Ch2, pt 2 Stiglitz and Soros

That a self made capitalist, who has clawed his way to unimaginable wealth using the most abstract and advanced tools of unproductive finance such as derivatives and currency deals, is an opponent of the IMF and George Bush, should give apologists for ‘business as usual’ pause for critical thought.



Stiglitz and Soros
Joseph Stiglitz became Chief Economist of the World Bank in 1997. He was also one of President Clinton’s key economic advisors and chaired the US Council of Economic Advisors. His ground breaking academic work on asymmetric information, the idea that markets may fail because consumers and producers have imperfect knowledge, won him a Nobel Prize (Guardian, 11 October 2001). In 1999 he resigned from the World Bank because he felt that the more powerful IMF was blocking its agenda of reform. In 2001 he published Globalization and its Discontents, arguing that neo-liberal globalisation had led to poverty for millions of people and would fail unless thoughtfully reformed. The title echoes Freud’s Civilisation and its Discontents, an explosive tome that shows how apparent rationality is based upon repression. Stiglitz comes closer to endorsing violence against economic repression than any other commentator outside of autonomist anarchism, bitterly observing, ‘For decades, people in the developing world have rioted when the austerity programs imposed on their countries proved to be too harsh...what is new is the wave of protest in developed countries’ (Stiglitz 2002: 3). While the prophets of capitalism ignore or ridicule most of their opponents, they hate Stiglitz with a corrosive passion:
Mr Stiglitz's prose reads like a draft dictated to a secretary whose mind was apt to wander: readers too will be drifting off a lot. Also, the narrative conveys a whining self-righteousness that is always tiresome and sometimes downright repellent. (Economist, 6 June 2002 )

George Soros was raised in poverty, made a fortune and is now best known for using his wealth for ambitious political and social projects. Born in Hungary, his family hid their Jewish origins to avoid extermination by the Nazis and their anti-semitic puppets. In the post-war years Soros found his way to Switzerland, moved to the UK to study at the London School of Economics. In 1956 he left for the United States where he managed to make a massive investment fortune. He specialized in arbitrage, the art of skimming off the differential change in value from dealing, especially dealing in currency. He was an early practitioner in the high risk hedge fund market, an ‘investment of $100,000 in Soros’s Quantum Fund in 1969 was worth $300 million by 1996’ (Hertz 2001: 137). In 1992 he bought billions of dollars worth of foreign currency being sold by the British government to prop up demand for sterling. As the pound slid in value his currency worth accelerated upwards.

Fiercely hostile to the totalitarianism of both Hitler and Stalin, he embraced the free market philosophy of the Austrian philosopher Karl Popper. Soros established the Open Society Institute, his philanthropic foundation, in 1979, ‘to help open up closed societies, help make open societies more viable, and foster a critical mode of thinking’ (Soros 1998: 69). Popper argued that socialism led to a closed totalitarian society ruled by experts. Marx, for Popper, is prefigured by Plato who believed in a utopia governed by an elite of philosopher kings. Yet by 1995 Soros had come to believe that unfettered capitalism rather than socialist totalitarianism had become the main threat to freedom. Such sentiments are summed up in the title of his 1998 book, The Crisis of Global Capitalism: Open Society Endangered which sees globalisation as a force that must be tamed if a market based society is to be sustained.

Soros has advanced his ideas practically by funding an interesting range of charitable projects and political campaigns. He sent four hundred photocopiers to his native Hungary to promote information access in the pre internet era. He allegedly helped to topple the President of Georgia in 2004 and poured dollars into anti-Bush campaigning:
[He] gives away $400m a year through his Foundation and thus subsidizes many of the activist groups, luminaries and publications of the American left, probably dwarfing the sums that once trickled out of Langley or Moscow […] his monetary influence is one of those hushed secrets inside the left usually dismissed as conspiracy-thinking. (Sheasby 2003)

That a self made capitalist, who has clawed his way to unimaginable wealth using the most abstract and advanced tools of unproductive finance such as derivatives and currency deals, is an opponent of the IMF and George Bush, should give apologists for ‘business as usual’ pause for critical thought.