Soros on Why the Market Is Not Enough: ‘Every Society Needs Some Shared Values’

In announcing his gift of up to $500-million to finance social programs in Russia, the philanthropist and financier George Soros said last week that he was motivated by his desire to promote a global capitalist society — but not one controlled merely by market forces. In a speech last month to a meeting in Budapest convened by Civicus, an international coalition of citizen activists, Mr. Soros outlined his views. Following are excerpts:

Every society needs some shared values if it is to hold together. But our global society incorporates many different customs, traditions, and religions. So where can it find the shared values that would hold it together?

Market values on their own cannot serve that purpose because they reflect only what one market participant is willing to pay another in a free exchange. Markets reduce everything, including human beings (labor) and nature (land), into commodities.

We can have a market economy, but we cannot have a market society. In addition to markets, other institutions are needed to serve social goals such as political freedom and social justice. There are institutions in individual countries, but not in our global society.

I believe that the idea of the open society could serve as a shared value for all of humanity and provide the conceptual basis for the institutions that our global society needs.

What is the open society? In a superficial sense, it is just a way to describe the positive aspects of democracy: the greatest degree of freedom compatible with social justice. It is characterized by the rule of law, respect for minorities and minority opinions, the division of powers, and a market economy.

The principles of the open society are admirably stated in the Declaration of Independence. But the Declaration starts by stating that “we hold these truths to be self-evident,” while the principles of the open society are anything but self-evident; they need to be established by common consent. In the United States they have been enshrined in the Constitution. But our global society has no constitution, and it does not recognize the principles of open society.

There is a strong epistemological argument in favor of open society. Our understanding is inherently imperfect; the ultimate truth, the perfect design for society, is beyond our reach. We must therefore content ourselves with the next best thing: a form of social organization which falls short of perfection but holds itself open to change and improvement. That is the concept of the open society: a society open to change and improvement.

But the idea of open society is not widely accepted.

On the contrary: The epistemological argument has not even been properly considered, and the idea of a global open society is often explicitly rejected.

There are those, for instance, who argue that values are different in Asia. Of course they are different. Our global society is characterized by a diversity of values, religions, and traditions. But fallibility is a universal human condition; therefore we ought to be able to find common ground in the open society, which celebrates this diversity.

Any variety of Asian (or other) values would fit into a global open society, provided that some universal values based on the recognition of our fallibility — such as the freedom of expression — were also respected.

Western democracy is not the only form that an open society can take.

On the contrary, it follows from the epistemological argument that open society should take a variety of forms. This is why the concept of open society could serve as a unifying principle for our diverse global society.

The global capitalist system is vigorously expanding in both scope and intensity. It exerts a tremendous attraction through the benefits it offers and, at the same time, it imposes tremendous penalties on those countries which would try to withdraw from it.

These conditions will not prevail indefinitely, but while they do, they offer a wonderful opportunity to lay the groundwork for a global open society. It is a pity that the desirability and need for doing so is not recognized — but, in a way, this is simply another demonstration of our imperfect understanding.

The vigorous expansion of the capitalist system is attributed to the growing acceptance of the timelessly valid laws of economic theory. The view — I call it the laissez-faire ideology — is based on a fundamental misunderstanding of the capitalist system.

Markets do not operate in a vacuum, and they do not tend toward equilibrium. They operate in a political setting, and they evolve in a reflexive fashion. The global capitalist system is best understood as a directional, historical process.

In the 19th century, the global capitalist system was held together by the imperial powers, and eventually it was destroyed by a conflict between those powers. But the days of the Empires are gone. For the current global capitalist system to survive, it must satisfy the needs and aspirations of its participants.

For the time being, it does. With the passage of time, the deficiencies are liable to make their effect felt, and the boom is liable to turn into a bust. But the ever-looming breakdown can be avoided if we recognize the flaws in time. What is imperfect can be improved.

For the global capitalist system to survive, it needs a global society which is constantly striving to correct its deficiencies: a global open society.