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Tue, Jan 03, 2017 - Page 9 News List

Open society needs defending as democracy falls into crisis

By George Soros

Well before Donald Trump was elected president of the US, I sent a holiday greeting to my friends that read: “These times are not business as usual. Wishing you the best in a troubled world.” Now I feel the need to share this message with the rest of the world.

However, before I do, I must tell you who I am and what I stand for.

I am an 86-year-old Hungarian Jew who became a US citizen after the end of World War II. I learned at an early age how important it is what kind of political regime prevails. The formative experience of my life was the occupation of Hungary by Hitler’s Germany in 1944. I probably would have perished had my father not understood the gravity of the situation. He arranged false identities for his family and for many other Jews; with his help, most survived.

In 1947, I escaped from Hungary, by then under communist rule, to England. As a student at the London School of Economics, I came under the influence of the philosopher Karl Popper, and I developed my own philosophy, built on the twin pillars of fallibility and reflexivity. I distinguished between two kinds of political regimes: those in which people elected their leaders, who were then supposed to look after the interests of the electorate, and others where the rulers sought to manipulate their subjects to serve the rulers’ interests. Under Popper’s influence, I called the first kind of society open, the second, closed.

The classification is too simplistic. There are many degrees and variations throughout history, from well-functioning models to failed states, and many different levels of government in any particular situation. Even so, I find the distinction between the two regime types useful. I became an active promoter of the former and opponent of the latter.

I find the current moment in history very painful. Open societies are in crisis and various forms of closed societies — from fascist dictatorships to mafia states — are on the rise.

How could this happen? The only explanation I can find is that elected leaders failed to meet voters’ legitimate expectations and aspirations, and that this failure led electorates to become disenchanted with the prevailing versions of democracy and capitalism. Quite simply, many people felt that the elites had stolen their democracy.

After the collapse of the Soviet Union, the US emerged as the sole remaining superpower, equally committed to the principles of democracy and free markets. The major development since then has been the globalization of financial markets, spearheaded by advocates who argued that globalization increases total wealth. After all, if the winners compensated the losers, they would still have something left over.

The argument was misleading, because it ignored that the winners seldom, if ever, compensate the losers. However, the potential winners spent enough money promoting the argument that it prevailed. It was a victory for believers in untrammeled free enterprise, or “market fundamentalists,” as I call them.

Because financial capital is an indispensable ingredient of economic development, and few countries in the developing world could generate enough capital on their own, globalization spread like wildfire. Financial capital could move around freely and avoid taxation and regulation.

Globalization has had far-reaching economic and political consequences. It has brought about some economic convergence between poor and rich countries; but it increased inequality within both poor and rich countries.

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