Pubdate: Sun, 03 Mar 2002
Source: New York Times (NY)
Section: Books
Copyright: 2002 The New York Times Company
Contact:  http://www.nytimes.com/
Details: http://www.mapinc.org/media/298
Author: Anthony Gottlieb
Note: Anthony Gottlieb is the executive editor of The Economist and the 
author of "The Dream of Reason: A History of Philosophy From the Greeks to 
the Renaissance."

'SOROS': WHO WANTS TO BE A BILLIONAIRE?

If one had to pick the ideal training ground for a great currency 
speculator, the black market in the Mienk Cafe in Budapest in 1945 might be 
a good place to look. It was there that the 14-year-old George Soros -- 
later one of the most successful of all 20th-century investors, the man who 
famously bet against the Bank of England and won in 1992, and was blamed by 
some Southeast Asian countries for their crises in 1997 -- continued his 
family's struggle to survive Communism as it had Nazism. It was a dangerous 
and thrilling youth, providing crash courses in both the horrors of 
totalitarianism and the fundamentals of macroeconomics. The Hungarian 
currency, at one time printed in denominations of quintillions, regularly 
lost two-thirds of its value overnight.

Soros had to learn fast.

Superficially, "Soros: The Life and Times of a Messianic Billionaire," by 
Michael T. Kaufman (formerly a writer and editor with The New York Times), 
might seem to make Soros's remarkable achievements as a speculator, and as 
one of the world's most imaginative philanthropists, almost predictable. He 
developed the steely detachment and cool that he needed for the world's 
currency markets as he hid from the Nazis. He learned his internationalism, 
and how to take risks quickly, from his father, an Esperantist and free 
spirit who bribed officials to get false papers for his family.

Was it surprising that Soros, having experienced both fascism and 
Communism, should become a disciple of Sir Karl Popper's "Open Society" 
philosophy of antitotalitarianism when he sat at Popper's feet at the 
London School of Economics in the early 1950's? Soros's Open Society 
foundations have spent several billion dollars, much of it on undermining 
totalitarianism and then helping to build on its ruins.

But of course there are no such easy explanations. Not every money-changing 
street urchin makes it big, let alone that big. Not every Jew who survived 
the war in hiding emerged with a steady nerve, let alone one steady enough 
to make bets with $100 million chips.

And not every pupil of Popper even agreed with the Popperian anti-Marxist 
philosophy, let alone made it the basis of a vast and effective 
philanthropic program.

Soros remains mysterious, not because of any shortcomings of Kaufman's 
biography, which is a fascinating account of one of the great men of our 
times, but because the man is a nest of paradoxes and contradictions. For 
example, he is shy, but he can also be unnervingly outspoken and candid, in 
business and in interviews. He admits to what Kaufman calls "messianic" 
ideals: "I have had these illusions, or perhaps delusions, of grandeur and 
they have driven me." He has also said that his "goal is to become the 
conscience of the world." (Kaufman, who for two and a half years edited a 
magazine backed by Soros, assures us that these words sound less pompous in 
conversation than they do in print.) Yet there is no trace of 
self-aggrandizement in Soros's actions.

Although far from secretive and no recluse, he has done little to trumpet 
his good works, which outweigh those of a pewful of saints.

When one thinks of the noise made by many other tycoons on smaller 
philanthropic sprees, his modesty is striking.

He is, however, keen to share his views of the world, in speeches and 
articles -- a long piece called "The Capitalist Threat" in The Atlantic 
Monthly in February 1997 is perhaps the most wide-ranging of his 
testaments. It argues, ironically for such a successful capitalist, that 
the untrammeled intensification of laissez-faire capitalism and the spread 
of a value system based on the primacy of a free market serve to undermine 
democracy.

Yet what he is most eager to communicate, echoing Popper, is the 
imperfection of human understanding and the fallibility of all theorists, 
including himself: "The time is ripe for developing a conceptual framework 
based on our fallibility."

The only part of Soros's semiphilosophical writings to be discussed at any 
length in this book is an extended and uncompromising critique of Freudian 
psychoanalysis that Soros sent to Popper in 1963, while his career as a New 
York financier was already under way. Seventeen years afterward, in a 
typically Sorosian paradox, he was on a Freudian analyst's couch 
(figuratively speaking: Kaufman informs us that the patient, who later 
described the treatment as a success, did not lie but sat for his two or 
three sessions per week). Having left his first wife in 1978, he moved into 
a small furnished apartment, in search of a new life with few possessions, 
less time at work and more time to himself.

It was in the years from 1979 to 1981 that he came to attribute his nagging 
dissatisfaction with his life and his insecurity to shame -- for which an 
inflated sense of self-importance was a compensation -- deriving largely 
from the false, non-Jewish identity he had adopted to survive the war.

It was also around this time that the Quantum Fund, the hedge fund he 
managed, had its greatest period of growth.

Its value increased by 55 percent in 1978, by 59 percent in 1979 and by 102 
percent in 1980. In 1981 -- the year Soros overcame his shyness with 
journalists, and Institutional Investor put him on its cover as "the 
world's greatest money manager" -- it lost 22 percent, its first bad year. 
But it was soon back on form. Investors who had put $100,000 in his first 
fund in 1969 and stuck with him would have seen their stake grow to $353 
million at the end of 1997.

The greatest contradiction of all in the life of George Soros is that he 
believes his financial success to be due to the successful application of 
his theories of economic behavior, which seems to be very far from the 
truth. Friends, family members and colleagues attest that gut instinct and 
intuition are what inform his decisions; that what sets him apart is art, 
not science.

His son Robert, who worked with him, once noted:

"My father will sit down and give you theories to explain why he does this 
or that. But I remember seeing it as a kid and thinking . . . the reason he 
changes his position on the market or whatever is because his back starts 
killing him. It has nothing to do with reason. . . . If you're around him a 
long time, you realize that to a large extent he is driven by temperament."

Reviewers and commentators have found little sense in his theories, which 
revolve around the unremarkable idea that in the financial sphere reality 
is affected by the beliefs of participants in the markets -- a notion he 
calls "reflexivity." How he purports to translate this idea into concrete 
investment decisions remains obscure.

Besides, he has made big mistakes in calling the behavior of markets: in 
1998, in the wake of the Asian crisis and Russia's foreign-debt default, he 
predicted the imminent demise of global capitalism.

He has cheerfully described himself as a failed philosopher. His dearest 
wish, from his student days in London through much of his career, was to 
build on the work of Popper and construct a general theory of human 
knowledge that would hold the attention of other thinkers.

But he left little impression on Popper and virtually none on anyone else. 
Not even his biographer makes much of an attempt to explain his general 
ideas, which is disappointing.

Soros's intellectual originality has made its mark, however, in a less 
conventional way: in his style of philanthropy. Instead of ladling money 
into traditional charities or the usual good causes of medical research and 
the arts, his foundations have operated in over 30 countries, supervising 
hundreds of programs that are carefully and often ingeniously aimed to have 
the maximum effect. (One of his hobbyhorses was to undermine censorship in 
Hungary by distributing photocopiers.) Having already devoted perhaps 
nearly half of his fortune to his foundations, he says he intends 
eventually to give it all away. It will be hard to predict where: one of 
his more recent projects, in America, has been to support the 
decriminalization of drugs.

In the end, this anti-Marxist would-be philosopher may achieve what Marx 
himself wanted philosophers to do: change the world instead of merely 
interpreting it.
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