Soros Against the Teacher: Science as Manipulation

Let’s turn to the philosophical theory that led Soros to make money. According to him, economics taught in colleges usually considers the market to tend toward equilibrium, reiterating a Newtonian worldview in which nature is in perfect balance, governed by intrinsic laws (I have already discussed the importance that Newtonian physics had for the rise of economic liberalism, with the Physiocrats) . But the truth is that the economy is unstable and tends to form bubbles. The poparian effect enters there: a person kills himself in an attempt to find out the truth, but this is impossible. Thus, the parties to the market, no matter how hard they try to read reality, will fall into errors. As a matter of fact, no one in the financial market needs to study Popper to conclude that the knowledge of a man (in this case, the investor) is never perfect, but Soros had philosophical claims and that is why the support of the great philosopher of science was valuable. his doubts.

Soros goes further and attacks the Achilles’ heel of Popper’s political philosophy, the overly idealistic figure with which he conceives of human intentions. For this, Soros begins by addressing a very important problem in epistemology, which is the difference between the humanities and the natural sciences. This, by the way, is a problem to which Hayek devoted himself so much, which led him to formulate the very useful concept of scientism (which I have already discussed here). But while Hayek was striving to achieve objectivity in the humanities (trying to see the objectivity of the subjectivity of others), Soros coined the concept of “reflexivity”. Since the humanities do not deal with inanimate objects, the predictions of the sociologist influence reality. This greatly undermines the way Popper treated, for example, Marxism. With this in mind, it is not enough to make an objective assessment of whether or not Marx’s prophecy was fulfilled within the specified period; It is necessary to bear in mind that the fact that Marx published his reasoning about the crisis of future capitalism prompted men to act on the basis of his writings (Soros does not openly speak of the possibility that Marx was right; what he does speak of has to do with the inherent collapse of Chicago school capitalism). In the end, it didn’t matter much whether Marx was right or wrong: his predictions sent a mob of fanatics rushing to carry out the communist revolution (some succeeded), and at the same time, banks rushed after them to finance it. Rightly or wrongly, Marx’s predictions have changed reality. This means that Marx’s theory served Reality manipulation. Once we manipulate reality, the task of knowing it will also become more difficult, for we now have one more variable to study, which is the prophecy itself, and its effect on men.

Again, Soros distilled off an idea that must be a cliché for a financial market economist, because bubbles are often not the result of manipulating investors’ beliefs; And the more manipulators, the more difficult it is to invest.

However, Popper was not an economist. Nevilipata had read Parmenides in Greek, was interested in theoretical physics and pure mathematics, and even learned carpentry to live as a manual laborer when he was a communist. Popper even had a friend from Nobel in economics, Hayek, but he was also a theorist and theorist who did a lot of evaluating public policies – he was a friend and interlocutor of Keynes, for example, with whom he disagreed a lot, but with whom he shared an interest in the same macroeconomic issues. Hayek was not a creature of the chaotic financial market, like Soros. In any case, Hayek would internalize the existence of manipulation in his conception of the humanities, which includes knowledge of other people’s beliefs used to support action. What Hayek does, of course, is highlight manipulation itself as an important component of the humanities and social transformation. This is what Soros does.

Thus, if Popper, in a somewhat unusual way, treats man as a pure being in search of truth, Soros takes an equally unusual step, saying that the human mind has two functions: perception and manipulation. I quote: “The concept of reflexivity [aplica-se] Only in situations where there are thinking participants. The ideas of these participants serve two functions: the first is to understand the world we live in, which I advocate Cognitive function; The other is to change the situation to our advantage, which is what I advocate participatory function or manipulation. The two functions connect thought and reality, but in opposite directions. In the cognitive function, reality is assumed to determine the opinions of the participants; The causal relationship of the world to the mind. By comparison, in the manipulative function, the causal relationship is from the mind to the world—the intentions of the participants have an effect on the world, so to speak.” (He studied with George Sorospp. 14-15). That is, when thinking, or that a person is looking for knowledge or manipulation. If Popper imagines a very angelic man, Soros imagines him demonic. This says a lot about the nature of Soros, and it’s amazing that anyone would post such sincerity.

