Sunday, May 04, 2008

Soros' Follies Again

Tibor R. Machan

In the late 60s I was invited to listen to a fellow Hungarian refugee in Los Angeles discuss communism. I nearly walked out when he began with the refrain about how communism is such a wonderful ideal but, sadly, unattainable in practice. What wonderful ideal? The prospect of a worldwide intelligent ant colony, bound together completely with no individual initiative in play anywhere, all automatically serving humanity--is that some wonderful ideal? It is hell, so far as I can discern.

Well, I tell this story to give you a little idea how it strikes me whenever that famous financier George Soros, himself a Hungarian refugee from the Nazis and Communists, comes out with various political-economic pronouncements. He isn’t by any means someone deluded about the idealism of communism but he does, quite mistakenly, favor a widely regulated pseudo-capitalism.

Soros was interviewed recently in The New York Review of Books and presented his version of the late Karl Popper’s middle way politics, one that’s neither socialist nor capitalist. (Popper was a famous 20th century philosopher of science and political theorist.) As Soros put it,

“Now, we should not go back to a very highly regulated economy because the regulators are imperfect. They’re only human and what is worse, they are bureaucrats. So you have to find the right kind of balance between allowing the markets to do their work, while recognizing that they are imperfect. You need authorities that keep the market under scrutiny and some degree of control. That’s the message that I’m trying to get across.” (TNYRB, 5/15/08, p. 10).

This is a mess. First it tries to build some kind of coherent political-economic idea on the Popperian view that all our knowledge is imperfect, fallible, merely probable; nothing certain. OK but what follows from this? What justification is there for drawing any conclusion at all from such a position since that conclusion will itself only be uncertain, probable, iffy? Second, if the regulators, bureaucrats all of them, are especially imperfect--which is what public choice theory teaches, noting their institutional disorientation as persons-with-power-and-no-rational-restraints--why trust them at all? These “authorities” will only cause trouble and will not help at all with any mishaps in the market place where mishaps tend to be self-correcting, at least over time. (It’s no different in markets from what it is in life: freedom may not work the impossible dream of perfection but it enhances self-responsibility!) Third, of course, “markets” don’t do anything--they are but spheres of human activity, in this case mostly commercial, business or economic, and as such they are homes to innumerable forms of human conduct. No one can possibly control them except to cause them to experience distortions far worse than free men and women ever produce. Finally, how will this “right kind of balance between allowing the markets to do their work” and government regulation come about? Who will do this “allowing”--some king or other “authority” who is wiser than market agents? (This interview is replete with reference to this mythical “authority” that will fix things for us all!)

George Soros no doubt has a knack for global finance--he has proved it big time--although even that applies mainly to highly regulated state financial markets. He has never been tested in a fully free market of money and banking. But this knack gives absolutely no hint of wisdom concerning the broader sphere of political economy, of understanding how human beings think and act as citizens, as friends, as professionals, a vacationers, and as social and economic agents. For instance, while some of us are no doubt ill informed about some matters we ought to know better, it is silly to make a broad generalization that our knowledge is always imperfect. Well, some of if may be but in some other matters we are pretty knowledgeable and certainly this would not be improved upon by having a bunch of “authorities” barge in to mess with our decisions and actions wherever these “authorities” decide to do so.

One can, of course, read Soros’s mentor Karl Popper more generously to mean only that people know well enough but never in some final, timeless fashion. The world is constantly developing, changing, and knowledge will always need to be modified by new information. But nothing from this implies that we need authorities to regulate us--and, oddly, Soros himself seems to realize this when he sees the hazards of bureaucracy. Why he doesn’t draw the right conclusions form that beats me.

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