Argument

The Imperfect World of George Soros

The billionaire investor wants to understand what it means to live in a world that we cannot fully understand.

George Soros cites Isaiah Berlin as an important intellectual influence, so it makes sense to see Soros through one of the Riga-born philosopher's best-known lenses -- the division of the world into foxes and hedgehogs. In his public life, Soros is a broad-minded fox: As a hedge fund manager, his success rested on his ability to make many different bets every day. In his philanthropy, Soros is foxy too, supporting, under the broad umbrella of "open society," dozens of causes in dozens of countries.

But intellectually, Soros is a more narrowly focused hedgehog. He has been pondering, articulating, elaborating, and publicizing variations on one big idea for more than half a century. The way he describes that central thought today is "the significance of imperfect understanding as a motive force or determinant of history."

Over the years, Soros's written expositions of this concept have sometimes met with bafflement, even as his financial prowess and philanthropic accomplishments have been widely admired. For Soros himself, though, his big idea and many public initiatives are intimately connected; his intellectual framework, he believes, is what has made him good at everything else. And, to his delight, after years of struggling to be accepted as a public intellectual, the turmoil in the world economy has finally made the rest of us more receptive to his insight.

"The present moment is a potent illustration" of how imperfect understanding shapes bad outcomes, Soros told me when I interviewed him recently for Foreign Policy. "We have had 25 years of a superboom, interspersed by financial crises. Each time, the authorities intervened by reinforcing the credit and leverage in the economy, until it became unsustainable. Then you had the crash of 2008, where the financial system actually collapsed and had to be put on life support, which consisted of substituting sovereign credit for the financial credit that was no longer credible."

Soros sees this boom-and-bust cycle as a real-world example of his theory, illustrating how flawed ideas shape events: "It was all due to a false dogma which postulated that financial markets tend towards equilibrium."

Of course, there's a bit of a contradiction at the very core of Soros's big idea: He is absolutely, zealously, passionately certain that all our knowledge of the world is imperfect. He knows for sure we can never know anything for sure.

One way Soros squares this in real life is to relentlessly apply his theory of imperfect knowledge to himself. His business partners say that his investing genius isn't some oracular power to always make the right trade. What he's good at is knowing when he's wrong -- and cutting his losses. And knowing when he's right -- and doubling down.

Soros takes particular pleasure in spotting his own mistakes. "In 1997, I thought that global capitalism was unsustainable," he reminded me. "And yet it lasted another 11 years!"

Soros traces his own acceptance of volatility to his teenage experience of a world transformed: the Nazi invasion of Hungary when he was the 13-year-old younger son of a comfortable Budapest household. The Soros family survived, and George learned the necessity of responding to revolutionary change. "I had the guidance of a father who had a similar experience as a prisoner of war in Russia in World War I," he said. "I had a family history of turbulent times. And that gave me a personal advantage in managing these far-from-equilibrium situations."

Soros has been arguing for his ideas in the public arena for decades. But, he told me, "my ideas were dismissed as the indulgence of a successful speculator." With the onset of the financial crisis -- a textbook example of the impact of imperfect knowledge -- Soros has been getting more respect as a thinker. "Since the crisis, there is more recognition in the value of recognizing the role of imperfect knowledge," he said.

Of course, Soros doesn't restrict himself to the abstract realm of philosophy. He's perhaps best known for his unabashedly liberal political views, and he loves nothing more than weighing in on public-policy debates around the world, particularly when he thinks his concept of imperfect knowledge can be applied or when the values of open society are at stake.

His most recent preoccupation has been the European Union, where this year he memorably championed the iconoclastic idea that Germany must "lead or leave." That is Soros's shorthand for the notion that Germany should either shoulder the true burdens of EU leadership, providing financial support to weaker states and permitting the inflation their economies need, or exit the eurozone and allow them to create those conditions for themselves. So far, Germany hasn't taken either course, but Soros's idea captured the attention of both European elites and the European public, significantly shaping the debate.

Soon, Soros may find himself making headlines about China. Among both China hands and the global investing class, it is a truth universally acknowledged that the country's paramount economic and political challenge is shifting from an export-led economy to one that is also driven by internal consumption. But Soros thinks that this shift is proving harder than expected.

"China has been the tremendous beneficiary of globalization and now is at the end of the road as far as the growth model they have employed, which is based on exports and investment," he said in our interview, in comments that are more bearish about the world's second-largest economy than Wall Street conventional wisdom.

"The share of consumption is just one-third of GDP, and that is now reaching the limits of what is sustainable," he said. "So they have to change that. But it will be rocky. It involves a hard landing. To increase consumption, you need to increase household incomes. But the economic slowdown is creating unemployment and people are scared, so their propensity to save increases. So all three segments are falling: exports, investment, and consumption."

One of Soros's intellectual hallmarks is an ability to quickly size up who wins in such a scenario. This is a useful habit of mind if you run a hedge fund. It also happens to be a very Eastern European way of thinking: Vladimir Lenin famously insisted that the key question of any political agenda was "who whom?" -- as in, who is doing what to whom?

Here is how Soros applies that framework to China's political economy. "The great gimmick that was helpful in maintaining economic growth was having an undervalued currency, which was the equivalent of a tax imposed on Chinese labor," he said. "But people did not feel taxed. Since the economy was growing so rapidly, even though the share which accrued to labor was less than appropriate, during this period of rapid growth everyone was satisfied."

At the time, the winners were the Communist Party's elite, whose members personally benefited and saw the economy take off. This political dynamic, however, is breaking down along with the slowdown, he says, as "the willingness of people to accept a regime which is a dictatorship is greatly diminished."

