Open Society: Reforming Global Capitalism by George Soros

Open Society: Reforming Global Capitalism

One of George Soros’ famous books is Open Society: Reforming Global Capitalism. This book is a revision of “The Crisis of Global Capitalism: Open Society Endangered” (1998). This book was first published in 2000 in New York by Public Affairs, a member of the Perseus Books Group.

Soros wrote this book because he saw that the capitalist system in 2000 was in a state of crisis. According to him, the global capitalist system creates a significant gap between developed and developing countries. Soros argues that neoliberalism or fundamentalism controls global capitalism. A strong understanding of neoliberalism makes the capitalist system more profitable for developed countries while developing countries continue to get poorer. Soros said neoliberalism is the ideology of a closed society because it makes absolute claims. Soros wants to replace neoliberalism with the concept of an open society.

The Crisis of Global Capitalism Endangers Open Society

Global capitalism is an economic system in which trade, industry, and the means of production are controlled by private owners and occur in countries all over the world. An Open Society is a society that adheres to the doctrine of epistemic fallibility which allows for the absence of single ideological domination, giving space for humans to become human through the ‘nature’ of the fallibility of the human mind. It is through this doctrine of epistemic fallibility that Soros fights against liberalism and communism. Liberalism and communism have a foundation of ideological epistemic doctrines which value the mind and the world as congruent. Fallibility and ideology are two things that are contradictory and fallibility is the right ‘nature’ for humans.

In this book, Soros argues that global capitalism, which is in crisis has endangered the open society. As he defines it, current capitalism is based on the view of market neoliberalism supported by laissez-faire principles and endangers an open society. Soros’ main idea is that an open society is required to achieve a truly capitalist society.

Reflexivity Theory

Soros developed the theory of reflexivity from 1959 to 1963. Soros developed a philosophy of “reflexivity” based on the ideas of Karl Popper. According to Soros, reflexivity is the belief that the act of seeing any market judgment by its participants influences that market’s valuation.

This reflexivity is an epistemology that carries out the relationship between facts, truth, and reality in the process of understanding, through a feedback mechanism. Reflexivity Theory draws a clear line between the natural and social sciences and challenges the postulates that form the basis of economic theory: rational behavior in general and rational expectations in particular. Reflexivity fosters an interpretation of how financial markets operate. Based on a reflexive approach, George Soros founded First Eagle Funds (1967) and Double Eagle Hedge Funds (1969), both engaged in investment. The aim of these investment institutions is to apply a strategy of taking profits when economic bubbles occur.

George Soros’ investment strategy turned out to be successful, turning from an initial investment of $4 million to $12 million. From there, the investment institution changed its name to Soros Fund and then changed again to Quantum Fund. As of 2013, the Quantum Fund generated a profit of $5.5 billion. This score makes it the most successful hedge fund investment institution in the world. George Soros also founded the Open Society Foundations to provide assistance to social groups with the goal of building openness and individual freedom to develop innovative ideas, which can be ultimately “reflexive”.

Reflexivity in History

Soros used the concept of reflexivity to formulate a theory of history. He interpreted history as a reflexive process. Soros began to apply the concept of reflexivity to understanding social events. Reflexivity is based on the recognition that there is a reality and we are part of that reality.

Reflexivity in Money Markets

Soros argues that the concept of reflexivity provides a better interpretation of how financial markets work than the concept of equilibrium because the financial market is always in a state of disequilibrium. According to him, reflexivity injects an element of uncertainty, which makes the financial market inherently unpredictable. George Soros bases the idea that the actual value of prices in the market is more often controlled by situational ideas from market participants than by fundamental elements. Reflexive situations are created by a continuous chain where ideas affect market conditions, then market conditions affect ideas.

Reflexivity Theory is one way George Soros describes financial markets. When traders and investors see an increase in the market price, many people will be lured into becoming buyers, thus pushing the market price higher, and attracting more participants, creating a self-reinforcing cycle. Reflexivity Theory states that investors do not base their decisions on reality but on their perception of reality.


Soros, George. 2000. Open Society : Reforming Global Capitalism (Edisi 2). Koesdiyantinah, Sri. 2007. Jakarta: Yayasan Obor Indonesia 2007.

Riris. 2019. Pengaplikasian Teori Refleksivitas. Retrieved from scribd:

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