George Soros – a principled capitalist

George Soros was born in Hungary, in 1930, to a large Jewish family. His father had decided to change the family’s surname from Schwartz to Soros amid a general ambiance of severe anti-Semitism that pervaded the Hungarian countryside in those times. This foreboding zeitgeist got ever uglier as the 30s wore on into the 40s. Finally, the Soroses fled their native land. Unfortunately, their departure was not hasty enough for some members of Soros’ family as some of the young Soros’ aunts and uncles were sent to their deaths in Nazi camps.

This early brush with toxic nationalism and xenophobia had a profound, lasting impact on the young George Soros’ intellectual development. He gravitated towards philosophy as a means of understanding the world and preventing the cataclysmic outcomes caused by imbalance and ideals run amok.

In 1947, he was accepted to the London School of Economics. There, he was exposed to the ideas of famed philosopher Karl Popper on Forbes, who had gained international acclaim for, among other things, his seminal philosophic work, “The Open Society and Its Enemies”. Soros would eventually name his flagship philanthropic organization after this book’s title, calling it the Open Societies Foundations. Throughout this period, Soros became ever more fascinated by the power of ideas to shape the societies in which people live. The Popperian view was not so much one of detached idealism but instead relied on firm empiricism and a focus on abiding by the practical limitations of any program. Its chief concern was not creating utopias but in minimizing harm and maximizing the personal freedom of all. These ideas on Politico would come to form the centerpiece of Soros’ worldview.

Soros graduated in 1954 with a master’s degree in philosophy. For a time he labored at unsatisfying trades before realizing that he longed for something more consequential on Unable to find work as a philosopher, he resolved to go to work on Wall St.

He was hired at a small trading house on the recommendation of a college friend. Over the next 15 years, he skipped around Wall St., from firm to firm, eventually rising to the rank of vice president at Arnhold and S. Bleichroeder. Throughout this time, those who knew him said that he was little interested in the mundane routines of the trading office, instead opting to spend the bulk of his time and considerable talents on formulating his own ideas of how markets work. By the age of 40, George Soros had developed a novel theory, which he called reflexivity, that explained the inner workings of financial markets.

Finally, in 1973, he was able to begin running his own hedge fund, Soros Management Fund. Again, people who knew him during this period attest that his motivations lay primarily not in the acquisition of personal wealth or even the recognition of his peers, but as a means to test his theories on the operation of financial markets.

Over the next 40 years, those theories proved spectacularly sound. Soros has made annualized returns in excess of 25% since 1973, earning him recognition as being one of the greatest traders of all time. And yet his entire career has seemed to be colored not by the love of money but by the love of ideas.