New Quaker Notebook

In an interview today in the Telegraph, billionaire George Soros tells a bleak story about the current world financial situation:

"I think this is probably more serious than anything in our lifetime," he says. In short, his feeling is that the United States and Britain are facing a recession of a scale greater than the early-1990s, greater even than the 1970s.

"I think the dislocations will be greater because you also have the implications of the house price decline, which you didn't have in the 1970s—so you had stagflation and transfer of purchasing power to the oil producing countries, but here you also have the housing crisis in addition to that."

Not surprisingly, the topic moves from this "period of wealth destruction" to his own place in the big picture:

"As a hedge fund manager, I do not claim to be serving the public interest. I am in the business to make money," he says. "It's a difficult point for people to understand and there's a general attitude when they see people profiting to say that markets are immoral, or making money by speculating is immoral.

"It's really the job of the authorities to set the rules, and there are times when some people break the rules or engage in improper activities, like the sub-prime mortgages. The impact fell particularly heavily on black and Hispanic minorities.

"It is a scandal, and I think you can blame [former Federal Reserve chairman Alan] Greenspan for not regulating the mortgage industry. But that's very different from speculating in government bonds or financial instruments, and that's a difficult point to get across, but I feel very strongly.

"Markets play a very useful role and they are amoral, not immoral."

Soros is right that markets are amoral, but this is only because markets are not the kinds of things that can be moral or immoral, so this is not a profound declaration. People are moral or immoral, behave morally or immorally, and do good or do evil. Markets don't do anything at all; whether they behave morally or immorally is irrelevant.

What is most interesting here is his admission that, as a hedge fund manager, he isn't serving the public interest: he's only making money. (Is this like saying "It's not personal, it's only business"?) I think what he's arguing here is that his role as money-maker in the markets is not an immoral endeavor, even if it doesn't aim to serve any public interest, because the markets are not immoral. But again, the markets aren't the sorts of things that can behave morally, so whether he does good or evil is not a matter of the markets at all.

Assume a completely free reign in the financial markets, where anything goes—perhaps as in Adam Smith's "invisible hand." Whether good or bad comes from what Soros does in the markets can't be measured by compliance with any rules set by the authorities (because we've assumed that there are no such rules). Therefore, there must be a standard of morals that applies to the businessman's market behavior which does not rest on compliance with rules set by the authorities.

I believe Soros knows this, but it's so much easier on the conscience when you can put on the coat of amoral markets; it's almost like having your own a cloak of invisibility.

Soros: The Markets Are Not Immoral