Joseph Stiglitz, the 2001 winner of the Nobel Prize for Economics, was President Bill Clinton’s main economic adviser until he became Chief Economist for the World Bank in 1997. This book, his thoughts on those years, is illuminating and intelligent. Stiglitz should be that most elusive of creatures, the accountable economist, a person from the global Establishment who is prepared to explain to us, the all too often baffled outsiders, just what’s going on in the world economy. Well, Stiglitz is certainly eminent, his book is readable, and he’s critical of the current orthodoxy. He writes accessibly, appreciating that economic inquiry must connect to wider social concerns. As a sceptic from the heart of the elites, Stiglitz has attracted attention because he voices some of the sorts of things that we might want to say.

In its infancy as a discrete field of inquiry, economics was labelled "the dismal science" and it’s never got over the tag. Economists are people who remind us that we can’t afford the things we want and we don’t pay attention anyway because they usually communicate only to each other in an opaque jargon. Money isn’t a fun topic. Stiglitz points out that, one reason this happens is that the economists want to avoid public scrutiny. The "transparency" that they preach applies to others. His book is a partially successful attempt to demystify the issues.

There is another explanation of the obscurantism of Stiglitz’s mates. In an interview given about the time he published this book, Stiglitz remarked that economists tend to see their work as being technical in nature. They think of themselves as "experts", and within the constraints that they have themselves devised, they undoubtedly are. Stiglitz went on to say that economic orthodoxy likes to label disagreement as being "populist". If you think the economists have made a mess of things you’re a populist. The fact that millions agree with you proves your inadequacy. You’re reacting vulgarly, emotionally - unlike the dispassionate economists, an elect few.

Like us, the fundamentalists, as Stiglitz dubs the orthodox economists, start from certain assumptions. There’s nothing wrong with this. It might even be said to be a necessary consequence of being human, of being a social, thinking animal. Stiglitz gives examples of fundamentalist prejudices that pose as objective and permanent truths, reminding us that humans have always been good at seeing what they want to see. The assumption, for instance, that low wages mean high employment, the basis of so much fundamentalism, has never been confirmed by evidence. Some high-wage countries have high employment rates and many low-wage countries have masses of destitute lost souls. So it might be smart to admit to doubt about any single, all-encompassing statement about the causes of unemployment. Maybe the people who think that low wages are necessary to bring about jobs are fooling themselves. Maybe the fundamentalists are motivated less by conscious logic than by an unconscious prejudice against the poor. If the poor get more, they might worry, the rich will get less.

A non-expert might think that more people having some spare cash will be good for society as the internal market will be more lively. In NZ we are accustomed to the moneyed elites disagreeing about how much policy should take account of the non-rich, as they don’t always have the same needs. Their views are conditioned by their own interests, by whether they’re exporters or retailers, for instance. Similarly, fundamentalists represent only one segment of opinion within the already limited world of the global elite. Fundamentalism is the creed of the capitalist who thinks he has won the debate with those of his fellows who think they have to pay at least some attention to the views of those who still talk about "society" or "public good". Fundamentalism thinks it can chuck out the old compromises. It wants no semblance of a Welfare State because that brings with it an interventionist government. The fundamentalist is otherwise known as a neoliberal. Whatever its name, for New Zealanders the ideology is easy to spot. The fundamentalist wants to make rules that prevent governments from doing anything he will not like - for good technical reasons of course. (Jane Kelsey’s seminal 1995 analysis of neoliberalism, "The New Zealand Experiment - A World Model For Structural Adjustment?" was published overseas as "Economic Fundamentalism". The question was answered. We were the guinea pigs - the globalised economy in one country).

Market fundamentalism proceeds from axioms such as "low wages good, high wages bad". But a better way to get things right is to test them out first. Make up your mind after you’ve looked at the evidence and not, as with fundamentalism, before. This is the scientific method, which is the best we have. The fundamentalists suppose that, rather than finishing with a proposition, you should start with it, the result being that you have to overlook any facts that do not fit. This should be the preserve of religions, where "fundamentalism" more commonly belongs. Thinking about human activities which starts from a priori hunches is prejudice.

