George Soros On Globalization

Environmental Book Review

George Soros

On Globalization 

Perseus Books 

2002

This book actually invites some interesting reflection on the changes and discussions wrought around the subject of Globalization in the past decade. The prolific George Soros is, of course, a billionaire investor, Number 7 on the Forbes list of America's most wealthy, and is the world's richest hedge-funds manager, with a net worth estimated in 2012 to be approximately 20 billion dollars. He is the founder of the philanthropic think tank, The Open Society Institute, which has given billions to various projects. The OSI was named in reference to the book, Open Society and its Enemies, by philosopher Karl Popper. Soros was a student of Popper at The London School of Economics, and is a supporter of progressive-liberal causes. His selective philanthropy has been credited, among other things, with playing a significant role in the peaceful transition of Hungary from Communism to Capitalism. Soros is also controversial for investing and removing his money from various nations in ways that have destabilized their economies, including his role in creating the economic crash in East Asia in 1997, and he won his reputation as “the man who broke the Bank of England,” after he profited 1 billion GBP during the 1992 Black Wednesday UK currency crisis. His 2002 book “On Globalization” was followed the next year by a book titled “Supremacy; Correcting the Misuse of American Power,” and in 2006 by “The Age of Fallibility: Consequences of the War on Terror.” He has also published innumerable articles on his ideas, can be frequently read in magazines such as The Guardian, and is a lecturer with a number of other books of similar tone.

His first point is that the domination of international finance markets we see today occurred during similar conditions prior to WW1. “Clearly,” comments Soros, “the process is not irreversible.”

“Globalization is an overused term that has been given a wide variety of meanings,” Soros remarks in his opening chapter. Concerned by protests and “widespread resentment,” Soros raises the alarm, stating that “unwitting coalitions between the far Left and the far Right have succeeded in weakening the few international institutions we have.” Soros asserts, “The two propositions that underpin this book have a common denominator: Both the provision of public goods and the improvement of internal conditions require some resource transfers from the rich countries to the poor. This goes against the grain of market fundamentalism, which claims that markets, left on their own, will ensure the optimum allocation of resources.” Soros does not agree. Soros beleives that capitalism left on its own to provide for the populace will fail. He also believes that financial institutions have a duty to fulfil, and that they are failing in many important ways. Proposing SDR's (Special Drawing Rights) at the IMF as a method of creating fair international assistance for applicant nations, assistance would be offered to nations chosen by a board of “eminent persons,” and the assistance would then be audited by a commission. This intriguing plan is only one of many ideas that make Soros truly readable. Refreshingly, Soros remarks that public protest against the mechanisms of Globalization should be heeded, and, as an international finacier interested in supporting progressive policies, he agrees that the market in its present form does not enhance the wealth of the poor in an equitable way. However, while he heeds protest, he objects to protests which attack, in particular, the WTO, and “IFTI's,” (international trade and financial institutions). These he believes “need to be strengthened,” as the resource transfers offered by the existing IFTI’s are inadequate. Most of the IMF’s money is used to rescue countries after a crisis had erupted. The main business of the World Bank is lending, its grant-making capacity is largely limited to the profits generated by its lending activity. The WTO is not concerned with resource transfers at all. The IFTI’s could play a more constructive role than they do at present…but there is a need for a new form of international resource transfer.” Soros reminds us that he has been engaged in providing foreign aid to the amount of $425 million in the last 5 years. Despite, or perhaps because of this, he sees foreign aid as considerably flawed, and outlines five specific reasons for this. His first reason, “it serves the interest of the donors rather than the recipients.” His second reason, “recipients rarely have control over development projects, which are designed and implemented by outsiders. When experts leave, not much remains.” Good point, and were he merely a despicable billionaire, he would not have made it. Soros further points out that, “foreign aid is usually intergovernmental. In some cases aid becomes the main form of support for otherwise unpopular governments,” a rather elegant way of stating the painful truth, that foreign aid supports antidemocratic regimes. His fourth point to me somewhat reiterates his first, in that “donors insist on maintaining national control over the aid they provide, resulting in a lack of coordination,” is basically a somewhat more detailed remark on his opinion that donors do not give up control. Finally, Soros comments, “it is not acknowledged that international assistance is a high-risk enterprise. It is much harder to do good than to run an enterprise for profit.” Honest words from an international businessman and investor. Here at last, Soros introduces his own fresh take, based on his wish to foster the development of open societies. This approach, Soros claims, is intended to serve the interests of the recipient, and be managed by nationals rather than donors, who decide on priorities. In explaining Karl Popper's ideas, he remarks, “open society is often confused with civil society,” clarifying, ”it is one of the components.” Soros defends the WTO as “a very valuable organization,” he considers both misunderstood and misused. “Conventions established through the WTO are under-enforced,” Soros remarks. From this vantage point, there are several issues that concern him for reform within the WTO, and these are labour rights, environmental protection, and intellectual property rights. As well, he calls for reform to “TRIPS, or trade relation investment measures,” as well as “competition, anti-corruption, and tax policies.” Soros proposes international reserve assets that are issued by the IMF, tagged to implement international assistance and sees this as an important missing component. He also supports structural reformation through multilateral development and suggests low interest, long maturity loans to the poorest, educational spending and micro-lending. In his concluding section of the book, the author states that since 911 that the US is the dominant hegemony, and “greater than ever,” but Soros objects strongly to individuals such as Kissinger, and ideas involving US hegemony as having a “practical” aspect requiring the control over resistance movements in smaller nations and the militarism that followed 911. Soros offers “two alternative visions of the US role in the world” that of ”Geopolitical realism” based on the interests of the state, and “open society idealism” based on the interests of humanity. Describing various governments which embody one or the other in their leanings, he explains that Theodore Roosevelt “can be taken as the protagonist of American hegemony,” while Woodrow Wilson might represent the idealist approach. Interestingly, Soros defines the Cold War as an era when the US “successfully combined the two roles of being one of the two superpowers and the leader of the free world.” Because of this, other democratic countries “voluntarily submitted” to US leadership in face of a common danger, and the United States emerged victorious. “Following the collapse of communism… the choice between the two presented itself more starkly.” Both history lesson and optimistic proposal, the book explains past events in a way that is neither rhetorical nor apologist in tone. Soros writes that the general public did not see “under the influence of market fundamentalism” the need for the US to consider reaching out to former communist countries in the way The Marshall Plan reached out to Europe after WW2. Soros calls this a moment where “an historic opportunity was lost.” Speaking further on 911, he points out that ”relations with China and Russia have undergone a remarkable transformation. This is one of several positive by-products of one of the most devastating tragedies in American history.” Regardless, “although no state can challenge American supremacy, we are at risk if we fail to live up to the responsibilities that our leadership position imposes...The responsibilities I am talking about are moral responsibilities. That is the missing ingredient in US policy. It is of course not entirely missing; it is only shunted to the sidelines by the prevailing doctrines of market fundamentalism and geopolitical realism.” Soros defends the vision of an open society as counter to present policy in the United States. “The principles of open society find expression in a democratic form of government and a market economy...One way to foster open societies without running afoul of the sovereignty of states is to offer... incentives for voluntary compliance with international rules and standards.” In his closing statement, an invitation to build a society his ideas, Soros claims, “the difference between global capitalism and global open society is not so great.” Insightful perspective by an international financier, one who counsels us to listen to protestors and to learn from the lost opportunities of the past, Soros is a man with an eye to transforming policies and progressively, even radically improving (rather than dismantling) existing international organizations seen by so many as cause rather than cure.

Soros, G. (2004). George Soros on globalization. PublicAffairs.