George Soros is setting up institutions to study the failure of economic thinking. They have succeed in demonstrating failure, he said this afternoon at the CEU in Budapest, but not in discovering what to do about it.
The source of the problem, he explained, is relying too much on theory, on knowledge, and not on how our not knowing what to do makes us act in ways that change the world, which world we don't see because we expect it to conform to our theories. We need to be able to discard our theories when they are proven wrong, and we need to understand that no general theory is enough, because our actions are constantly changing the world we need to respond to and understand.
So I said to him after his talk:
- You have divided human activity in two parts, theory, and manipulation. Theory doesn't work, and manipulation of markets is based on crowd behavior, that is, fear. But since ancient Greece, the parts to human activity have been divided into not two, but three: you have left out practical action.
Practical action differs from manipulation, fearfully following and leading each other, in that its end is making learning easier. It's purpose is outside of itself, in the part of life where we learn, where we find beauty, what makes life good.
Why not establish institutions that study how economic relations are practical: what forms of cooperation lead to a life of learning and freedom from manipulation, and which don't. And study how to make the transition from the present institutions based entirely on greed and fear to the kind we need to have. Do you understand?
- I have studied maximization of happiness.
- No that's not what I mean. Counting results of fear based behaviors: doing that is living still in the world of the theoretical and the manipulative. We need to study how to cooperate, study what forms of cooperation help us learn to make our lives better.
Let's go, says George Soros assistant, urging him as she has been doing for the last few minutes as we talked. OK, I say, I tried. You remember me, right?
- Yes, he nods his head.
I'd asked him for a job the day before when I saw him walking down the street from the University to his hotel.
Practical necessity. I need to get out of this hell of Budapest, this place putting pressure on me not to learn.
People say it is difficult to diagnose the political problems of our times, but I don't see the difficulty. We're together in this hell trapped between theory and fear.
An open society with unhappy people is a closed society.