Nobody doubts that were markets to rule unfettered, as the fundamentalists prescribe, a low minimum wage would follow. But there is good reason to suppose that the inequality that follows market liberalisation (in the view of all sides to the debate) is wasteful, leading to all sorts of costs. This waste, expressed through the world’s spending on its health, education, welfare and justice systems, though vast, is unrecognised in fundamentalist analysis. If only the reason for this neglect was based on the realisation that life’s vicissitudes can’t be quantified. It isn’t. Fundamentalism ignores such humdrum things as people’s daily lives because it holds to the conviction that they’re none of its business.

It has to turn a blind eye, if only because it doesn’t believe what it says. Neoliberalism in fact wants unemployment because a scared worker is a quiescent worker. Rather than discouraging jobs, a higher minimum wage would encourage people to work. That’s why fundamentalists go on about the dangers of "over-full employment" and why, in its most fundamentalist phase, the Reserve Bank of New Zealand baffled us with job-destroying high interest rates.

Unlike the fundamentalists, Stiglitz has a confident understanding of capitalism. He does not feel he has to cling to orthodoxy like a convert facing a crisis in faith. His theme is that governments should pick and choose from a variety of economic tools. He paints himself as a pragmatist. Perhaps the most interesting aspect of his book is its account of the various crises of the latter part of the 20^th Century, and his take on how the experts gave unfailingly bad advice. It’s a reassuring story, in that Stiglitz’s suggestions make sense.

In Stiglitz’s version, developing world unemployment was the result of taking the sort of expert advice that NZ’s fundamentalists had prescribed. The International Monetary Fund (IMF) would not lend money unless governments raised interest rates, eliminated deficits and cut taxes, all of which put people out of work. So did the artificially high exchange rates that dogma prescribed. The results are well known. Whole regions have been laid waste in the name of fiscal and monetary propriety. Stiglitz charges the IMF with preaching its text regardless of its relevance. One size fitted all, said the IMF. If people lost jobs, it was a temporary, and necessary, thing, a cost of "adjustment" (it had to be. Fundamentalism had other reasons for the existence of unemployment).

There are several international agencies involved in global public banking yet the IMF gets most of Stiglitz’s blame. The IMF’s role, he says, has been to set policy. It became obsessed with inflation, saying that keeping it down took precedence over all else. Stiglitz points out that there should be no one over-arching goal for the world economy beyond the wellbeing of the people in the countries concerned. Inflation is not necessarily the worst evil to poor countries trying to expand. The question remains: Why have the world’s most influential economists given so much bad advice to so many for so long? And where were the Clinton Administration and the World Bank - where was Stiglitz? - when the developing world was being wasted? There must be a suspicion that his book is a latter-day attempt to rewrite history so that he escapes blame.

Another factor is that the IMF is typically involved in a crisis so that it’s become accustomed to dishing out the bad news. A favourite IMF metaphor is "shock therapy", the best-known instance being the hiding administered to Russia in the 1990s. The results: over a decade the currency fell by 45%; poverty increased from 2% to 24% of the population; industrial production fell by 60%, and Gross Domestic Product (GDP) by 54%. The social collapse was huge. According to Stiglitz, even in World War 2, when tens of millions of Russians died, GDP had fallen by "only" 24%.

Fundamentalists are a literal-minded lot, not given to cultivating a wider general knowledge, let alone irony, so they might still not have considered the appropriateness of borrowing an expression from medicine where the original shock therapy was in disrepute. Stiglitz argues that the IMF forced Russia into collapse by ripping apart the existing order without putting something else in place. There was an inevitability about the disaster, predictable from following the daily news at the time. Political hacks, opportunists and crooks were handed State property at knockdown prices just as legal and institutional restraints were removed. The new Mafia, as it was soon dubbed, was provided with billions of public money, which the lenders knew was being stolen. It was so dire that Stiglitz says that sceptics even devised a conspiracy theory, to the effect that the IMF and the US Treasury deliberately eviscerated Russia to remove it as a rival.