The result, Soros predicts, will be conflict and crisis. "The big question for China and the world is whether the situation will be resolved with an increase in democracy or greater repression," he said. "I am very hopeful it will result in a move towards democracy and a more equitable social system where the rulers get a lesser share. But the ruling class rarely abandons its privilege willingly, so there is bound to be social conflict, as well as an economic crisis."

The volatile future Soros foresees for China is an environment in which he is at ease, both as an activist and as a thinker. Soros is also comfortable balancing his foxy public life and his hedgehog intellectual preoccupations. "To engage in action is necessary in order to provide fodder for understanding," he argued.

But Soros doesn't hesitate to name the work he values most highly. It isn't earning a fortune, though he has done so many times over, and it isn't supporting open society, though he has personally contributed some $8 billion toward that goal. It is coming up with his big idea.

"Trying to understand the human predicament of being born into a world that exceeds our capacity to fully understand," he told me, "is what I am most interested in and most preoccupied with."

THOMAS PETER/AFP/Getty Images

Argument

Why Family Is a Foreign-Policy Issue

Helping women strike a work-life balance would change the world more than you might think.

I have a split personality these days. On Mondays and Wednesdays, I give speeches on work and family -- and the changes America needs to make to enable more professional women to get to the top. On Tuesdays and Thursdays, I teach a course on the politics of public policy and give speeches about a wide range of foreign-policy issues. My audiences for the work-and-family talks are often interested in foreign policy as well, but for most people in my foreign-policy audiences, that "work/family stuff" is a completely separate arena, a sideline at best. Sure, individual women and men will often tell me privately that they appreciated the essay I wrote for the Atlantic this summer on why I gave up my high-profile State Department job to return to Princeton University and my two teenage sons, but they see no real connection with the foreign-policy world.

They're wrong. The connection is there, and it's a very important one: If more women could juggle work and family successfully enough to allow them to remain on high-powered foreign-policy career tracks, more women would be available for top foreign-policy jobs. And that would change the world far more than you think, from giving peace talks a better chance to making us better able to mobilize international coalitions to reordering what issues governments even choose to work on.

My decision to talk in such specific gender terms is still deeply uncomfortable for many. Foreign policy is a very male world. The women who have made it are a small and close club, all committed to advancing the careers of younger women and worried that even engaging in this conversation could make it harder to break those glass ceilings. Some argue that as long as some women can juggle high-powered careers and kids at the same time, others should just follow their example and get on with the work. Others argue that my analysis shouldn't be so globalized because it is based on my own unique situation, suggesting that I should have moved my family to Washington.

Perhaps. But the larger issue is not about me. It's about the numbers. Even with Hillary Clinton as the third woman secretary of state in the last dozen years, the line of top female foreign-policy professionals in Barack Obama's administration is one woman thick. I can think of only a handful of qualified women who were not tapped for senior foreign-policy jobs under Obama (some of whom chose not to enter government for kid-related reasons). Some men, of course, opt off the Washington fast track for family reasons too; the pace of top jobs is exhausting, if exhilarating, for everyone involved. But for every man who leaves, another man is waiting in the wings. For every woman who steps down to spend more time with her family (for real!), the next president is going to have to look very hard and perhaps even order in "binders full of women" if he wants to keep his administration from being a boys' club.

But so what? Does it matter if the president has an all-testosterone team shaping America's place in the world? I'm sure it does, and in ways that hinder the country's ability to address the complex new challenges of our 21st-century planet. More than a decade after 19 men armed merely with box cutters and their own radical convictions struck at the heart of the most awesome military power in world history, we are only now beginning to focus on societies as well as on states as part of the core foreign-policy agenda. The world of states is still the world of high politics, hard power, realpolitik, and, largely, men. The world of societies is still too often the world of low politics, soft power, human rights, democracy, and development, and, largely, women.

Let me be clear. I am not saying that women are not perfectly capable of realpolitik chess-game strategizing about how to best adversaries and counter potential threats in the world of state power. And some men, of course, do focus on a wide range of social, economic, and humanitarian issues. But many women are more likely than many men to see the world from the bottom up and connect the dots, for example, between America's living up to its word by preventing mass killing on a horrific scale in supporting the Libyan opposition against a murderous regime and beginning to change perceptions of the United States among young people not only in Libya but across the Middle East. And women add sheer diversity to the mix of issues we should rate as important; I well remember the horror of a male colleague at the idea that we would be working on food security, one of Clinton's priorities.

Biological and sociological explanations abound for these differences; time and neuroscience will tell. In the meantime, the president and the country would be better served if both perspectives were equally represented in any decision-making process. Judging from Foreign Policy's list of the top 50 foreign-policy Democrats, we have a problem. Below cabinet level, it is men who surround the president as foreign-policy advisors. Only one woman from inside the White House is even listed.

Formal position and actual influence are not the same thing, of course. Still, a bigger pool of eligible women would help. The core problem is that precisely when men in their early thirties are taking positions as National Security Council directors, speechwriters, or special assistants -- jobs that prepare them for more senior positions -- women are having children and stepping out, not up. Addressing that problem requires systemwide change. Ambitious parents need more flexibility in how, where, and when they work, including the ability to work less or even not at all for a period. Equally important, they will need employers -- starting with the president -- who don't view this kind of zigzag career path as a lack of commitment or professionalism, but instead value both their experience as parents and their determination to live up to the full range of their responsibilities.

From medicine to education, many young women are now choosing a career based in part on how family-friendly it is. Foreign policy does not rate highly on this score; by definition, it involves endless amounts of travel and a work schedule at the mercy of world events. That cannot be changed. But a lot of other things can be. If we want to see and solve the full range of national and global problems, rather than a selective and sometimes distorted set of them, it's time to make family and foreign policy work together.

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