George Soros (born August 12, 1930) is famous for two accomplishments: his astonishing ability to make vast sums of money by investing in global markets, informed by theories he developed about the essential irrationality of markets (Kaufman 2002; Slater 1996); and his commitment to endowing numerous foundations which fund projects to help in opening “closed societies” in Central and Eastern Europe and the former Soviet Union, as well as, projects dedicated to “building and maintaining the infrastructure and institutions of an open society” throughout Latin America, Africa, Asia, and the United States (OSI 2005). He has described himself as “a financial, philanthropic, and philosophical speculator” (Kaufman 2002).
Soros grew up in Budapest, Hungary, and spent the last year of World War II hiding his family’s Jewish ancestry from occupying Nazi forces. He immigrated to London, England, in 1947, and earned a degree in economics from the London School of Economics. Soros soon gravitated to investment banking, where he learned about arbitrage (buying and selling securities or currencies simultaneously in different markets to profit from price discrepancies). He moved to New York in 1956 (becoming a naturalized U.S. citizen in 1961) and found a job as a trader on Wall Street, where his European arbitrage skills were a rare and valuable asset. Shrewd, deeply confident, and extremely successful, Soros was able to start his own investment firm in 1974, Soros Fund Management, which returned astronomical profits to its clients (Slater 1996). One financial coup alone, the “selling short” (selling shares one does not own, in hopes of making a profit when the commodity later declines in value) of over ₤10 billion in British sterling on “Black Wednesday” in 1992, earned him over $1 billion. His effectiveness at making money through investment is unequaled by any other speculator (Kaufman 2002).
Among the richest men in America, Soros has not been content to live a thoughtless life as an extremely wealthy individual, but has become deeply involved in furthering the cause of democracy and other hallmarks of “open societies” in Europe and across the world. Beginning his philanthropic work in Africa in 1979, when he sought to help black South African students attend university during the height of apartheid, he then focused on the oppressive “closed society” regimes in Central and Eastern Europe and the former Soviet countries, and has more recently expanded his work into Latin America, Asia, and the United States. His work—unlike that of the stereotypical rich philanthropist, who funds classical institutions of learning and culture such as libraries and art museums—boldly seeks to influence public policy both abroad and at home, and to build support for progressive reforms aiming at controversial issues like criminal justice and the Drug War. His unusually political style of philanthropy has earned him praise as well as condemnation from across the political spectrum (Shawcross 1997).
Born Jewish in pre-WWII Hungary, the Nazi invasion of his home country in 1944—and the year he and his family subsequently spent hiding from Gestapo who were ordered to send all local Jews to concentration camps—made an enormous impression on George Soros. His light coloring and his family’s disinterest in Jewish religious traditions (as was common among Hungarian upper middle-class Jews during that time) made it easy for the boy to evade his would-be captors, yet also left him with internal conflicts about his cultural roots for much of his life. However, Soros also learned during this period to love taking risks and to have utter confidence in himself, two qualities that drove him to become one of the most successful and renowned investors the world has ever seen (Slater 1996; Kaufman 2002).
As a young student of economics and politics at the London School of Economics, Soros was exposed to two theorists who were deeply influential on his nascent philosophies: Friedrich von Hayek, an economist whose seminal text The Road to Serfdom condemned fascism, socialism, and communism; and, most importantly, philosopher Karl Popper, whose theories on “open” and “closed” societies rang true with the young man who had experienced fascist and then communist oppression in his home country. Soros also wished to be a philosopher, to be known for his ideas, and formulated a number of theories (some highly original, some derivative) that he has expounded on in nine books to date (Slater 1996; Kaufman 2002; OSI 2005).
George Soros’ importance in history is tied to two of his main passions in life: making huge sums of money using his shrewd business sense and deep understanding of human nature, and using it to conduct forward-thinking, strategic philanthropy promoting progressive ideals. Although he has publicly stated, somewhat ironically, that he does not believe he should bear responsibility for negative effects that result from his power to move billions of dollars in world markets, Soros has demonstrated a strong commitment to spreading the democratic, liberal values of the open society, investing billions of his personal wealth in philanthropic projects advancing this viewpoint behind the Iron Curtain and across the globe. By leveraging his capital with the abilities of the carefully selected, resourceful, creative individuals who head his numerous foundations, he has been successful in supporting critical thought and even effecting social change in some of the countries he seeks to aid (Shawcross 1997; Kaufman 2002).