Stiglitz thinks the conspiracy buffs credit the bankers "with both greater malevolence and greater wisdom than I think they had. I believe that they actually thought the policies they were advocating would succeed. They believed that a strong Russian economy and a stable Russian reform-oriented government were in the interests of both the United States and global peace".

Those lucky enough to be uninitiated in matters of global finance mght think that the claim that the IMF was trying to encourage stability is less credible than any madcap conspiracy theory. But to Stiglitz it’s entirely consistent with IMF policy. He’d seen the same sort of chaos engendered in Thailand after the Russian gambit. He’d watched as former President Mobutu in in the former Zaire diverted billions from a complicit IMF to his private foreign accounts. All the ripoffs were engineered in the name of "stability" and "efficiency".

"Stability" and "efficiency" are IMF code for "We got rid of the Commies and put in our guys". They’d have been happy had the Russian baby died in 1917, but the patient survived until Gorbachev surprised everyone by admitting him to hospital in1989. Like Stiglitz, the IMF understands "the interests of both the United States and global peace". In other words, the therapy was a success because the patient died. After all Russia is tied more closely to the interests of global finance than anyone could have hoped ten years ago.

There’s a story about a US President who faced domestic opposition for supporting a dictator - a recurring habit of all Administrations since at least the 1890s. "He might be a son of a bitch", the President replied, "but at least he’s our son of a bitch". Seen in this light, it could be argued that the IMF is more in tune with conventional US foreign policy than Stiglitz. While Stiglitz sneers about "Kissinger-style realpolitik", he should remind himself that even in the short time since Kissinger-Nixon (ie since the mid 1970s. Ed.), the US’s global power has increased, and with it, the need to send the troops into places like Nicaragua, Laos, Cambodia and Cuba should have decreased. This still increasing US influence has been largely due to the ministrations of both the IMF and the World Bank. It’s all very well to lament "naive geopolitical thinking" in the context of the Asian crisis, but Stiglitz glosses over the fact that, in Asia in 1997 as well as in Russia in 1990, the realpolitik was to do with keeping America’s sons of bitches in power. They’re all into realpolitik all the time.

Neither does Stiglitz say anything about - for instance - the first Iraq war, raising again the question of his selective memory. He would like us to think that his boss, Clinton, was too cool for Kissinger-type meddling, so he does not allow himself to develop the part of his analysis which might show the continuity between Bill and his predecessors. Dr Henry Kissinger was National Security Adviser and Secretary of State under Presidents Nixon and Ford in the 1960s and 70s, a truly Machiavellian figure, and if there was any justice in the world, he would have long ago stood trial as one of the 20^th Century’s worst war criminals. Ed.

More importantly, Stiglitz glides past the dominant fact about 21^st Century US policy. Dubya’s regime does not meddle; it invades. American power is exercised with an open ruthlessness that Nixon-Kissinger dared not attempt. If Stiglitz finds "Kissinger-style realpolitik" distasteful, what would he say about all-out war? Well, nothing much, because in his own way he’s as doctrinaire as the fundamentalists. They both assume an American right to control the world, but Stiglitz has more faith than Bush in the ability of markets to do the job without recourse to military force.

The core of Stiglitz’s feud with the IMF was that the IMF put privatisation before all else. As long as private interests took over the economy, was the IMF view, the other stuff could sort itself later. Stiglitz agreed with the centrality of a capitalist economy as the purpose of the reforms, but argued that, for markets to rule, there needed to be competition. IMF policy in Russia (and everywhere else) did not set up the conditions for a competitive, democratic, economy. Stiglitz charges the IMF with deliberately strangling competition in the cradle as the new Russian economy was born. Unlike the West, where capitalism lurched and spurted through childhood to a maturity generations later, the Russian oligarchs were billionaires within months, and only by virtue of knowing the right people at the right time. As sons of bitches go, they were always going to be grateful and reliable.

Fundamentalism has as a central tenet the idea of "symmetries of information". In the pure and free markets of the neoliberal imagination, all parties engage in contracts with equal access to the facts. The playing field is level and all that. The favourite guru of the fundamentalists, the Austrian economist Friedrich von Hayek, placed this doctrine at the core of his analysis. It has to be. All the touted morality and efficiency of market liberalism flows from the concept of ready access to what’s going on. So it makes sense that Stiglitz was upset that the IMF prescriptions made a mockery of it by granting absolute privileges to the anointed billionaires.

