Washington, DC, January 23, 2001 --  

When Westerners worry about dangerous of fundamentalists, images of turbaned Iranian terrorists and gun-toting Afghan warlords quickly come to mind. But not to George Soros. The billionaire investor and philanthropist worries about fundamentalism of a different kind -- market fundamentalism.

The reach of global markets and the acceptance of capitalism have become so omnipresent since the collapse of the Soviet Empire that some world leaders are starting to believe that markets are the only things that matter. This market fundamentalism is now the greatest threat to the world since the downfall of communism, Soros says.¹

Such ideas might be dismissed as the ramblings of an eccentric billionaire, except that Soros has constructed a worldwide empire of aid foundations that rival the influence of the United States. A couple of years ago, Soros actually spent more money aiding Russia than the U.S. Government.² In the early ?90s, Soros paid to rebuild the water supply in war-ravaged Sarajevo when nobody else seemed to care.³ He has become, in essence, a one-man foreign policy player in a system dominated by nation-states.

Soros has outlined his proposals in his new book, Open Society: Reforming Global Capitalism. Much more a man of ideas and action than a wordsmith, he spends 400 arduous pages making the case that new global institutions should be created to oversee the new global society that has been developing for the past two decades.

What's wrong with the old institutions? Plenty. The World Bank and the International Monetary Fund have increasingly come under fire from leftist protesters and American conservatives for exploiting poor countries and wasting money.* According to Soros, the problem with these organizations -- as well as the United Nations -- is that the board members represent the interests of their respective nation-states. Because they look out for what is good for their own governments instead of poor countries or the world as a whole, they fail to achieve the goals of their institutions.

Soros has a good point here, and he argues further that future institutions should be based not on a block of nation-states, but on an organization of "open societies" working outside the control of their national governments. This means, in essence, that people in free countries would come together to create liberal Western-oriented global institutions that hold the needs of individuals and the entire world as supreme to that of the nation state. Not surprisingly, this sounds an awful lot like Soros' Foundations.

The only problem with Soros' Foundations is that even billionaires have limits to their resources. In order to be successful, he sometimes has to solicit funds from deep-pocketed countries to achieve his goals. An example of this, Soros said, is when he tried to eliminate tuberculosis from the Russian prison system. His organization soon ran into cost overruns when many strains of the disease proved resistant to inexpensive antibiotics. Because of such situations, Soros believes that existing deep-pocketed international organizations like the IMF and World Bank should be reformed to serve this need.

The flaw here, of course, is that the only reason these organizations have pockets deep enough to solve these kinds of problems is because their member governments can confiscate money from millions of people. Whether or not taking tax money against the will of citizens is moral is beyond the scope of this discussion. It could be argued that any taxation voted on by the majority in an open democracy is consistent with Soros' concept of an open society. But it is far from certain that the same majority that would vote for foreign aid would vote to spend it in a manner that agrees with Soros' principles.

While the United States government has the deepest pockets of any organization in the world, it is elected by a citizenry that loathes foreign aid. Americans are far more apt to vote to spend government money subsidizing wealthy retirees in Florida than they are to give foreign aid to help famine victims in the Sahel. Likewise, Europeans might vote to spend government monies to subsidize the use of organic farming methods in the undeveloped world. Such a program would be completely unscientific, and would likely lead to less food in countries that sorely need more.

Clearly, Soros doesn't envision this kind of system. To his credit, the kinds of things he would choose spend money on would be far worthier, and far more likely to achieve positive results than those of voters in democratic countries. If funds were given to Soros -- or people like him -- then the world could truly be made a better place.

This is where Soros' vision fails. What he wants is nothing short of an unrealistic fantasy -- he expects governments to use their power to extract huge sums of money from their subjects, then give complete control of the funds to enlightened people like Soros. This will never, ever happen.

Because of this fatal flaw, Soros' vision is doomed from the start. This might be a good thing. Soros' ability to creatively solve problems for the clear benefit of the world is unparalleled in our times. The world is much better off having Soros solve problems himself than having him design institutions to take his place.

*Related Web Column:

Breaking the Bank, April 18, 2000

Notes:

1. Soros George, Speech before the U.S. Library of Congress, January 20, 2001

2. The New York Times, Soros to Donate Millions More to Help Russia, October 20, 1997

3. Financial World, The Wall Street 100, July 6, 1993