Analyse the following passage and provide appropriate answers for the questions that follow.
Soros, we must note, has never been a champion of free market capitalism. He has followed for nearly all his public life the political ideas of the late Sir Karl Popper who laid out a rather jumbled case for what he dubbed “the open society” in his The Open Society and Its Enemies (1953). Such a society is what we ordinarily call the pragmatic system in which politicians get involved in people’s lives but without any heavy theoretical machinery to guide them, simply as the ad hoc parental authorities who are believed to be needed to keep us all on the straight and narrow. Popper was at one time a Marxist socialist but became disillusioned with that idea because he came to believe that systematic ideas do not work in any area of human concern.
The Popperian open society Soros promotes is characterized by a very general policy of having no firm principles, not even those needed for it to have some constancy and integrity. This makes the open society a rather wobbly idea, since even what Popper himself regarded as central to all human thinking, critical rationalism, may be undermined by the openness of the open society since its main target is negative — avoid dogmatic thinking, and avoid anything that even comes close to a set of unbreachable principles. No, the open society is open to anything at all, at least for experimental purposes. No holds are barred, which, if you think about it, undermines even that very idea and becomes unworkable.
Accordingly, in a society Soros regards suited to human community living, the state can manipulate many aspects of human life, including, of course, the economic behaviour of individuals and firms. It can control the money supply, impose wage and price controls, dabble in demand or supply-side economics, and do nearly everything a central planning board might — provided it does not settle into any one policy firmly, unbendingly. That is the gist of Soros’s Popperian politics.
Soros distrusts capitalism in particular, because of the alleged inadequacy of neoclassical economics, the technical economic underpinnings of capitalist thinking offered up in many university economics departments. He, like many others outside and even inside the economics discipline, finds the arid reductionism of this social science false to the facts, and rightly so. But the defence of capitalist free markets does not rest on this position.
Neo-classical thinking depends in large part on the 18th- and 19th-century belief that human society operates according to laws, not unlike those that govern the physical universe. Most of social science embraced that faith, so economics isn’t unusual in its loyalty to classical mechanics. Nor do all economists take the deterministic lawfulness of economic science literally — some understand that the laws began to operate only once men embark upon economic pursuits. Outside their commercial ventures, people can follow different principles and priorities, even if it is undeniable that most of their endeavours have economic features. Yet, it would be foolish to construe religion or romance or even scientific inquiry as solely explicable by reference to the laws of economics.
In his criticism of neo-classical economic science, then, George Soros has a point: the discipline is too dependent on Newtonian physics as the model of science. As a result, the predictions of economists who look at markets as if they were machines need to be taken with a grain of salt. Some — for example the school of Austrian economists — have made exactly that point against the neo-classical.
Soros draws a mistaken inference: if one defends the market as flawed, the market lacks defense. This is wrong. If it is true that from A we can infer B, it does not prove that B can only be inferred from A; A → C, too, might be a reason for B.
