Hungarian-American billionaire and philanthropist George Soros, 92, has made headlines in India for making critical remarks about Prime Minister Narendra Modi during the Munich Security Conference last month. In his speech, Mr. Soros identified two threats to world peace: climate change and growing conflict between two systems of governance, what he calls ‘open societies’ and ‘closed societies’. He defined the two systems thus: “In an open society the role of the state is to protect the freedom of the individual; in a closed society the role of the individual is to serve the interests of the state.” While liberal democracies were ‘open societies’, communist and fascist states, and dictatorships were ‘closed’ ones. But there were also some states that were between the two, such as India.
Elaborating on this aspect, Mr. Soros observed in his speech that although India was a democracy — making it an ‘open society’ on paper — its current head of government “Modi is no democrat. Inciting violence against Muslims was an important factor in his meteoric rise.” Referring to recent developments around the Hindenburg report, he went on to add, “Modi and business tycoon Adani are close allies; their fate is intertwined... Adani is accused of stock manipulation and his stock collapsed like a house of cards... This will significantly weaken Modi’s stranglehold on India’s federal government and open the door to push for much needed institutional reforms. I may be naïve, but I expect a democratic revival in India.”
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These remarks sparked a storm of condemnation from members of the Modi Cabinet and the BJP. “Soros is an old, rich opinionated person sitting in New York who still thinks that his views should determine how the entire world works...he is also dangerous as such people and such views and such organisations actually invest resources in shaping narratives,” responded External Affairs Minister S Jaishankar.
Union Minister for Women and Child Development Smriti Irani described Mr. Soros’ remarks as “not just an attempt to hurt India’s image. If you listen to him carefully, he talks of regime change.”
These comments might seem like an excessively prickly overreaction to the conference remarks of an ageing billionaire. However, this is not the first time such accusations have been flung at him – other heads of state have done so, including Viktor Orban, the Prime Minister of Soros’ country of birth. Often described as “the world’s most influential investor”, Mr. Soros’s public life and persona are struck through by an irreconcilable contradiction between, on the one hand, his extreme wealth and the predatory means by which they were accumulated, and on the other, the extreme idealism and generosity of his philanthropy.
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Born in 1930 to Jewish parents in Budapest, Mr. Soros’s family survived the Nazi persecution using false documents that helped them pretend to be Christians. As a 13-year-old, Mr. Soros had to go around giving deportation notices to Jewish families while his family lived with the traumatic awareness that the smallest slip could expose their true identity, resulting in immediate execution.
After surviving the Nazi occupation, Mr. Soros moved to Paris, and then to London, where he did a Bachelors and then a Masters in Philosophy from the London School of Economics, studying under Karl Popper. After doing some odd jobs as a railway porter and waiter and selling fancy goods, he joined a merchant bank in London before moving to an investment firm in New York, where he built up a formidable track record as an arbitrage trader and speculator specialising in European stocks.
Theory of reflexivity
In the 1960s, Mr. Soros drew on Popper’s philosophical ideas to develop his theory of “reflexivity”, which he then applied — with spectacular success — in the world of finance through his hedge fund Quantum. Detailed in his book, The Alchemy of Finance (1988), Mr. Soros’s theory of reflexivity holds that because human beings are also participants of the reality they seek to understand, perceptions of reality are always flawed, and this flawed perception affects how we act on reality, which in turn shapes perception — the reflexivity of cause and effect. In finance, this meant that markets are not efficient or rational but chaotic, and necessarily subject to boom-bust cycles. And if that is so, then whoever can manipulate perceptions (or narratives) can also shape reality, and derive immense advantages — profit or power — from it.
Unlike someone like, say, Warren Buffet, Mr. Soros did not make his billions by identifying and investing in companies with strong fundamentals but by staying ahead of the curve — sometimes even muscling in on the curve using enormous amounts of leverage — in identifying markets or willing them into existence. That was how he famously “broke” the Bank of England in 1992 when he made $1 billion in a matter of days by shorting the British pound. His name has also been linked to the East Asian financial crisis of 1997, with the then Malaysian Prime Minister Mahathir Mohamad squarely blaming it on Mr. Soros’s “massive currency speculation”. Mr. Soros has also admitted to decades of brazen tax avoidance, which enabled him to compound his humongous profits.
