When successful businessman put pen to paper in order to enlighten the world on their philosophy of investing, conventional wisdom says, “Run Away!” (In the words of Monty Python). George Soros’ The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means is without doubt the exception to the rule.
In less time than it will take you to receive the book from Amazon.co.uk, you will understand fundamentals of a fallacy, endemic in our financial and social systems, that guarantees ‘bubbles’ and the crises that follow them. In essence, Soros explains, that the foundations of free market economics assumes an impossibility: the separation of knowledge and intent or, as he puts it, cognitive and manipulative processes.
In very simple terms, he explains that since man is an active participant in this world, it is fundamentally impossible for him to have perfect understanding of the space within which he occupies. Instead, his understanding is tainted by his own perception and intention. Therefore, the perfect knowledge, that is required for market theory, cannot exist for sustainable periods of time.
A theologian once asked, “What kind of God can there be that we, his creations, could understand His mind? Not much of a God, I would think.” Well, in essence, George Soros is posing the same question to philosophers and economists, alike, while offering us mere mortals a unique insight into the current crisis and what will be needed to avoid them in the future.
Those who hate business books…so do I! This is a pleasant read, I assure you.