Before actually getting into George and his revelation(s), it’s important to go over his past. He was born in Hungary in 1930 into a Jewish family and was able to escape the Nazi’s advancement into his country. He then moved to England, and soon afterwards moved to America, all the while gaining more and more experience as an investor.
One of his main theories is the theory of reflexivity. As described in a nutshell in a New York Times article gave this explanation of it, in relation to the economy:
[Reflexivity is] The idea is that people’s biases and actions can affect the direction of the underlying economy, undermining the conventional theory that markets tend toward some sort of equilibrium.To recap, trading markets and the like are influenced by people’s actions and likes and dislikes. When you take the basics of reflexivity without applying it to anything, you end up with the explanation of it being how the cause and effect of something is in fact circular and not linear, as is what is popularly thought. The normally labeled “causes” and “effects” then end up begin closely tied together, influencing each other’s state of existence.
The premise behind reflexivity appears similar to deconstruction. Deconstruction aims to take two binary oppositions and show that they are in fact not binary at all. They are both interconnected. Reflexivity seems to be doing the same general idea with causation. Cause and effect, while not exactly holding a binary opposition to them are still tried as two fairly separate objects. Because A happens B will then also happen as a result. But with reflexivity, B does indeed happen because of A but A within itself is also affected by the end result of B. The degrees of separation are broken down to show how it is a circle of influence between the two or more occurrences. A is dependent on B as much as B is dependent on A.
Soros has also demonstrated a completely faithful following to his own message. He has repeatedly stated that through the use of reflexivity, he has been able to become the mogul that is he. He has also spent a lot of time advocating spreading out the message, like a proper prophet should. Here is an excerpt from a speech of his:
When Rudi Dornbusch invited me to speak at this conference, he gave me a totally free hand in deciding what I wanted to talk about. Well, I want to discuss a subject which fascinates me but doesn’t seem to interest others very much. That is my theory of reflexivity, which has guided me both in making money and in giving money away, but has received very little serious consideration from anybody else… It has been out of print for the last several years but demand has been building up as a result of my increased visibility, not to say notoriety, and now the book is being re-issued. I think this is a good time to get the theory seriously considered.As he himself states, he has not been taken seriously with the theory, but he still continues to preach its ideals in his writings. In addition to this, he also utilizes it in his actions. When one looks into what he has been able to accomplish, it is difficult not to say that maybe he knows what he saying. I believe that a prophet living in accordance to his own message is a vital part of conveying whatever it may be to the masses – It gives evidence to their target audience of how things can turn out if they listen and follow.
I myself do think that there is some truth to reflexivity. I can see how it applies to the situations that I’ve tested it on, but I do feel that there may be some holes in the theory. One question I have is just what makes an event lead into another event, while it would have gone into any number of other perfectly reasonable actions (why does A lead into B, when it could have gone to C, D, or even E)? Does reflexivity take this into consideration or does it just deal with what did in fact happen and not the possibility of other outcomes? Also when you draw the lines of influence from the result to the cause, can you look beyond the point of the event itself to see how the cause and the result perpetuate themselves in later incidents? Even though I have these questions, I think that reflexivity is worth continuing to explore, if for nothing more than finding answers to my questions.