Well then: Soros came from the financial market, and was the first to apply his theory to the financial market. One interesting concept is that of “fertile fallacies—interpretations of reality that, though distorted, produce results that reinforce the distortion” (p. 20). These fallacies are related to the formation of financial bubbles. Suppose I make up a lie and convince others that such a thing is a great investment. More and more people will invest, and so the value of that thing will go up, because if “everyone” is buying, that belief is reinforced. However, my grasp of reality, at least in this case, is not complete, for the truth is that such a thing was not as good as you said. At some point, reality sets in, and that’s when the bubble bursts. Soros made an infographic showing how to make money with it:

Note that if we are closer to the truth than most proxies, we will benefit from the bubble. In a sense, while people buy stocks, it’s a good idea to buy them just because other people do. However, when reality sets in, stocks don’t fool anyone anymore and prices fall.

Soros intends that this dynamic is not a idiosyncrasy of the financial market, but rather a feature of human beliefs in general. Just as some manipulate financial markets when publishing information, social scientists manipulate society when issuing a theory. This makes knowing reality more difficult, and in the humanities there will be an uncertainty principle similar to what Heisenberg discovered in physics (roughly speaking: observation interferes with measuring an object). However, he says, “Werner Heisenberg’s discovery of the uncertainty principle in physics did not change the behavior of quantum particles in the simplest form, but social theories—whether Marxist, market fundamentalism, or reflexivity theory—may influence the topic to which they refer. The method is assumed to be Scientific is devoted to the search for truth. The Heisenberg uncertainty principle does not contradict this hypothesis, but the reflexivity of social theories does. Why should the social sciences limit themselves to the passive study of social phenomena when they can be used to actively change the situation?” (p. 30) Soros agrees with the phrase of the Young Marx who frequents the walls of universities, according to which philosophers (in this case, social theorists) have interpreted the world too much and must change it. However, for Soros, there should be no revolution. The world is a big market for ideas and beliefs. It is up to the sociologist to play around with it. This reminds us more of Plato with his “noble lie” than of Marx. Popper hated them both. He hates Plato above all for his defense of lying, argues VThe open society and its enemies.

Let’s take a look at the fertile fallacies in the field of philosophy. Soros cites two opposites: the Enlightenment and postmodernism. The first assumes that man is more rational than he really is. It appeared at a time of great scientific progress. Therefore, it seemed true enough for men to believe in it and succeed in many endeavors (especially scientific ones). For Soros, “The Enlightenment misinterpreted reality by introducing a dichotomy between thought and reality that would allow the mind to have perfect knowledge” (p. 70). But we learn from Soros about reflexivity, according to which, in humans, reality that it well thought. Thus, he considers that Popper fell into the Enlightenment fallacy when he proposed his ideal of an open society. So for Soros, it is not the case that Popper erred in assuming a community of scientists: Popper erred in assuming a community of scientists without considering reflexivity, and thus fell into the Enlightenment fallacy. He complains, “Neither the elegant Bobery model of the scientific method nor economic theory recognized reflexivity” (p. 71).

But this fertile fallacy was fertile in that it contained “a grain of knowledge.” For this reason, “the dichotomy between reason and reality has been so successful with regard to the study of natural phenomena, but misleading in the study of human affairs. Like bubbles for financial markets, there are fertile fallacies for other areas of history” (p. 71). (For Soros, the market is Finance, which is characterized by emergencies, belongs to the system of history, and not to another, more abstract one).

Once the Enlightenment bubble burst, postmodernism came, which is the next time.

Let us end the day by emphasizing that Soros’ critique of Popper’s open society is not merely that he employed a somewhat naive conception of human nature, but that he misses the theory of science as much as it overlooks the manipulative function of the human mind. “Even I,” he complains, who discovered—or invented—reflexivity in financial markets, was unable to see that the Popperian conception of an open society was based on the thinly veiled premise that cognitive function takes precedence over cognitive function. Manipulative – that we are looking for the truth, not just trying to manipulate people into believing what we want them to believe” (pp. 71-72). And manipulation, as we have seen, is a role for the social sciences.

With the fertile fallacy of postmodernism, the power of propaganda comes into play.