The Global Guru

The Bubble of American Supremacy
by George Soros
Weidenfeld & Nicolson, 224pp, £12.99

Having made a fortune as a financier and then given much of it away in philanthropy, George Soros has embarked on a new career as a guru. He urgently wants to put his mouth where his money is. He looks at our arrangements for managing the planet and finds them sadly wanting. “The combination of financial markets and national politics,” he writes, “has created a lopsided system designed primarily for the production and exchange of private goods. Collective needs and social justice receive short shrift because the development of international institutions . . . has not kept pace with the development of markets.”

To the task of plugging the institutional gap, he brings compact proposals, based on his experience in financial markets and on Karl Popper’s philosophy of the “open society”. In his previous book, George Soros on Globalisation, he proposed reforms to international financial and economic institutions. In this one he turns to the political and security underpinnings of a globalising world. He is an insistent rather than a subtle thinker, and his prose is calculated to bludgeon you into submission rather than persuade. But his heart and most of his mind are in the right place. He is a hard-headed social democrat in a world drifting towards ideological extremes.

The book opens with a forthright attack on President Bush’s approach to the problem of world order. Its gist, as well as style, is conveyed by the following quotation:

I consider the Bush doctrine of pre-emptive military action pernicious . . . The government of the most powerful country on earth has fallen into the hands of extremists . . . The supremacist doctrine is in contradiction with the principles of an open society because it claims possession of an ultimate truth . . .

Much of the attack covers familiar ground. The philosophy of the “neo-cons” around Bush is outlined succinctly; Soros notes the capture of the Republican Party by a “curious alliance” of religious and market fundamentalists. He writes of Bush’s war on terrorism that it has “little to do with ending terror or enhancing homeland security; on the contrary, it uses terror as a pretext for waging war”. In discussing American motives for invading Iraq he emphasises, rightly, the importance of oil and Israel. More distinctive to Soros is the perception of a parallel “between the pursuit of American supremacy and the boom-bust pattern that can be observed . . . in the stock market. The bubble is now bursting.”

However, in attacking Bush’s doctrine of “pre-emptive military action” Soros misses his target. What is pernicious about the Bush strategic doctrine is the use of the language of pre-emption to cover up a much more dubious claim: the right to make preventive war. This opens the door to wars based on potential or even manufactured threats. Bush and Blair used the pretext that Saddam Hussein was an immediate threat to wage war against him for other reasons, one of which may have been to stop him from becoming a threat in the future. It is astonishing how, when no weapons of mass destruction were discovered in Iraq, the Prime Minister was able to slide from the first to the second justification without any outward sign of embarrassment.

There remains the question of how one counters threats to national security which cannot be fully anticipated. The chief one today comes from the largely invisible operations of terrorist groups. Soros sensibly says that terrorism should be treated as a crime not an act of war, requiring for its prevention or punishment good police work, not military action. He says that we should have “pursued Bin Laden in Afghanistan”. But how would the “police” have been in a position to pursue Osama Bin Laden for his “crime” (or prevent him committing further “crimes”) without first overthrowing the regime which harboured him? This problem will remain when the Bush doctrine is consigned to history.

Soros’s own programme of preventive action, outlined in the second part of the book, revolves round his familiar idea of promoting “open societies all over the world”. The United States should become leader of a “community of democracies” which would exclude repressive regimes from membership of the United Nations and other international organisations. Soros repeats his call for the International Monetary Fund to issue extra money every year for the use of developing countries. He wants to reform foreign aid programmes to ensure that they are “owned” by their recipients, citing the experience of his own Open Society Foundation. To prevent rulers stealing natural resources from their own people he would set up an organisation to “monitor the collection and expenditure of government revenues from the mining and oil sectors”.

These initiatives do not infringe the principle of state sovereignty: they reward good behaviour and punish bad behaviour with the loss of privileges. However, what does one do about states whose governments are too weak, incompetent, corrupt, or murderous to respond to such incentives? Soros takes up the newly fashionable idea that sovereignty rests with people not states. When rulers fail to protect their citizens, the duty for protection should be transferred to the international community. Coercive intervention is justified to prevent mass loss of life and “large-scale ethnic cleansing”. He might have added that the UN Trusteeship Council, moribund since the Second World War, could be revived for the temporary government of “failed” states.

One can swallow most of Soros’s proposals without accepting the personal philosophy that underpins them. Nevertheless, it is of great importance to him, and he provides a “conceptual appendix” which summarises the argument of his most important book, The Alchemy of Finance. At its heart lies what he calls “the human uncertainty principle”. All hypotheses are provisional, and subject to falsification by events. So the only safe method of progress is by way of piecemeal social engineering. All this Soros owes to Popper. It is a powerful intellectual antidote to “closed” society thinking, and in Popper’s hands was a powerful weapon to knock the “scientific” pretensions of communism. Unfortunately, it is much less effective as an attack on Soros’s bete noire, “market fundamentalism”, which, unlike communism, carries its own self-corrective mechanisms.

In addition, Soros feels impelled to set up his own doctrine of “radical fallibility” against the theory of “natural rights”. The latter, he argues, allows Bush to claim that American principles, as enshrined in the Declaration of Independence, are self- evidently best. This argument must be counted as one of Soros’s intellectual lapses. It is true that Bentham described the philosophy of natural rights as “nonsense on stilts”, but Soros fails to realise that it offers a far more secure defence against political crimes than Popper’s falsifiability principle. Indeed, it is precisely to guard against “radical fallibility” (“original sin”, in theological discourse) that we need to hold on to the idea of natural rights. If nothing is self-evident, everything is possible.