In an account such as this, Stiglitz cannot devote space to the history of economics but he does discuss another founding father of fundamentalism. It’s a necessary guide in so far as Adam Smith is invoked constantly by the market reformers. When they build their shrine Smith will be above the altar, flanked by Hayek. Yet you wonder why those who so despise history and are so determined to sideline experience as a guide to behaviour make such a fuss about a man who wrote a couple of books over two hundred years ago.

Smith wrote during the 18^th Century Industrial Revolution, an early and eloquent champion of free markets. At the time it needed to be said. But if Stiglitz is right - and many New Zealanders have endured experiences to say that he is - fundamentalists cannot often explain their proposals without still invoking the name of Smith. Self-styled men in a hurry, practical and tall poppies who know numbers, the fundamentalists like to quote from "The Wealth of Nations", penned in 1776, the year of the American Revolution. It’s a good read. Whether its 21^st Century champions have read it is open to doubt. You get the impression that they pick up a smattering of quotes from motivational seminars. Certainly the fundamentalists don’t often refer to other 18^th Century writers.

The other Smith, the one who advocated public controls on private investment, is the one that Stiglitz likes, though, more widely read than his opponents, he does not need one long-departed Scot to buttress his case. Stiglitz prefers to discuss the Englishman, JM Keynes, as it was the influence of Keynes which inspired the formation of the World Bank and the IMF in the bleak post-World War 2 years. In both their mandates was the Keynesian assumption that, if things get tight, you need to get your hands on some money. We, ordinary mortals, know that if you want something really expensive, like a house, you have to take out a loan or you’ll have to rent forever. If governments want to build houses for their peoples (and after 1945, they all did) they have to run a deficit. If prosperity grows (as it did, helped by the extra investment) there’s no problem with paying the banks. The most important part of Stiglitz’s critique is the part that he bases directly on his career in Washington as a Keynesian economist.

Stiglitz gives a context which helps us make sense of how the IMF got so off track from this start. In the 1940’s the leading economies had emerged from the destruction of the war needing a massive and speedy investment in their civilian infrastructure. The governments of the US and the UK, the architects of the post-war dispensation, had mobilised by a huge, and highly effective, marshalling of State monies, so this notion made sense. They were ready for Keynes, the crux of whose advice was that, if demand is low, it has to be raised, just as, if demand is too high, it has to be lowered. In Sitglitz’s words, "lack of sufficient demand explained economic downturns; government policies could help stimulate aggregate demand. In cases where monetary policy is ineffective, governments could rely on fiscal policies, either by increasing expenditures or cutting taxes" (p11).

In the 1930s each country tried to shield itself by shutting out their neighbours, thus beginning a downward spiral of protectionism. To Stiglitz the lesson was that "there was a need for global collective action, because the actions of one country spilled over to others. One country’s imports are another country’s exports. Cutbacks in imports by one country, for whatever reason, hurt other countries’ economies" (p196).

The original mandate of the IMF and the World Bank was to stimulate national economies by forcing them to cooperate. The world’s governments were to help create full employment by using whatever tools, including public deficit spending and international trade that they thought would work. The banks were supposed to help - as servants, not as masters. The IMF and the World Bank have never been authorised to abandon Keynes.

The new World Bank Chief Economist was noted for her work in "rent seeking", a jargon borrowed from a commonsense hunch that human beings have biases. Fundamentalism presented it back to us as an original insight to justify the primacy of markets. "Special interests", it was said, use protections and tariffs for their own ends. Well, hello. This aspect of anti-Keynesian theory was emphasised in NZ, where fundamentalist analysis latched on to "rent seeking" big time, thereby inflating schoolyard wisdom into sophisticated analysis which could be applied to whatever it pleased. Those with direct, empirical knowledge had to be shut out from influence over policy and governance.

