une composante majeure de la réalité sociale, les contributions dominantes actuelles (...) en économie n’intègrent pas cette dimension. Le propos de mon article est de montrer que si Soros nous donne un éclairage pertinent, il ne pousse pas assez loin son raisonnement. L’essence de son message risque de se perdre en conséquence de certains propos qu’il faut mettre en doute et qui ne sont peut-être pas nécessaires à son argumentation centrale – des propos que l’on peut retrouver ailleurs dans la quête d’alternatives, et qui méritent à ce titre une attention particulière. (shrink)

George Soros makes an important analytical contribution to understanding the concept of reflexivity in social science by explaining reflexivity in terms of how his cognitive and manipulative causal functions are connected to one another by a pair of feedback loops (Soros, 2013). Fallibility, reflexivity and the human uncertainty principle. Here I put aside the issue of how the natural sciences and social sciences are related, an issue he discusses, and focus on how his thinking applies in economics. (...) I argue that standard economics assumes a ‘classical’ view of the world in which knowledge and action are independent, but that we live in a complex reflexive world in which knowledge and action are interdependent. I argue that Soros's view provides a reflexivity critique of the efficient market hypothesis seen as depending on untenable claims about the nature of random phenomena and the nature of economic agents. Regarding the former, I develop this critique in terms of Cauchy distributions; regarding the latter I develop it in terms of rational expectations and rational addiction reasoning. (shrink)

Let me begin by saying that I think that George Soros is right in identifying fallibility and reflexivity as important phenomena in economic life, and in social life more generally, and as phenomena that mainstream economic theory has largely ignored. I also agree with Soros that economics is an uncertain science. And I think that Soros himself, being one of the world's wealthiest men and most generous philanthropists, deserves credit for being ready and willing to think (...) for himself. It would be all too easy for him to trot out conventional wisdom about market efficiency, privatization, and the like – safely under-written by economic science. It is much more difficult to question the conventional wisdom, let alone its theoretical foundations. Soros does both. Better yet, he takes the trouble to write down his ideas for public consideration and to respond to requests from academic journals to debate their significance – while he could just as easily be lounging on a yacht eating caviar for the rest of his days. Thus said, I do not agree with everything Soros says in his ‘Fallibility, reflexivity, and the human uncertainty principle’ and in what follows I will focus upon what I regard as misconceptions in what he says about fallibility, reflexivity, and scientific method. I will attribute these disagreements to misunderstandings of some of the ideas of our mutual mentor – Sir Karl Popper. In doing so, I hope to show that some of Soros' ideas may be closer to Popper's than Soros thinks, that reflexivity may not be as exclusive to social science as Soros thinks, and that it may not require a scientific method of its own. Getting clear about this may leave us with a somewhat different view of science. (shrink)

For the last few months the financial crisis is being widely discussed. However, it was foreseen some time ago by at least two people who named its deep causes. A philosopher of culture, Zygmunt Bauman, claims that a postmodern utopia of “morality without ethical code” makes it impossible to solve problems created by our era of “liquid modernity”. George Soros, an American currency speculator, stock investor, businessman, philanthropist, political activist, and a pupil of Karl Popper, maintains that the (...) crisis is a result of a victory of “transaction morality” over “morality of the open society”. The two diagnosis of the present crisis show that the process of deregulation of the economy should not lead to the point where ethics loses its normative functions. This is the lesson of the crisis. Capitalism must be ethical or none. (shrink)

In 1987, George Soros introduced his concepts of reflexivity and fallibility and has further developed and applied these concepts over subsequent decades. This paper attempts to build on Soros's framework, provide his concepts with a more precise definition, and put them in the context of recent thinking on complex adaptive systems. The paper proposes that systems can be classified along a ‘spectrum of complexity’ and that under specific conditions not only social systems but also natural and artificial (...) systems can be considered ‘complex reflexive.’ The epistemological challenges associated with scientifically understanding a phenomenon stem not from whether its domain is social, natural, or artificial, but where it falls along this spectrum. Reflexive systems present particular challenges; however, evolutionary model-dependent realism provides a bridge between Soros and Popper and a potential path forward for economics. (shrink)

