The Conscience of the Rich

"Soros: The Life and Times of a Messianic Billionaire," by Michael Kaufman, Alfred A. Knopf, 344 pages, $19.95

"Soros: The Life and Times of a Messianic Billionaire," by Michael Kaufman, Alfred A. Knopf, 344 pages, $19.95

There is no question that the American financier of Hungarian-Jewish stock, George Soros, is a colorful and complex character: a daring stock-market speculator and singularly generous political philanthropist, a multi-billionaire and radical critic of the money market and global capitalism, a penniless refugee who fled to England from communist Hungary after World War II and invested hundreds of millions of dollars to topple communist regimes and build alternative democratic infrastructure in the 1980s and `90s.

Until 1992, Soros was relatively anonymous: Only a few people on Wall Street and a handful of dissidents knew his name. But on September 16, 1992, "Black Wednesday," Soros bet against the pound sterling, pocketed half a billion dollars and triggered a 20 percent devaluation of the British pound. Time magazine, which published the first profile of Soros, marveled over the fact that the man who had lost British taxpayers $10 billion was perceived by the public as a genius and even a hero. In Eastern Europe, on the other hand, and especially Hungary, where he helped to further democracy and founded an independent university, he is sometimes seen as part of an international (i.e., Jewish ) plot to take over the local economy.

The author of this book, Michael Kaufman, a former New York Times correspondent in Eastern Europe, was also the editor of "Transitions," a journal published in Prague in the 1990s, financed by the Soros Fund. Kaufman thus has a connection to Soros and makes no effort to conceal it. Yet this is not an official biography. Soros did not initiate or underwrite it, and he never had access to the manuscript. The overall picture Kaufman paints is a favorable one, but he freely criticizes Soros' financial manipulations, certain personality traits, his family relationships and the chaotic management of the Soros Fund. The book is not a hagiography, but neither is it an attempt to sully his name. The man who "broke" the Bank of England, but also wrote "The Crisis of Global Capitalism," was born in 1930 to Jewish parents whose life sounds like something out of Hungarian-Jewish director Istvan Szabo's monumental film "Sunshine." The history of his family reads like the rise and fall of Hungarian Jewry. The grandfather, a shopkeeper in a small town, moves to Budapest and succeeds at business. His son, Tivadar, father of George Soros, already a member of the Hungarian Jewish intelligentsia, edits an Esperanto newspaper, lives the good life and has no qualms about entering into shady deals. During War World I, he is drafted into the Hungarian army, captured by the Russians and exiled to Siberia. He returns to Budapest after seven long years of hardship and adversity. In the 1930s, the family changes its name from "Schwartz" to "Soros."

In Russian captivity, says Soros, his father learned the art of survival. He got himself and his family through the Holocaust and the barbarous actions of the Arrow Cross with the help of false papers. Kaufman does not hide the fact that Soros senior not only survived the Holocaust, but made a pretty penny arranging Aryan papers for other Jews.

After liberation and the arrival of the Soviets, the elder Soros ventured into speculation and made a fortune exchanging foreign currency on the black market. It was here that young George got his first lessons in finance and honed his skills in monetary affairs. From his father, says Soros, he learned the knack of staying in the ring and being willing to take risks. Another thing his father taught him was not to pursue money as an end in itself, but only as a means of improving life and promoting goals he felt were worthy.

Breathtaking success

George Soros managed to escape from Hungary in 1947, on the pretext of attending an Esperanto conference in Switzerland. With the help of his father's personal and business contacts, he made his way to England. His father sent him money occasionally, but life was not easy for a 17-year-old in London in those times of austerity. After several unsuccessful attempts, Soros got into the London School of Economics, where he acquired his theoretical knowledge of economics and met the Austrian Jewish philosopher Karl Popper (with whom he was not as intimate as he would like us to believe), author of "The Open Society and its Enemies," from which he would derive the inspiration and title for his humanitarian work.

After working for a number of companies in London, Soros moved to New York, spent a few years with different firms and finally opened his own investment company. It was a modest start, but Kaufman offers a detailed account of how Soros found himself a niche in what came to be known as "hedge funds," which became the cornerstone of his legendary wealth and dazzling success.