It would have been honest to have stated that "special interests" were people from the public sector or trade unions, because the phrase was rarely used except to encourage governments to attack them. If, for example, you worked in a hospital, you were said to be ineligible to contribute to health policy because nurses or doctors must be "rent seeking". Teachers were "rent seeking" if they had anything to do with educational policy and if politicians listened to them we’d suffer "provider capture". And so it went.

On the other hand, those bureaucrats and economists who were being hired for their obedience to fundamentalist dogma were said to be objective. As was Big Business of course. And the Russian billionaires and oligarchs wouldn’t "capture" a rouble. It is thus necessary to accept that the people running the new Russia, like their peers in the world’s corporations, outfits like Enron and Parmalat, were not "rent seekers". They were the humble servants of market forces. Yet some now say they were "special interests". Absurd. Just as only witch doctors can drive out evil spirits, only those who define "rent seeking" can be trusted to know it when they see it. Only they can be trusted to purge it from our souls.

In his section on Russia Stiglitz remarks that, for Wall Street, "notions of social capital and political participation may not even appear on the radar screen; they feel far more comfortable with an independent central bank than one whose actions are more directly under the control of political processes" (p172). Stiglitz was showing that the last thing the fundamentalists wanted was any vestige of public, democratic influence over post-communist Russia. Yet, it was not only Russia, where there were no existing democratic or capitalistic institutions, whose central bank was granted independence in this period. So was New Zealand’s, and then the UK’s (doubtless emboldened by the ease with which it was done in NZ). Presented as a means to financial prudence and all that, the removal of the country’s public bank from democratic control might more accurately be seen as a way that fundamentalists wrested power over the national economy from its elected politicians. Asked why, they might say that it was the best way to disallow the Government from "rent seeking" in the matter of the country’s economy.

Stiglitz always returns to a political interpretation. His Russian chapter is entitled "Who Lost Russia?", a timely witticism, as the question alludes to the popular Washington lament of the late 1940’s, the time when the World Bank and the IMF were created. "Who lost China?" it was asked by Republicans who pretended to believe that President Truman had been asleep at the switch when the "sleeping giant" woke up under Chairman Mao Ze Dong (leader of the People’s Republic of China, from 1949 until his death in 1976. Ed.). Stiglitz’s answer, that China was not America’s to lose, is true as far as it goes, but he should have been clear that neither was Russia. And Russia has not been "lost".

Keynes ‘saved’ capitalism in the 1930’s, Stiglitz concludes, and ever since its methods have worked better than the often looney "all market" alternative. Herbert Hoover, the Depression-era US President, and his IMF-style advisers might have "lost" the game had not Keynes been subbed on in the second half. This embarrasses the extreme Right, who charge Keynes with the unspeakable blasphemy - of being a "socialist". Stiglitz knows better. Keynes was a more flexible tactician than the fundamentalists. He understood why capitalist economies had crises and thus he offended the "ideological" True Believers who inspire the Bushes and Brashes of the world.

Stiglitz is a voice (one of the most authoritative) of the other side of the debate. He is a defender of the post-war consensus, Keynesianism, frustrated at the ease with which the fundamentalists came to dominate elite thinking. Tellingly, he dubs the fundamentalists "Bolsheviks". They’re extremists, he’s saying, ruthlessly ready to do whatever it takes for their side to win.

Ultimately Stiglitz’s argument is that the fundamentalists should be more devious so that more voters accept them and fewer foreigners need to be invaded. Stiglitz’s difficulty is that he was in charge of Clinton’s policy and Clinton did little to counter the "ideologues". Why not? Because Treasury thought economic policy to be "too important to let the President have an important role". (p171). Clinton and Stiglitz were puppets of the Treasury. Yeah, right. That’s not good enough. Drunken, bloated Boris Yeltsin (the former Russian President. Ed). is too easy a target. What we need to know is what policy the Keynesian "non-ideologues" prescribe for a mature developed state like the US or NZ.

