Three Sigma Systems

A Letter to George Soros

The following link is to an excellent article by George Soros, one of the great marketists of our time. Read his article and then my letter of reply to George.

The Crisis & What to Do About It, By George Soros

Dear George,

I enjoyed your very interesting article. It was refreshingly clear in its discussion of a subject that is intentionally obfuscated by most pundits. Your discussion of market "reflexivity" is quite good, though it is no revelation. You manage to strip away the veil of impersonal market forces, but you leave in place a veil that euphemizes the inherently destructive amorality of the marketplace. In the final analysis, marketism, whether fettered or unfettered, if a poor foundation for any social enterprise. It panders to the basest instincts of the human species. In a Darwinian sense, it selects for the lowest common denominator.

You place the beginning of the super bubble in the Reagan era, which is insofar as you go, is correct. But you do not really challenge the theory of free markets. At best, you are a revisionist who calls for more and better policemen to abate the crime that runs amuck in free markets. You suggest that regulators must be more attuned to the signals that reflect the excesses of marketeers and must also be aware of the "reflexivity" that they themselves inject into the market.

Sadly, you are suggesting no more than a rearrangement of deck chairs on the Titanic. Your solution is tantamount to building bigger walls against the ever-increasing storms that institutionalized greed and avarice must produce.

A theoretical breakthrough—a paradigmatic shift—requires much bolder step. Of course a real shift must acknowledge and provide for the enterprising nature of market actors. But this must be regarded as, and be relegated to the status of, a social epiphenomenon, that is built upon a stable foundation of sustainable social institutions that assure social actors of all sorts, predictable and equitable relations. These institutions must be a function of a social-collaborative enterprise that provides the infrastructure necessary for a society and its enterprising individuals, to move forward.

This is the "system" by which the great problems of human success can be addressed and great advances can be realized. Off the top of my head, this social enterprise must provide the society as a whole with essentials such as, access to energy, transportation, communications, healthcare, education, stable currency, and safe harbors of refuge which are insulated from the vicissitudes of epiphenomenal markets that produce, trade, and profit from the much-touted benefits of consumeristic desires (deodorants, personalized automobiles, designer clothing, custom houses, etc.)

The challenges facing the human species are too great to be left to devices of entrepreneurs who are motivated primarily by self-interest.