Who is More Dangerous: Capitalism or George Soros?

By Gord Gekko
web posted March 1997

From CNN to "The McLaughlin Group", one man's recent critique of capitalism has led to a debate about the role of capitalism and its effects on society. The argument has once again come down to whether limits are needed on capitalism to stop it from wreaking havoc on society.

The man in question who has largely sparked this latest round of the pros vs. cons of capitalism is billionaire financier George Soros with his piece in the February 1997 issue of The Atlantic Monthly entitled "The Capitalist Threat".

While I must say at the outset of this piece that I emphatically disagreed with Soros' arguments and conclusions, he has performed a valuable service to capitalism. Too long has capitalism been debated with too few people understanding exactly what it is that they are debating.

So What Is Capitalism?

Defining capitalism seems to be a difficult proposition for most, even for some that should know. The only economic system that most North Americans have experienced is the mixed economy, a society that has attempted to fold, and failed in trying, collectivist precepts into a capitalist economy, spawning a mutation which is sometimes as much one as the other.

As an example, not long ago I received a piece of email from a young woman at Aquinas College. While doing some research for a paper she stumbled on ESR and posed the question she had been tasked to answer. "Is the United States a socialist or capitalist society?"

A good question. Living in Canada I could only answer from an outsider's perspective. In Canada the answer is only slightly easier to answer. The response I gave her was, to be succinct, that the United States was both.

While the United States features less government intervention in the economy (level of taxation, government regulation of the market and level of entitlements, among other variables should suffice to explain government intervention) than does Canada and some European states, it still features a huge bureaucracy which regulate large segments of the economy. Since the late 1800's, the United States has moved steadily away from a capitalist economy to that of a mixed economy.

I myself prefer Ayn Rand's definition of capitalism which appeared in her essay "What Is Capitalism?" (Capitalism: The Unknown Ideal, 1967):

"Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned."

Rand's definition is one that presupposes knowledge about the basic aspects of objectivism, the philosophy that she largely created and refined. Since this is an essay on capitalism, I try and succinctly give you that background.

Rand believed that the cornerstone of capitalism was individual rights and that the only way to protect those rights was to eliminate force in human relationships. Rand believed that in a capitalist society that force, whether, coercion or physical, may not be initiated by one against another. To banish force, government is given the monopoly of force to protect people's rights.

If force is banished, then all human exchange is voluntary and all exchange is governed by reason.

So what is the role of private property? Rand stated in that same essay, "Private property is the institution that protect and implements the right to disagree – and thus keeps the road open to man's most valuable attribute (valuable personally, socially, and objectively): the creative mind."

The Capitalist Threat?

So what's George Soros' beef?

In his Atlantic Monthly piece Soros claims that capitalism has become a force that is doing harm to society itself. After successfully juxtaposing itself against Marxism, capitalists believe that the system has become an ultimate truth. Like Marxism, Soros states, capitalism is trying to portray itself as a science.

His core argument is that the "open society" that we enjoy is being threatened. What Soros means by the term "open society" is what philosopher Karl Popper's definition the term is, which appeared in his 1945 work, The Open Society and Its Enemies. Popper stated that since the ultimate truth is beyond mankind, ideologies like Marxism or Nazism, which claim to be an ultimate truth, must rely on oppression to force its truth on society and those who do not share the same ultimate truth. Popper's view of a open society was one that realized that there were many ultimate truths and that government was needed to protect the rights of citizens, allowing them to co-exist peacefully even though widely divergent philosophies existed.

Soros believes that many capitalists have accepted capitalism, and are promoting it as, an ultimate truth without understanding the ramifications and effects. It has become a force, that like totalitarian ideologies, which believes it possesses an ultimate truth and destroys common interests.

Soros believes that these common interests, never really defined in his piece, must be protected from capitalism. "Laissez-faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest. Unless it is tempered by the recognition of a common good that ought to take precedence over particular interests, our present system is liable to break down."

Soros also has a problem with what he calls "excessive individualism". Soros defines that as "too much competition and too little cooperation." What does the amateur philosopher define individualism as? No answer.

For all his successes and obvious talents, I would submit that Soros does not understand on a philosophical level what capitalism really is.

Soros believes that his "open society" is threatened some people's belief that capitalism has an ultimate truth, one that will infringe on the beliefs and truths of others who do not share capitalism's philosophical messages.

Soros is essentially correct. Some "truths" disappear because they are destroyed by the reality of the situation. But what Soros is arguing is not anti-capitalism, what Soros is arguing is anti-reason.

Capitalism, as stated above, is a free exchange, not only of goods and services, but of philosophies as well. Just as a temporal marketplace deals in products, a philosophy must gain currency in the marketplace of the minds. The only moral way for a philosophy to be freely exchanged is with reason.

Capitalism is a moral system that depends on free exchange. Anyone is allowed to hold whatever beliefs they wish, but those beliefs will be tested by reality. If they do not hold up to reason, then a rational person will re-think those beliefs. Capitalism too depends on reason. That which cannot be rationally explained in a free market cannot be sustained.

Capitalism serves no common good for society. The common good is a term that has no definition. Who's common good? No answer.

When Soros talks about the "common good" he expressly holds that as a higher goal then the individual. Soros railed against what he calls excessive individualism. Soros all but admits his tyranny is acceptable, where capitalism's benefits are not. His tyranny holds the collective should benefit not those who hold rationality and justice above the mob. Soros' "common good" means upholding any belief system, no matter what it preaches. By placing other systems at the same level as capitalism Soros does not raise them, but insults the freest form of human exchange.

Capitalism serves no social or collectivist agenda. It is simply the most moral system of human exchange and interaction conceived.

John McLaughlin called this debate "faddist" but he is wrong. Capitalism has been under attack since the day Wealth of Nations was published. Attempts to subvert capitalism to shackle it to someone's hobbyhorse or outright attempts to destroy it happen every day, whether by "social activists" or governments. To date, capitalism has survived in one mutated form or another. George Soros' attack is merely the latest.

Don't believe that Soros is arguing anti-reason? His own words condemn him as an enemy of capitalism, true freedom and the human mind:

"We have now had 200 years of experience with the Age of Reason, and as reasonable people we ought to recognize that reason has its limitations. The time is ripe for developing a conceptual framework based on our fallibility. Where reason has failed, fallibility may yet succeed."

It would appear that Mr. Soros fell prey to his own conceptual framework.

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