But once he had made his billions, starting with the 1980s, Mr. Soros seemed to have had enough of the world of finance. He now wanted political influence.
As the Soviet Union and the former communist bloc collapsed, Mr. Soros — or at least his public persona — morphed from that of a ruthless Wall Street mercenary to that of a benign philanthropist. In 1993, he began to set up a network of grant-giving foundations known as the Open Society Foundations (OSF). This, too, was an idea inspired by Popper, who defined an open society as one “in which an individual is confronted with personal decisions” as opposed to a “tribal or collectivist society.” Mr. Soros has till date funnelled around $32 billion through the OSF to 37 countries, with the broad aim of nudging them into the “open societies” camp rather than closed ones. As in the world of finance, here too, his ability to spot a trend before others helped.
As the stabilising bipolarity of the Cold war ended, Mr. Soros anticipated the rise of rabid nationalisms — especially in the erstwhile Eastern bloc — and he was off the blocks before anyone else, pouring billions into creating robust civil society networks. He funded the setting up of NGOs and rights groups advocating for civil liberties, freedom of speech and social justice. In his native Hungary, he founded the Central European University (CEU) in Budapest, which quickly gained a name for independent research in the humanities and social sciences and produced a steady stream of liberal intellectuals and dissidents.
However, Soros’ ‘open’ society was not only about individual freedom, it was also about opening up the state sector for privatisation and free flow of capital. Mr. Soros also calculated that rather than donate his money for a hospital or a university endowment in the U.S, he could have a much bigger impact, and buy more political influence, in smaller countries where their value would be far greater relative to the size of the economy. In other words, he was already shaping the ‘emerging markets’ narrative before it became a buzzword.
In several of these, such as Macedonia and Albania, top-ranking government officials and politicians were often alumni of a Soros-funded organistion. His most intense involvement, greatest success, and also cautionary failure came, ironically enough, in Ukraine. In 1994, he saw in Leonid Kuchma, a rank outsider, a politician who seemed in alignment with his own values and goals. Mr. Soros threw his weight behind Mr. Kuchma who, against all odds, won. But his long tenure as Ukraine President (1994-2005) did very little to turn Ukraine into an ‘open society’. Instead, Mr. Kuchma turned authoritarian, and was instrumental in giving control of the economy to a bunch of oligarchs, and as development stalled, the country’s politics went into a chauvinistic spiral that would culminate in a disastrous military confrontation with Russia.
In terms of purely cultural, social and educational work, the OSF had several success stories, especially in the realm of criminal justice reform and protecting space for dissent. And there were some failures, too: Mr. Soros’s foundation in Moscow, for instance, made headlines for corruption, with officials using grant money to buy 60 cars and funnelling $14 million into shady financial institutions.
In 2020, Forbes magazine ranked Mr. Soros as the world’s “most generous giver”, above the likes of Bill Gates and Warren Buffet. He had given away 64% of his original net worth, estimated to be $8.6 billion in 2021. He recently pledged $1 billion for an Open Society University Network, which he described as “the most important project of my life” and would serve as a global platform for research and teachingHe contextualised this announcement by lamenting that the world’s most influential states were “in the hands of would-be or actual dictators” and that “the biggest and most frightening setback” was in India where, he alleged, Modi was “creating a Hindu nationalist state”.
Evidently, Mr. Soros’s remarks in Munich on Modi and Indian democracy were by no means his first. Consistent with his pet schema of open versus closed societies, he had equally scathing words for Turkish President Recep Tayyip Erdogan and President Xi Jinping of China, a manifestly closed society. But it is not so much Mr. Soros’s views but the brute force his wealth affords him to make his views influence outcomes that unnerves politicians.
Mr. Soros cares about his legacy, and he does not want to be remembered as a stock market manipulator. He fancies himself as a philosopher, too, and with his childhood experiences under the Nazis, sees himself as someone who has a moral responsibility to prod humanity in the right direction – a form of Messiah complex in the eyes of his detractors. Hungary was one of the first to move against him — shutting down CEU in Budapest and forcing it to shift its campus to Vienna. Understandably, his messianism is not always welcomed by political actors, least of all by those toward whom it is manifestly hostile.