The story of Soros' financial success takes your breath away. It cannot be summed up in a few words. Soros has no theory or rational explanation apart from this: Economic theoreticians, and stock market investors, too, believe that there is a certain logic in the way the financial world works. Soros agrees that this logic exists, but there are times when it breaks down, leaving investors and economists dumbfounded.

Soros attributes his success to being on the lookout for the unexpected and jumping in ahead of time. He says that like human life, economic life is predicated on the unpredictable. One cannot foresee the future, but if one is aware that something may happen, it is possible to take preventive action - as his father did in Budapest in 1944, when he set out to arrange hiding places and Aryan papers for his family before the bloodbath erupted, sensing that something was brewing.

Most people think in linear terms, says Soros, which is why they fall apart in times of crisis. He lends to this insight a theoretical dimension by giving it a name - "reflexivity" - and linking it to Heisenberg's uncertainly principle. At the same time, he admits that intuition can be wrong. There have been times when he, too, has suffered heavy losses - in Russia, when the market crashed in eastern Asia, etc.

Using this insight, Soros discovered the weak spot of the communist regimes in the 1980s. He did not foresee the fall of the communist bloc or the Soviet Union, but he did pick up on certain anomalies. Hungary and Poland, for example, allowed their academics to travel to the West, but did not provide them with the necessary funding. Soros took advantage of this void, of which government bureaucracies in the West were not always aware, and financed hundreds of grants for summer courses and sabbaticals, especially at Oxford.

In this way, quietly and almost stealthily, a critical mass of sociologists, philosophers, social scientists, historians and writers was created who went back to their countries and helped to build the infrastructure for dissident movements like Arta 77 in Prague, the Democratic Forum in Hungary, and above all, Solidarity in Poland. These movements were assisted by Soros in other ways, too: He supplied them with fax machines and copiers, and organized shipments of textbooks and other literature. He thus contributed more than any other individual to undermining the legitimacy of communist regimes from within.

Over time, these activities have become routine. Today, Soros funds are operating all over Eastern and Central Europe, in South Africa, and even in the United States (where Soros has been working, with little success so far, to legalize marijuana).

No Jewish patriot

At the same time, Soros has become an outspoken critic of globalism in the last few years. He says that globalism creates the illusion of rules and progress, but it keeps colliding with uncertainties that lead to terrible hardship in developing countries. The dogmatic answers of the International Monetary Fund only worsen the crisis. According to Soros, intergovernmental mechanisms are needed to regulate the flow of international capital because this is what triggers unforeseen crises.

This appeal for greater government involvement in the capital market, coming from someone who has profited more than anyone from wild market fluctuations, may sound surprising. But it goes to show that Soros sees himself as more than a financial pirate. When he looks in the mirror, he also sees a philosopher with a sense of social responsibility.

From time to time, the question of Soros' Jewishness comes up. He does not hide it, and many of the managers of his funds in different countries are Jews. Let me put it this way: Soros is conscious of being a Jew, but it is not part of his identity. When he visited besieged Sarajevo and donated $50 million to insure the inhabitants a supply of clean water, a picture of the Warsaw Ghetto flashed across his mind. There is no question that part of Soros' sensitivity toward the sufferings of minorities comes from memories of the Holocaust. But that does not make him a Jewish patriot.

Three years ago, I witnessed a poignant moment in Budapest, at a convention of the Hungarian Academy of Sciences in honor of the president of Hungary, Arpad Goncz, who was retiring from office. Goncz, a liberal, is a personal friend of Soros, who was thus among the invitees. In conversation, Soros mentioned the hard times he went through in Budapest when his family was forced to use an assumed Aryan identity. There was one thing, he said, that he was ashamed of today: At the time, people told him that he, George, would make it because he "had good features and didn't look Jewish." He has no doubts that this non-Jewish appearance was helpful to him, but today he is ashamed of being proud of it. Soros repeated these remarks when he addressed the plenary.

Much has been said about the fact that Soros is not a contributor to Israel (although he has invested modest sums in a number of start-ups). Once, during a meeting of a Soros committee to which I belong, I gently asked him about it. He thought for a moment and replied: "Look, I try to help those who have no one to help them. You Israelis have someone to help you: the United States, world Jewry. So I help the others." An approach that you can't deny has a certain logic to it - Jewish logic, that is.

Prof. Shlomo Avineri's most recent book, co-edited with Werner Weidenfeld, "Politics and Identities in Transformation: Europe and Israel," was published in English by the European Union.