Let me start my review of George Soros’s “The New Paradigm for Financial Markets” by stating that there is much I like in this book, however there is also much that I don’t like. I can only marvel at his skill as a fund manager and his rebuttal of the foolishness of efficient market assumptions. I also applaud his evangelising the philosophy of Karl Popper. If Karl Popper is not the greatest 20th century philosopher I don’t know who else could possibly take the mantle. It is precisely over Karl Popper however that my following of George Soros’s line of argument unravels.
Karl Popper stated that the great mistake of Western philosophy is to conflate truth with justification. In other words we should try to make our knowledge claims objective, rather than trying to justify them as probably or conclusively true. We never experience uninterpreted data. Even sensations are soaked by presuppositions in our neural networks.Empiricists wrongly believe in absolutely given perceptions or facts or data that justify our knowledge. There can be no way to verify our beliefs or perceptions, all we can do is make them open to testing, to being proven wrong. If they pass the test it only means they have been corroborated for now.
Strangely, George Soros, as an avowed follower of Karl Popper, seems to misinterpret or ignore the above core Popperian tenet.His error is to define a “cognitive function” that is somehow able to know with certainty as opposed to “a manipulative function”. This cognitive knowledge says Soros is represented by true statements as opposed to the guesswork of the manipulative function. Soros makes the mistake of interpreting Tarski’s correspondence theory of truth ( a statement is true if and only if it corresponds to the facts) as a concrete achievable goal rather than a regulatory concept. Karl Popper would have been aghast. One of Popper’s core dictums was that the answer to the question: “How do we know?” is “We don’t!”. Rationality requires no foundation, no grounding on expert opinion or consensus. It needs only critical dialogue.
Once Soros makes the claim for justified knowledge via the cognitive function he than needs to find a separate source for biases, reflexivity. He has the cart before the horse. All our knowledge starts with biases, even the cognitive function. There is no possibility of pure knowing, all our knowledge is guesswork. Far from being meaningless, biases and myths and thence critical metaphysics provides the background for the growth of science. The job of reason is to seek evidence not to support our biases but rather to see if they can be refuted.
Nassim Taleb in “The Black Swan” covers similar ground to Soros without the logical inconsistencies. I think there is much of value in Soros’ demolition of the academic hubris that contributed to the 2008 credit crisis but his misreading of Popper could severely confuse readers who have an interest in exploring Popper’s legacy. George Soros is right, the world needs more exposure to Popper’s critical rationalism.