"America, under Bush, is a danger to the world "(Washington Post, 11/11/03). It’s not what the typical financier says in his Manhattan office, but George Soros, a New Yorker who has made billions from playing the currency markets says things like that loudly and often. Getting George Bush out of office is the most important aim of Soros’ life these days, he told another interviewer. Apparently Soros is the Democrats’ chief funder (Slate, 10/3/04, Sebastian Mallaby & Washington Post, 11/11/03).

"The Bubble of American Supremacy" is Soros’ explanation. He said he used to wake up at 3 a.m. to write it, his thoughts "like an alarm clock". Soros’ thesis is that Dubya has sprouted a "Bush Doctrine". On September 20, 2001, Bush used a speech to the US Congress to tell the world that "either you are with us, or you are with the terrorists". This remark came but nine days after 9/11, when terrorists crashed hijacked passenger planes into the World Trade Center and the Pentagon. Soros’ anger is based on his belief that Bush has used the attacks to justify an "extremist" policy that threatens American values and world peace.

Many readers of Watchdog might have had the same thoughts, but when a Wall Street billionaire has them it’s different. Soros has the resources and, in his world, the mana, to gain attention. And since Soros published, earlier in 2004, his suspicions have been confirmed by a Washington insider. Richard Clarke, in charge of US security under four Presidents, says that Bush and his gang were planning their attack on Iraq by September 12, 2001.

Hence the infamous weapons of mass destruction (WMDs) and the half-hearted attempt to link former Iraqi dictator, Saddam Hussein, a pragmatic run-of-the-mill sort of despot, to the fundamentalist zealotry of Osama bin Laden. Hence the on-going twists and turns as the Coalition of the Bidden try to justify the second war on Iraq. Soros thinks that Bush needed a pretext to project American power over everyone else, and that in the aftermath of 9/11 he exploited global sympathy to force allies into line and to silence potential critics.

Despite differences of emphasis, George Soros, the whizkid speculator, and Joseph Stiglitz, the Nobel Prize-winning economist, have the same take. Both dub Dubya’s clique "fundamentalists". Both see the fundamentalist ideology (often called "neo-conservativism") as representing the triumph of the American Republican Party’s Rightwing.

Soros reminds us that in 1998, before the latterday revisions and rationalisations, influential fundamentalists were pushing for an attack on Iraq. He identifies Vice-President Dick Cheney, Secretary of Defense Donald Rumsfeld, and Paul Wolfowitz, Rumsfeld’s deputy, as key ideologues from the 80’s and 90’s who have captured policy.

Another key figure, a signatory to the neo-cons 1998 declaration of aims, is Steve Forbes (of the US family that owns the eponymous Forbes magazine. Ed.), whose inherited wealth has freed him up to become a travelling propagandist for the cause. Forbes was invited to ACT’s last conference to push for his - and Sir Roger Douglas’s - favourite cause, a flat and low rate of income tax.

Wouldn’t you if you were a billionaire? Everyone has a right to want what suits them best. The neo-con’s difficulty is that they know that the rest of us don’t agree. We’ll never vote for it. They say it’s because we’re envious that we’re not billionaires, which could be true. Who knows our various personal motivations? But it’s also true that lowering taxes on the rich does all sorts of harm to the economy as a whole. As Soros says, lower income tax rates on higher incomes have been the means by which society is denied the resources to challenge the big boys and defend our patch. Fundamentalist tax reform is not meant to benefit society.

Fundamentalists know that most punters don’t want their countries’ assets to be privatised or stripped any more than they want their armies to wage imperialist wars. That’s why fundamentalists like to attack national governments the way they attack (selected) "rogue" nations. Saddam Hussein wouldn’t have gone by choice, and Russians wouldn’t have opted for their billionaire oligarchs. The Iraqi Army got shock and awe; the Russian people got shock therapy. And we got our version of shock and awe when we were Rogered in 1984.

Soros remarks that the disappearance of the Soviet Union deprived the US elite of the enemy it craved to justify its huge military and the mood of permanent panic that keeps its satellites saluting. Impatient with the diplomatic niceties still persisting from the Cold War era, Bush picked a fight with North Korea so that the US could return to the Reaganite missile defence project. Soros thinks that China was marked out as the next necessary big enemy (if so, this seems to have been put aside). A third impetus was provided by Bush’s need to show he was rejecting international treaties. Kyoto was a perfect fall guy. Above all else, fundamentalists demand the right to do what they want when they want, at home and abroad.

