In the February issue of The Atlantic Monthly, billionaire George Soros penned one of the strongest attacks on capitalism I have seen for many years. In the first paragraph he writes: "I now fear that the untrammeled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society. The main enemy of the open society, I believe, is no longer the communist but the capitalist threat."
Coming as it did from someone widely viewed as the ultimate capitalist, the article got attention the way "man bites dog" stories do. Here is someone who made billions of dollars in the stock market after having escaped, penniless, from both Naziism and Communism. Thus when someone of Soros's stature issues a sweeping condemnation of our economic system, it commands respect in the way a similar screed from a left-wing university professor would not.
The defenders of capitalism quickly recognized the Soros threat and counterattacked. Rob Norton of Fortune Magazine called Soros "a loser: as a thinker, hopelessly muddled; as a philosopher, woefully ignorant; and as a seer, oddly bereft of insight or imagination." Bob Samuelson of Newsweek called Soros "a crackpot," while Steve Hanke of Forbes thought his argument was simply "nonsense."
While I too disagree with Soros, I think it is unfair to dismiss him so lightly. After all, Soros is not only a man with a lot of money, he is someone who has tried to do something with it other than just make more. Soros was one of the first to recognize the coming collapse of Communism and both the promise and danger that entailed. Soros recognized that while getting rid of Communism was clearly a good thing, it was naive to assume that it was automatically going to be replaced by liberal democracy. Having seen Naziism and Fascism first hand, Soros knew that democracy was but one alternative to communism.
This concern led Soros to set up foundations in Eastern Europe as early as 1980. These foundations were designed to teach people who had lived their entire lives under totalitarianism how to live in a free, open society. Soros feared that without guidance and assistance, the open society might not take root and that the newly free people of the former Soviet Union and Communist Bloc might quickly revert to authoritarianism.
This concern was clearly valid. Although such countries as the Czech Republic and Poland have made remarkable progress toward the open society ideal, democracy remains fragile almost everywhere else. The collapse of the former Yugoslavia into warring factions and mini-states is the worst case. But many others are not far behind.
Soros believes that the real failure of the open society to take root in the formerly Communist soil of Eastern Europe lies primarily with the West. He believes that the West has been foolishly unwilling to invest the necessary resources in nurturing and maintaining the open society in former Communist states, leaving these countries to sink or swim on their own. The West, he believes, has been indifferent both to its moral responsibility and its own self-interest.
It was Soros's profound disillusionment over the West's failure to act that led him to write the article. He was concerned that there may be something deeply amiss with our own society that is responsible for the unwillingness to support and defend the open society ideal in Eastern Europe.
Soros concludes that the open society is still viable, but blames laissez-faire ideology for undermining the will to defend it or help spread it. The root problem, as he sees it, is that laissez-faire ideology opposes any form of government intervention aimed at preserving stability. Thus it is ideology, not shortsightedness or laziness that caused the West to shirk its responsibility in the East. This is what led Soros to attack capitalism so vehemently.
I believe Soros is wrong to blame capitalism for the West's failures. But he is right to call attention to them. NATO expansion could have been undertaken earlier; admission of former communist nations to the European community could have been accelerated.
The root problem is one of Western leadership and is not inherent in our political-economic system, as Soros believes. The Cold War was one of the costliest, most protracted wars in history and its end was an enormous relief. As with the end of all wars, the combatants just wanted to go home and tend to their personal affairs. Thus it is myopia and parochialism that are the true causes of Soros's concerns, not capitalism itself.
Although Soros is fundamentally wrong in his analysis, it would be a mistake to dismiss him too casually. He has identified a real problem, which is the fragility of the open society ideal in the former states of the Communist empire and the failure of the West to recognize it or do anything to nurture it.
Just as the failure to deal with the consequences of World War I planted the seeds of World War II, our failure to get democracy on a firm footing in Eastern Europe following the end of the Cold War may be planting the seeds of future crises.