Basing upon Friedrich August Hayek's concept of spontaneous orders and upon the elaboration of Karl Raimund Popper's concept of open society carried out by George Soros, and also basing upon author's own former work on the explication of the concepts of self-organization and organization, it is demonstrated that this is the self-organization - a spontaneous, i.e., a natural (without the external ordering reason) formation of structures - that puts the limits to the capability of mind in changing the (...) world. For flourishing the spontaneity, certain general rules must exist. The understanding of the self-organizing and evolving reality where we ourselves belong to is imperfect (i.e., it cannot be neutral or objective or complete) and our activity leads to the results we have not intended. (shrink)

This note focuses on George Soros's challenge to macroeconomics and finance theory that any valid methodology of social science must explicitly recognize fallibility in a Knightian sense. We use a simple algebraic example to sketch how extant models formalize fallibility. We argue that contemporary theory's epistemological and empirical difficulties can be traced to assuming away fallibility in a Knightian sense. We also discuss how imperfect knowledge economics provides a way to open mathematical models to such fallibility, while preserving (...) economics as an empirical science. (shrink)

In The Crisis of Global Capitalism, George Soros claims that the international financial economy is inherently unstable, and that while economists have failed to recognize this because of their commitment to static equilibrium theory, politicians have failed to stabilize the global economy because of their commitment to an unquestioned faith in the complete efficiency of laissez faire. While Soros is right to argue that market participants’ expectations about the future can cause instability, he is wrong to maintain (...) that this has gone unrecognized by economists, and his notion that we live in a world of economic laissez faire is equally mistaken. Indeed, his own analysis of the Asian financial crisis points to the “moral hazard” created by expectations of government intervention, rather than to laissez faire, as the culprit. (shrink)

This paper argues that history of economics has a fruitful, underappreciated role to play in the development of economics, especially when understood as a policy science. This goes against the grain of the last half century during which economics, which has undergone a formal revolution, has distanced itself from its `literary' past and practices precisely with the aim to be a more successful policy science. The paper motivates the thesis by identifying and distinguishing four kinds of reflexivity in economics. The (...) main thesis of this paper is that because these forms of reflexivity are not eliminable, the history of economics must play a constitutive role in economics. An assumption that I clarify in this paper is that the history of economics ought to be part of the subject matter studied by economics when they are interested in policy science. Even if one does not accept the conclusion, the fourfold classification of reflexivity might hold independent interest. The paper is divided in two parts. First, by reflecting on the writings of George Stigler, Paul Samuelson, George and Milton Friedman, I offer a stylized historical introduction to and conceptualization of the themes of this paper. In particular, I identify various historically influential arguments and strategies that reduced the role of history of economics within the economics discipline. In it I also canvass six arguments that try to capture the cost to economics for sidelining the history of economics from within the discipline. A sub-text of the introduction is that for contingent reasons, post World War II economics evolved into a policy science. Second, by drawing on the work of Kenneth Boulding, in particular, George Soros, Thomas Merton, Gordon Tullock, I distinguish between four species of reflexivity. These are used to then strengthen the argument for the constitutive role of the history of economics within the economics profession. In particular, I argue that so-called Kuhn-losses are especially pernicious when faced with policy choices under so-called Knightian uncertainty. (shrink)

This trilogy deals with an epistemology of economics, arguing for a radical overturning of conventional analysis and providing an alternative to political economy and social sciences, based not on positivism, but on a normative and programming paradigm. Volume II builds on the work presented in Volume I to explore oppositions to the traditional and conventional teaching of economics, and presents testimonies that are favourable to a trend towards a programming approach, thereby giving substance to the epistemological 'overturning' of conventional analysis. (...) Such oppositions studied include the work of Ludvig von Mises and his theory of praxeology; Ian Tinbergen and Wassily Leontif's preference for 'planning' over 'forecasting science'; Bruno de Finetti and Daniel Bell's support for the base of 'utopia' in economics; the trend from the 'theory of planning' towards the 'methodology of planning, by Andreas Faludi; neoclassic curiosity about the 'multi-purposes approach' and 'non-economic commodities' as investigated by Walter Isard, as well as theories expressed by Herbert Simon, Robert Lucas, George Soros and Mark Blaug. Volume III takes studies further and presents a concrete and practical example of how to build a Planning Accounting Framework, as associated with Frisch's 'plan-frame', to demonstrate the extent to which decisions and negotiations can be routed in the social sciences. (shrink)