The notion that America is uniquely gifted by circumstance, that it is the freest and richest nation on Earth, is accepted by many in the world - and assumed by all American neo-cons. We have long known of "American exceptionalism", the belief that the US economy is strong enough to be immune to the troubles that afflict the rest of us. "American exceptionalism" is undoubtedly a reason that dotcom speculators, for instance, thought they were exempt from boom and bust.

The Bushwhackers, who don’t talk of being exceptional because they can’t imagine that they would need to, are the symptom a new strain of an old and known virus. Since 9/11, the conditions for an epidemic have existed. US economic and military power has been (often) restrained by rivals. Soros points out that we are now faced with a new policy arrogance. Dubya thinks that God’s a Republican, and that means he’s reckless in fighting for what he wants.

An especially interesting part of Soros’ analysis is his discussion of the conditions, which allowed the Bush Doctrine to become established: "When did the current phase of global capitalism begin? Was it in the 1970s, when the offshore market in Eurodollars developed? Was it around 1980, when (British Prime Minister) Thatcher and (US President) Reagan ascended to power? Or was it in 1989, when the Soviet Empire disintegrated and capitalism became truly global? I opt for 1980, because globalisation was a market fundamentalist undertaking. The objective of the Reagan Administration in the United States and the Thatcher government in the United Kingdom was to reduce the ability of the state to interfere in the economy, and globalisation served their purpose well. Other countries had to follow suit in order to attract or retain capital. In the meantime, the trailblazing countries enjoyed a competitive advantage. Moreover the advantage conferred by the fact that the main financial centres of the world are located in New York and London was permanent. Judged by the criteria of market fundamentalism, globalisation has been a highly successful project".

The big rich countries have imposed all the risk created by footloose capital on those places that Soros calls the "periphery" countries (almost all of us). The New York and London creditors have made the rules to protect themselves. Wealth is shifting to the centres of financial power. Similarly, Soros thinks that the purpose of the fundamentalist reforms was to transfer wealth from middle and lower income earners to the rich. He reminds us that taxes have not come down. We tend to think they have because business analysts, happy to repeat fundamentalist propaganda, keep saying they have. The fundamentalist claim to our support is the equation that what they like to call free trade equals low taxes. Soros says it hasn’t happened. The burden has been transferred from income to consumption (and from corporations to individuals, he might have added).

A related misconception he corrects is the folklore that talks of the neo-cons having shrunk government. They haven’t. They’ve only shifted the emphasis from social investment. Soros could have been specific about where the money is now going. In the US it’s being gobbled by the military - which is just what we might expect under Dubya. Why doesn’t Soros square the circle by tracing what looks like an inevitable consequence of what he’s talking about?

In another context from where it belonged - in his critique of Bushite America - Soros introduces an idiosyncratic version of "American exceptionalism". Discussing Henry Kissinger’s* use of the term, he writes: "By ‘American exceptionalism’ (Kissinger) means that the United States comes closer to basing its foreign policy on principles (as opposed to selfish interest) than do most other countries" (p156). We’d expect such overt hypocrisy (and inconsistency) from realpolitik, Henry. The relevant point here is that Soros, the scourge of the imperialist Texan, is not being ironic. He cites Kissinger with approval. The US, Soros tells us, in support of Henry, fought World War II "for the survival of democracy and human rights". This is to distinguish the boys with the Stars and Stripes from NZ, let’s say, which fought it for greed and conquest. * Dr Henry Kissinger was National Security Adviser and Secretary of State under Presidents Nixon and Ford in the 1960s and 70s, a truly Machiavellian figure, and if there was any justice in the world, he would have long ago stood trial as one of the 20^th Century’s worst war criminals. Ed.

Having spent much of his life playing with global capitalism, Soros knows his topic. He made himself an immediate one billion dollars in 1992 from speculating against the UK pound, and later he bet successfully against Thailand and Malaysia. He admits to having invested a billion or so in the Russian economy at the same time as the non-profit organisations he funds were offering the Kremlin advice. Soros is used to accusations of hypocrisy.