Soros combined his interest in philosophy with his astute understanding of investment and financial markets to become astoundingly successful as the founder and manager of a pioneering hedge fund, a sort of exclusive, unregulated, high-stakes investment club, typically open only to a small number of very wealthy foreign investors (very few Americans are permitted to join), which offers higher return rates in exchange for higher levels of risk, and which has access to a number of unorthodox speculation techniques. An investment with Soros of $100,000 in 1969, if reinvested, would have been worth $300 million 28 years later, earning his reputation as “the greatest hedge fund investor of our time” (Slater 1996; Shawcross 1997).
He has contributed a great deal of his personal wealth to create grant making institutions, such as the Open Society Institute and 33 national and regional foundations which make up the Soros Foundation Network, which grant about $450 million each year to projects which “promote the values and principles of a free and open society” (Soros 2004). His first philanthropic focus was on funding black South African students’ attendance at Capetown University, in 1979; in the 1980s, he backed projects to support critical thought and democratic ideals throughout Central and Eastern Europe. More recently, he has extended his philanthropic reach to more than 60 countries in Africa, Asia, Latin America, and the United States (where his Open Society Institute has initiatives in areas such as criminal justice reform, youth, community development, and other key public policy issues) (OSI 2005). He devoted significant resources to the campaign to defeat President Bush in the 2004 election (Nichols 2005).
Ties to the Philanthropic Sector
George Soros, one of the world’s wealthiest men, has established more than 30 foundations throughout the world that collectively grant $450 million each year to further various progressive causes and projects. Through his philanthropy, Soros has supported opposition groups and encouraged free thought in totalitarian and other “closed” societies—activities that have been influential in effecting social change contributing to the fall of various Communist regimes in Eastern Europe and spreading liberal ideas (Clark 2003).
Soros has more recently become involved in the United States, first with various Open Society Institute initiatives focusing on domestic public policy issues, and later with his contribution of more than $23 million in 2004 to political action groups (such as MoveOn.org) working to prevent the reelection of President George W. Bush. Taking out a full page of ad space each time, he published two essays in 40 widely read newspapers, such as the Wall Street Journal, in October 2004 elucidating his reasoning on this issue, which centered on Bush’s deception about and mismanagement of the war with Iraq (Soros 2004). In 2005, he met with 70 other left-leaning millionaires and billionaires to discuss strategies to fund progressive think tanks (as conservatives have done with right-wing think tanks and public policy groups for many years); the participants have begun calling themselves the Phoenix Group (Nichols 2005).
Key Related Ideas
Karl Popper’s concept of the open society, one in which critical thought can take place, a democratic model of government allows for the correction of mistakes and respect for minority views, and there is respect for the rule of law, has been key to Soros’ conception of his philanthropic work. A closed society, conversely, purports to hold absolute truth and exerts dominion over the individual at the expense of liberty and the open exchange of ideas; examples of closed societies abound in the totalitarian states where he has established foundations, such as the (formerly) Communist countries in Europe and Eurasia (Soros 1995).
Soros’ controversial theory of reflexivity provided a novel analysis of how markets work: that their seemingly chaotic rises and falls are due to investors’ “inherently imperfect” knowledge of events and to the tendency of markets to actually influence the events they are anticipating—contrary to classical economic theory, which assumes that investors make perfectly informed decisions (Soros 1991; Slater 1996). Soros notes that people reflect reality in their thinking, but also make reality-affecting decisions that are “based not on reality, but on people’s interpretation of reality”; these two functions counteract and sometimes interfere with each other, creating a feedback mechanism. This theory explains the “boom-and-bust” cycle which occurs infrequently, yet dramatically, and which Soros has repeatedly been able to foresee and take advantage of, with spectacular results (Soros 1995). He also sought to extend his theory of reflexivity to historical events such as the rise and fall of the Soviet Union (Soros 1991).
Important People Related to the Topic
- Aryeh Neier (1937-): Neier became president of the Open Society Institute (OSI) and the Soros Foundations Network in 1993; prior to that, he served as founder and director of Human Rights Watch and national director of the American Civil Liberties Union. Born Jewish in Nazi Germany, Neier is internationally known as an expert on human rights and has been instrumental in investigating and prosecuting perpetrators of abuses in over 40 countries, including war crimes and other human rights offenses in the former Yugoslavia.
- Gara LaMarche (1954- ): LaMarche is vice president and director of U.S. Programs for the Open Society Institute, which he joined in 1996. He was also associate director of Human Rights Watch and directed its Free Expression Project and the Freedom-To-Write Program of the PEN American Center. He is a noted author on human rights and civil liberties.
