'SOROS': WHO WANTS TO BE A BILLIONAIRE?

If one had to pick the ideal training ground for a great currency
speculator, the black market in the Mienk Cafe in Budapest in 1945 might be
a good place to look. It was there that the 14-year-old George Soros --
later one of the most successful of all 20th-century investors, the man who
famously bet against the Bank of England and won in 1992, and was blamed by
some Southeast Asian countries for their crises in 1997 -- continued his
family's struggle to survive Communism as it had Nazism. It was a dangerous
and thrilling youth, providing crash courses in both the horrors of
totalitarianism and the fundamentals of macroeconomics. The Hungarian
currency, at one time printed in denominations of quintillions, regularly
lost two-thirds of its value overnight.

Soros had to learn fast.

Superficially, "Soros: The Life and Times of a Messianic Billionaire," by
Michael T. Kaufman (formerly a writer and editor with The New York Times),
might seem to make Soros's remarkable achievements as a speculator, and as
one of the world's most imaginative philanthropists, almost predictable. He
developed the steely detachment and cool that he needed for the world's
currency markets as he hid from the Nazis. He learned his internationalism,
and how to take risks quickly, from his father, an Esperantist and free
spirit who bribed officials to get false papers for his family.

Was it surprising that Soros, having experienced both fascism and
Communism, should become a disciple of Sir Karl Popper's "Open Society"
philosophy of antitotalitarianism when he sat at Popper's feet at the
London School of Economics in the early 1950's? Soros's Open Society
foundations have spent several billion dollars, much of it on undermining
totalitarianism and then helping to build on its ruins.

But of course there are no such easy explanations. Not every money-changing
street urchin makes it big, let alone that big. Not every Jew who survived
the war in hiding emerged with a steady nerve, let alone one steady enough
to make bets with $100 million chips.

And not every pupil of Popper even agreed with the Popperian anti-Marxist
philosophy, let alone made it the basis of a vast and effective
philanthropic program.

Soros remains mysterious, not because of any shortcomings of Kaufman's
biography, which is a fascinating account of one of the great men of our
times, but because the man is a nest of paradoxes and contradictions. For
example, he is shy, but he can also be unnervingly outspoken and candid, in
business and in interviews. He admits to what Kaufman calls "messianic"
ideals: "I have had these illusions, or perhaps delusions, of grandeur and
they have driven me." He has also said that his "goal is to become the
conscience of the world." (Kaufman, who for two and a half years edited a
magazine backed by Soros, assures us that these words sound less pompous in
conversation than they do in print.) Yet there is no trace of
self-aggrandizement in Soros's actions.

Although far from secretive and no recluse, he has done little to trumpet
his good works, which outweigh those of a pewful of saints.

When one thinks of the noise made by many other tycoons on smaller
philanthropic sprees, his modesty is striking.

He is, however, keen to share his views of the world, in speeches and
articles -- a long piece called "The Capitalist Threat" in The Atlantic
Monthly in February 1997 is perhaps the most wide-ranging of his
testaments. It argues, ironically for such a successful capitalist, that
the untrammeled intensification of laissez-faire capitalism and the spread
of a value system based on the primacy of a free market serve to undermine
democracy.

Yet what he is most eager to communicate, echoing Popper, is the
imperfection of human understanding and the fallibility of all theorists,
including himself: "The time is ripe for developing a conceptual framework
based on our fallibility."

The only part of Soros's semiphilosophical writings to be discussed at any
length in this book is an extended and uncompromising critique of Freudian
psychoanalysis that Soros sent to Popper in 1963, while his career as a New
York financier was already under way. Seventeen years afterward, in a
typically Sorosian paradox, he was on a Freudian analyst's couch
(figuratively speaking: Kaufman informs us that the patient, who later
described the treatment as a success, did not lie but sat for his two or
three sessions per week). Having left his first wife in 1978, he moved into
a small furnished apartment, in search of a new life with few possessions,
less time at work and more time to himself.

It was in the years from 1979 to 1981 that he came to attribute his nagging
dissatisfaction with his life and his insecurity to shame -- for which an
inflated sense of self-importance was a compensation -- deriving largely
from the false, non-Jewish identity he had adopted to survive the war.

It was also around this time that the Quantum Fund, the hedge fund he
managed, had its greatest period of growth.

Its value increased by 55 percent in 1978, by 59 percent in 1979 and by 102
percent in 1980. In 1981 -- the year Soros overcame his shyness with
journalists, and Institutional Investor put him on its cover as "the
world's greatest money manager" -- it lost 22 percent, its first bad year.
But it was soon back on form. Investors who had put $100,000 in his first
fund in 1969 and stuck with him would have seen their stake grow to $353
million at the end of 1997.

The greatest contradiction of all in the life of George Soros is that he
believes his financial success to be due to the successful application of
his theories of economic behavior, which seems to be very far from the
truth. Friends, family members and colleagues attest that gut instinct and
intuition are what inform his decisions; that what sets him apart is art,
not science.

His son Robert, who worked with him, once noted:

"My father will sit down and give you theories to explain why he does this
or that. But I remember seeing it as a kid and thinking . . . the reason he
changes his position on the market or whatever is because his back starts
killing him. It has nothing to do with reason. . . . If you're around him a
long time, you realize that to a large extent he is driven by temperament."

Reviewers and commentators have found little sense in his theories, which
revolve around the unremarkable idea that in the financial sphere reality
is affected by the beliefs of participants in the markets -- a notion he
calls "reflexivity." How he purports to translate this idea into concrete
investment decisions remains obscure.

Besides, he has made big mistakes in calling the behavior of markets: in
1998, in the wake of the Asian crisis and Russia's foreign-debt default, he
predicted the imminent demise of global capitalism.

He has cheerfully described himself as a failed philosopher. His dearest
wish, from his student days in London through much of his career, was to
build on the work of Popper and construct a general theory of human
knowledge that would hold the attention of other thinkers.

But he left little impression on Popper and virtually none on anyone else.
Not even his biographer makes much of an attempt to explain his general
ideas, which is disappointing.

Soros's intellectual originality has made its mark, however, in a less
conventional way: in his style of philanthropy. Instead of ladling money
into traditional charities or the usual good causes of medical research and
the arts, his foundations have operated in over 30 countries, supervising
hundreds of programs that are carefully and often ingeniously aimed to have
the maximum effect. (One of his hobbyhorses was to undermine censorship in
Hungary by distributing photocopiers.) Having already devoted perhaps
nearly half of his fortune to his foundations, he says he intends
eventually to give it all away. It will be hard to predict where: one of
his more recent projects, in America, has been to support the
decriminalization of drugs.

In the end, this anti-Marxist would-be philosopher may achieve what Marx
himself wanted philosophers to do: change the world instead of merely
interpreting it.