The billionaire philosopher
Soros doesn't enjoy making money, he's just good at it
Billionaire George Soros was once asked how he would like to be introduced at an award ceremony. His reply: "George Soros, a financial, philanthropic, and philosophical speculator."
This answer neatly captures the intermingling ambitions driving Soros's life, a life that is engagingly - if a tad too flatteringly - portrayed in Michael Kaufman's biography of the famed Hungarian-born investor.
Kaufman, a longtime New York Times staffer, enjoys the mixed blessing of having worked for Soros in the mid-1990s as editor of Transitions, a Prague-based magazine financed by Soros. Such connections offer clear advantages, but as Kaufman acknowledges, "I could not even pretend to be starting out with my mind a clean slate." The result is a compelling but uneven account, with unlikely gaps and a tendency to give Soros the benefits of most doubts.
The biography's early protagonist is not Soros himself but rather his father, Tivadar, who instilled in George an instinct for survival and a sense of future greatness. A young Jewish teen growing up in Budapest during World War II, George watched in awe as his father protected his family from German occupiers. "For me," Soros later recalled, "this was the most exciting time of my life."
Although philosophy was his early passion, Soros enrolled at the London School of Economics (LSE) in 1949. He considered economics a compromise between "my philosophical ambitions and my interest in getting on in the world." At LSE, Soros encountered Karl Popper, a philosopher who preached the need for nontotalitarian "open societies" and posited that in a world of uncertainty, we can only approximate the truth. Though they did not know each other well, Popper's thinking would exert a lifelong influence over Soros.
In fact, when Soros left London for Wall Street in 1956, he vowed to spend only five years making money, after which he would pursue philosophy full time. But a funny thing happened on the way to the ivory tower: Soros discovered an incredible talent for investing, quickly establishing himself as an expert in European securities.
In 1973, he was successfully managing his own investment fund for wealthy individuals. In 1981, Institutional Investor magazine dubbed him "The World's Greatest Money Manager." And in 1998, his fund reached $6 billion in assets.
Yet Soros claimed all along that he did not particularly enjoy making money. "I am just good at it," he once insisted. Philosophy remained his unfulfilled ambition. In the 1960s, Soros spent many nights working on a manuscript titled "The Burden of Consciousness," full of garbled, Popper-inspired ruminations on the relationship between human history and human knowledge.
Soros dubbed his philosophy "reflexivity." When he failed to develop a philosophical framework to understand historical changes, he applied reflexivity to the more limited field of stock and currency markets, coming up with maxims such as "Markets are always biased in one way or another" and "Markets can influence the events they anticipate." Soros still attributes his investing successes to such principles.
Whether or not they bought his philosophy, Soros's fellow financiers marveled at his ability to "pull the trigger" - his sense of when to make an investment and when to cut his losses. This approach also characterized his personal interactions; more than one colleague recalled his "transactional relationships," which Soros would end abruptly when they no longer suited him.
In the late 1970s and early 1980s, Soros experienced what Kaufman discreetly terms a "midlife transformation," marking the sudden end of two particularly important relationships. Soros and his wife, Annaliese Witschak, divorced after a two-decade marriage, and he also parted ways with business partner Jim Rogers, who had helped manage the investment fund for a dozen years.
Unencumbered, Soros began dabbling in philanthropy, an endeavor he had once disparaged as an "ego trap." His efforts in this arena would quickly eclipse his financial triumphs.
Inspired by dissident activists, Soros established philanthropic foundations in Eastern Europe during the 1980s, attempting to foster "open society" enclaves amidst totalitarianism. Soros's preferred projects were simple and effective, providing clear "openness" benefits - such as importing Western textbooks and photocopiers into Hungary in 1984 or wiring 33 Russian regional universities to the Internet in 1999.
Oddly, perhaps Soros's most daring project - financing a water-filtration plant in war-torn Sarajevo in the mid-1990s - was one the financier considered a failure. In principle, Soros seeks to avoid "relief" spending of that sort, since in his eyes it represents an admission of failure, an inability to have prevented a large-scale crisis. "I'm opposed to humanitarian spending," Soros explained. "CNN comes with the pictures, and people become aroused ... by then it's too late."
Yet, even Soros's philanthropy remained transactional. "He was as impatient as a donor as he had been as an investor," notes Kaufman. Soros soon discarded projects in South Africa and China, for example, simply because his expectations were not quickly met. Some staffers even joked, "Soros must be a Hungarian word for changing one's mind." Yet few questioned his zeal or dedication. Between 1994 and 2000, Soros contributed some $2.5 billion to his various foundations.
Ultimately, the investing prowess Soros so disdained afforded him the global platform to spread his "open society" gospel. When his bets against the British pound helped force a devaluation in England in 1992, the press dubbed Soros "The Man Who Broke the Bank of England."
This sudden fame enabled Soros to hobnob with world leaders, place essays in leading newspapers and journals, and write high-profile - though tepidly reviewed - books speculating on open societies and global capitalism. Today, in his 70s, Soros has become, as one analyst remarked, "the only man in the US who has his own foreign policy."
How will history judge George Soros's contributions in finance, philanthropy, and philosophy? Kaufman believes that such compartmentalizing is misguided, since it was Soros's desire to "attain philosophical understanding ... [that] spurred him to achieve his practical successes." Yet it seems unlikely that Soros will be remembered for his prodigious investing skills - the world may have too many billionaires already - or his fuzzy philosophizing. Soros as the "philanthropic speculator" is the legacy that will endure.
Carlos Lozada is a senior editor at Foreign Policy magazine.