- Kathleen M. Foley, M.D. (1944- ): Foley is director of the Open Society Institute’s Project on Death in America, which reflects Soros’ interest in the topic after his mother’s death by funding research on end-of-life issues and improving care for the terminally ill in the United States. She is a neurologist in the Pain and Palliative Care Service at Memorial Sloan-Kettering Cancer Center in New York, and is a professor of neurology, neuroscience, and clinical pharmacology at Weill Medical College of Cornell University. She has received many awards and honors for her work to understand the nature and treatment of pain.
Related Nonprofit Organizations
- The Open Society Institute (OSI) provides funding and other support to shape public policy to promote democratic forms of government, respect for human rights, and an array of social, legal, and economic reforms in order to establish and maintain open societies. OSI was founded to support Soros’ existing foundations in Central and Eastern Europe, but also conducts a number of regional and global initiatives addressing various public policy issues such as economic reform, education, human rights, legal reform, public health, and the strengthening of civil society, among others (www.soros.org).
- The Soros Foundation Network (SFN) is composed of 33 independent foundations in nations or regions where the open society model is threatened or nonexistent. Each foundation has the autonomy to set its own priorities and activities, and many receive outside funding as well as support from OSI. George Soros enjoys handpicking dissidents and other notable figures with a proven stake in fomenting open societies to direct SFN organizations (www.soros.org/about/foundations).
- Human Rights Watch (HRW) is an international nongovernmental organization that investigates and raises public awareness about human rights violations throughout the world to help prevent further injustice. George Soros is one of HRW’s major funders, and has hired former HRW leaders to direct some of his foundations and projects (www.hrw.org).
- The Open Society Policy Center (OSPC) is a 501(c)(4) nonprofit organization that engages in nonpartisan lobbying on domestic and international issues related to open societies, including civil liberties and civil rights, economic development, women’s rights, and criminal justice reform. OSPC was established to respond to the shift in U.S. policies after the September 11, 2001, terrorist attacks. Two senior staff members of OSI, Aryeh Neier and Gara LaMarche, sit on OSPC’s Board of Directors (www.opensocietypolicycenter.org/index.php).
Related Web Sites
The Open Society Institute (OSI) Web site, at www.soros.org, contains many articles, reports, and multimedia resources providing information about the local and global populations and public policy issues addressed by OSI and its sister foundations. It offers a wealth of information about OSI projects and is a major source for progressive public policy analysis.
George Soros’ personal Web site, at www.GeorgeSoros.com, is currently devoted to making available articles, speeches, and book excerpts written by Soros to critique President Bush’s public policy, particularly toward the war in Iraq, and to urge people not to reelect him (in several archived pieces published during the 2004 election).
The Stanford Encyclopedia of Philosophy’s Karl Popper Web site, at www.plato.stanford.edu/ entries/popper/, goes into great and lucid detail about Sir Karl Popper’s many contributions to philosophy, including his theories on open and closed societies. The Web site provides extensive bibliographies and offers links to other Internet resources discussing Karl Popper’s life and work.
Bibliography and Internet Sources
Clark, Neil. “NS Profile: George Soros.” New Statesman, 12 June 2003. Accessed 8 November 2005. Available from www.newstatesman.com/200306020019.
Kaufman, Michael T. Soros: The Life and Times of a Messianic Billionaire. New York: Alfred A. Knopf, 2002. ISBN: 0375405852.
Nichols, Hans. “Soros says be patient.” The Hill, 20 April 2005. Accessed 2 November 2005. Available from www.hillnews.com/thehill/export/TheHill/
Open Society Institute [OSI] and Soros Foundation Network. Open Society Institute and Soros Foundation Network. Accessed 17 November 2005. www.soros.org.
Shawcross, William. "Turning Dollars Into Change,” Time Magazine, 1 September 1997, 150: 9. Accessed 19 November 2005. Available from www.time.com/time/magazine/1997/int/970922/cover1.html.
Slater, Robert. Soros: The Life, Times, and Trading Secrets of the World’s Greatest Investor. New York and others: McGraw-Hill, 1996. ISBN: 0786312475.
Soros, George. Soros on Soros: Staying Ahead of the Curve. New York and others: John Wiley and Sons, Inc., 1995. ISBN: 0471120146.
Soros, George. Underwriting Democracy. New York: MacMillan, Inc., 1991. ISBN: 0029302854. Soros, George. “Why We Must Not Reelect President Bush” [dated October 2004; Accessed 5 November 2005]. Available from www.georgesoros.com/downloads/soros_doc_wsj_ad.pdf.