GeneralTheoryofReflexivity
Inthecourseofmylife,Ihavedevelopedaconceptualframeworkwhich
hashelpedmebothtomakemoneyasahedgefundmanagerandtospendmoney
asapolicyorientedphilanthropist.Buttheframeworkitselfisnotabout
money,itisabouttherelationshipbetweenthinkingandreality,a
subjectthathasbeenextensivelystudiedbyphilosophersfromearlyon.
IstarteddevelopingmyphilosophyasastudentattheLondonSchoolof
Economicsinthelate1950s.ItookmyfinalexamsoneyearearlyandI
hadayeartofillbeforeIwasqualifiedtoreceivemydegree.Icould
choosemytutorandIchoseKarlPopper,theViennese-bornphilosopher
whosebookTheOpenSocietyandItsEnemieshadmadeaprofoundimpression
onme.
InhisbooksPopperarguedthattheempiricaltruthcannotbeknownwith
absolutecertainty.Evenscientificlawscan'tbeverifiedbeyondashadow
ofadoubt:theycanonlybefalsifiedbytesting.Onefailedtestisenough
tofalsify,butnoamountofconforminginstancesissufficienttoverify.
Scientificlawsarehypotheticalincharacterandtheirtruthremains
subjecttotesting.Ideologieswhichclaimtobeinpossessionofthe
ultimatetrutharemakingafalseclaim;therefore,theycanbeimposed
onsocietyonlybyforce.ThisappliestoCommunism,FascismandNational
Socialismalike.Alltheseideologiesleadtorepression.Popperproposed
amoreattractiveformofsocialorganization:anopensocietyinwhich
peoplearefreetoholddivergentopinionsandtheruleoflawallows
peoplewithdifferentviewsandintereststolivetogetherinpeace.
HavinglivedthroughbothNaziandCommunistoccupationhereinHungary,
Ifoundtheideaofanopensocietyimmenselyattractive.
WhileIwasreadingPopperIwasalsostudyingeconomictheoryandIwas
struckbythecontradictionbetweenPopper'semphasisonimperfect
understandingandthetheoryofperfectcompetitionineconomicswhich
postulatedperfectknowledge.Thisledmetostartquestioningthe
assumptionsofeconomictheory.Thesewerethetwomajortheoretical
inspirationsofmyphilosophy.Itisalsodeeplyrootedinmypersonal
history.
TheformativeexperienceofmylifewastheGermanoccupationofHungary
in1944.Iwasnotyetfourteenyearsoldatthetime,comingfroma
reasonablywell-to-domiddleclassbackground,suddenlyconfrontedwith
theprospectofbeingdeportedandkilledjustbecauseIwasJewish.Fortunatelymyfatherwaswellpreparedforthisfar-from-equilibrium
experience.HehadlivedthroughtheRussianRevolutionandthatwasthe
formativeexperienceofhislife.Untilthenhehadbeenanambitiousyoung
man.WhentheFirstWorldWarbrokeout,hevolunteeredtoserveinthe
Austro-Hungarianarmy.HewascapturedbytheRussiansandtakenasa
prisonerofwartoSiberia.Beingambitious,hebecametheeditorofa
newspaperproducedbytheprisoners.Itwashandwrittenanddisplayedon
aplankanditwascalledThePlank.Thismadehimsopopularthathewas
electedtheprisoners'representative.Thensomesoldiersescapedfrom
aneighboringcamp,andtheirprisoners'representativewasshotin
retaliation.Myfather,insteadofwaitingforthesamethingtohappen
inhiscamp,organizedagroupandledabreakout.Hisplanwastobuild
araftandsaildowntotheocean,buthisknowledgeofgeographywas
deficient;hedidnotknowthatalltheriversinSiberiaflowintothe
ArcticSea.Theydriftedforseveralweeksbeforetheyrealizedthatthey
wereheadingfortheArctic,andittookthemseveralmoremonthstomake
theirwaybacktocivilizationacrossthetaiga.Inthemeantime,the
RussianRevolutionbrokeout,andtheybecamecaughtupinit.Onlyafter
avarietyofadventuresdidmyfathermanagetofindhiswaybacktoHungary;
hadheremainedinthecamp,hewouldhavearrivedhomemuchsooner.
Myfathercamehomeachangedman.HisexperiencesduringtheRussian
Revolutionprofoundlyaffectedhim.Helosthisambitionandwanted
nothingmorefromlifethantoenjoyit.Heimpartedtohischildrenvalues
thatwereverydifferentfromthoseofthemilieuinwhichwelived.He
hadnodesiretoamasswealthorbecomesociallyprominent.Onthecontrary,
heworkedonlyasmuchaswasnecessarytomakeendsmeet.Irememberbeing
senttohismainclienttoborrowsomemoneybeforewewentonaski
vacation;myfatherwasgrouchyforweeksafterwardsbecausehehadto
worktopayitback.Althoughwewerereasonablyprosperous,wewerenot
thetypicalbourgeoisfamily,andwewereproudofbeingdifferent.
In1944,whentheGermansoccupiedHungary,myfatherimmediatelyrealized
thatthesewerenotnormaltimesandthenormalrulesdidn'tapply.He
arrangedfalseidentitiesforhisfamilyandanumberofotherpeople.
Thosewhocould,paid;othershehelpedforfree.Mostofthemsurvived.
Thatwashisfinesthour.
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Livingwithfalseidentityturnedouttobeanexhilaratingexperience
formetoo.Wewereinmortaldanger.Peopleperishedallaroundus,but
wemanagednotonlytosurvivebuttohelpotherpeople.Wewereonthe
sideoftheangels,andwetriumphedagainstoverwhelmingodds.Thismade
mefeelveryspecial.Itwashighadventure.Ihadareliableguidein