In the first part of The Aporias of Open Society the author enters a polemic with the views of Karl R. Popper, who links open society to capitalism, sees it endangered by totalitarianism, and considers Plato, Hegel and Marx as its intellectual fathers. In the second part she makes broad reference to the findings of global capitalism scholars, including Popper student George Soros, in defining the capitalist system’s self-destructive traits, which she sees as confirmation of Soros’ claim (...) that open society’s most serious enemy today is itself. (shrink)

Moral entrepreneurship is the fine art of recycling evil into good by taking advantage of situations given or constructed as crises. It should be seen as the ultimate generalisation of the entrepreneurial spirit, whose peculiar excesses have always sat uneasily with homo oeconomicus as the constrained utility maximiser, an image that itself has come to be universalised. A task of this essay is to reconcile the two images in terms of what by the end I call ‘superutilitarianism’, which draws on (...) the lore of both superheroes and utilitarianism. After briefly surveying the careers of three exemplars of the moral entrepreneur (Robert McNamara, George Soros and Jeffrey Sachs), I explore the motives of moral entrepreneurs in terms of their standing debt to society for having already caused unnecessary harm but which also now equips him with the skill set needed to do significant good. Such a mindset involves imagining oneself a vehicle of divine will, which would be a scary proposition had it not been long presumed by Christians touched by Calvin. In conclusion, I argue that moral entrepreneurship looks most palatable – and perhaps even attractive – if the world is ‘reversible’, in the sense that every crisis, however clumsily handled by the moral entrepreneur, causes people to distinguish more clearly the necessary from contingent features of their existence. This leads them to reconceptualise past damages as new opportunities to assert what really matters; hence, a ‘superutilitarian’ ethic that treats all suffering as less cost than investment in a greater sense of the good. (shrink)

Abstract In The Crisis of Global Capitalism, George Soros claims that the international financial economy is inherently unstable, and that while economists have failed to recognize this because of their commitment to static equilibrium theory, politicians have failed to stabilize the global economy because of their commitment to an unquestioned faith in the complete efficiency of laissez faire. While Soros is right to argue that market participants? expectations about the future can cause instability, he is wrong to (...) maintain that this has gone unrecognized by economists, and his notion that we live in a world of economic laissez faire is equally mistaken. Indeed, his own analysis of the Asian financial crisis points to the ?moral hazard? created by expectations of government intervention, rather than to laissez faire, as the culprit. (shrink)

In traditional Jewish funerals, beggars usually join family and friends of the deceased in the kaddish prayer. When the funeral service ends, the beggars start chanting their own prayer: Charity will Save from Death! Charity will Save from Death! (sdaka tasil mimavet!). As the dead body of communism is interred in the ground of history, East European intellectuals accompany the funeral march chanting their own version of “Charity will Save from Death” (and political instability, rabid ideologies, xenophobia, war, hunger, and (...) pestilence). The main donor (nadvan) at the funeral of communism is the Hungarian-born financier George Soros. Since Soros does not plan for his philanthropic enterprises to outlive him, East European intellectuals pray for his longevity. (shrink)

For 34 years, the Fondation pour une entraide intellectuelle européenne was involved in promoting cultural dialogue across the Iron Curtain. This article looks at its relations with the Congress for Cultural Freedom, its agenda, and its impact on intellectual debates. It also analyses the ideological evolution of this organization after the 1960s and its transformation as it merged into the Open Society Foundation created by philanthropist George Soros.