His defence? He picks on currencies because they are weak. The crises would have happened without him. It’s not convincing, given that he also implies he shouldn’t be allowed to get away with plunging whole countries into chaos. But, until that happens, "we have to distinguish between playing by the rules and making the rules. Playing by the rules, one does the best one can, irrespective of the social consequences" (New York Times, 6/12/98).

New Zealanders might be more sceptical than Soros’ readers in larger, more secure economies. We have been wary since a currency panic launched Rogernomics. A standard tactic of fundamentalist revolutionaries throughout the world is to "create a crisis". A virtue of Soros is that, unlike a publicist like Steve Forbes, who’s loyal to his mates, Soros is an individualist. He’s got enough stashed away to be able to say what he likes, and spend what he likes. He’s estimated to have so far poured about $US5 billion into his various causes.

Soros sees himself as the hardheaded realist, interested in results, able to compartmentalise his life, able to separate the personal from the political. He’s also quite the philosopher, with a fondness for Sir Karl Popper (whom we remember because he wrote his best-known book, "The Open Society And Its Enemies" when living in Christchurch, from 1937-45, and teaching philosophy at Canterbury University College, which is now the University of Canterbury).

Soros concludes that a pressing need is to regulate global finance markets - and thereby put a stop to future versions of himself. If individual states are left to look after their own interests, "it will surely lead to the break down of the gigantic circulatory system which goes under the name of global capitalism" (ibid.). Given all that Soros has said, this conclusion seems undeniable. But isn’t there a problem when his other conclusion is that the US should act as global policeman? This is the same US that is an urgent threat to world peace. Soros seems to suppose that voting out Bush would be as easy as the rustler taking off his black hat and putting on the sheriff’s white hat.

Soros praises President Eisenhower (1952-60) for an early warning about the "military-industrial complex, but argues that until September 11^th, 2001 America had held it in check, and the US had acted benignly. This, too, is a charitable view of his adopted country. The Bush Doctrine has several earlier inspirations. Eisenhower’s Secretary of State, John Foster Dulles, declared to his allies that neutrality was a "crime". Dulles was enlisting support for the Cold War.

Now Bush wants no neutrality against "terrorism". The worry is that he wants to reserve the right to define "terrorism" and how to combat it with no countervailing force, no nuclear Soviet Union, to give him pause. We can agree with Soros. But did the Cold War provide as clear a division of interests as Soros, and conventional wisdom, assert? It could be argued that the US government and its allies had as self-serving and arbitrary a definition of "enemies" then as it does now. Further, and this is his most obviously myopic moment, Soros ignores the many and varied US invasions, military and/or financial, that litter post-WW2 history from Guatemala to Vietnam and beyond. He maintains his rigid distinctions, and his dislike of George Bush, by a strictly selective memory.

Soros, a Hungarian Jew, left Europe to escape the Nazis, and there’s no reason to doubt the sincerity of his love for freedom. But his thesis is such that he can’t avoid contradictions. He doesn’t resolve the tension between a starting premise - that countries have interests, which move world events - and his main argument, which is that capital is king and it has no home. Reagan and Thatcher did not accommodate finance to make their countries strong, and they personally did not gain. Their declared aim was to upset the balance of power within their countries. Reaganites and Thatcherites liked military imagery. They were fighting wars all right, but they were civil wars. Soros insists that both leaders were primarily the willing helpers of international capital. Reagan and Thatcher were the political leaders of the countries hosting the most influential corporations. That’s not the same thing as being the defenders of American or British power. Indeed the whole point that Soros is making is that neither Reagan nor Thatcher was motivated by a national interest as such. Soros agrees they did most of their citizens no favours.

Soros knows this, but he doesn’t want to follow the implications of his own thesis. He is too experienced to buy the extremist dogma that markets always provide better outcomes. There are, he says, three "major disparities in the global capitalist system - between public goods and private goods, centre and periphery, and good and bad governments" (p98). He hopes to resolve all three through a nice-guy US. It won’t happen.