The Crisis of Global Capitalism

by George Soros

Book Overview

The global economy, on which the world now depends more than ever, is in crisis. The Russian economy has collapsed, leading to punishing inflation and economic hardship. Scores of Japanese banks are in ruin while the Japanese government muddles along, the nation falling deeper and deeper into recession. The once-booming economies of Thailand, Malaysia, and Indonesia have imploded. Brazil and the rest of Latin America has begun to edge toward the precipice,...

• Format: Hardcover
• Language: English
• ISBN: 1891620274
• ISBN13: 9781891620270
• Release Date: December 1998
• Publisher: PublicAffairs
• Length: 288 Pages
• Weight: 1.35 lbs.
• Dimensions: 1.0" x 6.2" x 9.1"

Customer Reviews

Economic theory has misrepresented how markets behave

Reflexivity, is the two way interaction between thinking and reality. Reality is not separate from thinking. Reflexivity is acceptance that there is a reality and we are a part of that reality. Reflexity, strength of its statement is contingent on their impact. Fallibility means there is a lack of correspondence between the participants thinking and the actual state of affairs. When one recognizes a fallible belief, he can correct for error, this is another name for learning. All human designs are bound to be defective. In finance the value of a hypothesis is measured in money. Money accumulation measures the degrees of success in a belief system and the exploitation of observed fallacy. No fertile fallacy is likely to last forever and eventually, it will be replaced with a new fallacy that will occupy people's imagination. There are two ways to deal with deficient design, one, to look for an escape and two, to look for improvement. Marxist philosophy and economics is not scientific provable. Karl Popper's theory of scientific method involves predicting a specific phenomena then testing and explaining the phenomena. Therefore, prediction and explanation are reversible. Testing is comparing the initial and final conditions and establishing whether they conform to the hypothesis. One should accept the hypothesis provisionally, until is can be falsified. This approach allows the hypothesis to provide predictions and explanations without insisting on verification. The predictions can be either deterministic or probabilistic. However, generalizations made about reflexive events cannot be tested. Equilibrium in supply and demand means there is exists no unsatisfied sellers and buyers. Economics is the study of the relationship between supply and demand, not the conditions. All markets have radical fallibility and are liable to be flawed. Economic theory has misrepresented how markets behave. The conditions of supply and demand are unknowable because financial markets are discounting the future contingent on how they discount the present. Rational expectations of price are based on fundamentals, such as, future earnings, dividend, and the prospect of future transactions. Therefore, it would be irrational for an investor to believe they can outperform the market. Self-interest is the best explanation why free markets succeed. Different people work with different bias. A sequence of events occurs and these events affect a person's bias. Rational expectations philosophy contents that markets are always right. However, in reality financial markets are almost always wrong, but have the ability to validate them selves to a point. Divergence from outcomes and expectations can be taken as bias. For example, credit expansion and contraction are followed by a boom or bust, in the business cycle. Collateral value depends on the amount of money the bank is willing to lend. Investors had sought fast per-share growth rates and ce

Financial Speculators Against Libertarianism!

Here are two reasons to read this book -- 1) Learn why George Soros, one of the world's wealthiest men, a billionaire financial speculator, says that dogmatic belief in the so-called "free market" is every bit as dangerous as a comparably dogmatic belief in Marxism-Leninism (a topic Soros knows something about, given that he grew up under a Marxist-Leninist government in Hungary). 2) Learn about the philosopher Karl Popper, a beacon of rationality in a tribalistic world. Soros is an intellectual follower of Popper, author of the renowned THE OPEN SOCIETY AND ITS ENEMIES (see my review), and Soros attempts to apply Popper's thinking to the current crisis of global capitalism. Whether he draws the correct conclusion in every case is less the point than the serious thinking involved. Popper is widely misunderstood to be an advocate of the free market. What he is actually in favor of is freedom of thought -- skepticism of any received dogma, including the dogma of the Free Market, to which many now say There Is No Alternative. Rubbish, says Popper, and so says Soros. A legal, regulatory framework is required. Without the appropriate regulation, the result is the "gangster capitalism" of Russia, and of Enron. Along with Nobel Prize-winning economists Amartya Sen and Joseph Stiglitz among others, Soros is absolutely right in his basic point, and is making a contribution to the construction of an appropriate institutional architecture for an increasingly global society.

Precarious and Fragile - our financial world is not a given

The real message here is that the our prosperity and our easy way of life is not guaranteed by our being members of a rich and productive society. There are real reasons, embedded in human nature, why our modern economy has teetered on the brink of collapse several times in the last fifteen years. Read this book together with "Maestro : Alan Greenspan's Fed and the American Economic Boom" to understand that it has been repeatedly left up to a small number of people to respond to genuine crises with risky fixes to keep our financial system from collapse. Soros' application of "reflexivity" to market behaviour helps us understand that this will happen again and again. Someday the right people won't be there or the risky fix will not work. Whether Soros' call for international banking authorities and guarantees is feasible is an important question that won't be answered until a lot more people understand that all it will take is time and normal human behaviour to bring it all crashing down.

BIG TIME WALL STREET CAPITALIST ATTACKS CAPITALISM!

George Soros is one of New York City's richest Wall Street zillionaires, and got his money by organizing and profiting quite a bit from Soros Fund Management in Manhatten. His Quantum Fund is one of Wall Streets biggest and most profitable (for investors participating in it). He was born in 1930 in Hungary and completed study at the London School Of Economics in 1952. He left Europe for America, and got rich in the money biz, just like his famous fellow Hungarian Jew, Nicholas Deak (shot by his secretary at age 80, but whose famous name still lives on all over the world under the banner of the Deak-Perrera Foreign Exchange organization, the largest money changing company on the planet).Mr. Soros promotes himself and his business organization by writing books published by vanity press operations. His 1998 book titled THE CRISIS OF GLOBAL CAPITALISM was cranked out in a month by the famous Peter Osnos, publisher extraordinare, and mover and shaker of the Perseus Books Group, and its Public Affairs label. Soros pays a ton of money (which he can certainly afford) to foot the cost of printing, binding, and shipping, gratis, to libraries, bookstores, etc., etc. all over the planet. George Soros knows about and believes in skillful public relations, and he should. His past P.R. efforts have helped importantly to build his fortune.All this may sound unsavory, but the irony is that George Soros offers, in THE CRISIS OF GLOBAL CAPITALISM, an excellent read which probably wouldn't have seen the light of day had he been a pennyless writer trying to interest publishers in a book attacking big money in the USA and the world, and the abuses of the big money establishment. His book is terrific and everyone who cares about America and the impact of careless and unscrupulous big money should buy it and read it many times over.Soros pulls no punches. "What I predict," he states directly and without apology, "is the imminent disintegration of the global capitalist system." This is not Karl Marx asking the workers of the world to unite. It's a rich Wall Street guy who likely eats $300 per plate dinners at Manhatten's snootiest restaurants very, very often. Mr. Soros is worth listening to and heeding.He's written a lot attacking his fellow capitalists in recent years. In February 1997, he wrote an ATLANTIC MONTHLY article, much discussed at the time, titled "The Capitalist Threat."George Soros states that the capitalist system is deeply flawed. "As long as capitalism remains triumphant, the pursuit of money overrides ALL OTHER SOCIAL CONSIDERATIONS! Economic and political arrangements are out of kilter. The development of a global economy has NOT BEEN MATCHED BY THE DEVELOPMENT OF A GLOBAL SOCIETY!........If and when the global economy falters," (he implies it is certain to do so soon) "political pressures are liable to tear it apart."Soros dissects the current crisis and economic theory in general, revealing how theoretical assumptions have combined