A financier’s examination of global capitalism and the open society
What the Work Is
The Challenge of Money is a work by George Soros, the Hungarian-American investor and philanthropist, examining the relationship between global financial markets and the principles of the open society. The book draws on Soros’s decades of experience as a hedge fund manager and his philosophical training to address what he sees as fundamental problems in how global capitalism operates. Soros, who studied philosophy at the London School of Economics under Karl Popper before becoming one of the world’s most successful investors, brings both theoretical and practical perspectives to the subject.
What the Book Is About
The book addresses the tensions between free-market capitalism and the maintenance of open, democratic societies. Soros argues that the global financial system, left to its own devices, produces instability and crisis rather than the equilibrium that classical economic theory predicts. He contends that markets are not self-correcting mechanisms that naturally tend toward balance, but rather are driven by participants’ fallible perceptions that can create self-reinforcing booms and busts. The work makes a case for why market fundamentalism—the belief that markets should be free from government intervention—is both intellectually flawed and practically dangerous.
Key Ideas and Themes
Central to the book is Soros’s theory of reflexivity, which he developed early in his career as an extension of his philosophical studies. Reflexivity posits that market values are often driven by the fallible ideas of participants rather than solely by economic fundamentals. Unlike the equilibrium predictions of neoclassical economics, reflexivity holds that ideas and events influence each other in feedback loops. This means that markets can develop procyclical “virtuous” or “vicious” cycles—bubbles that inflate until they become unsustainable and then collapse. Soros applies this framework to explain why financial crises are not aberrations but rather inherent features of how markets actually behave.
The book also engages with the concept of the open society, a term Soros inherited from his mentor Karl Popper. An open society is one characterized by democracy, individual liberty, and transparency, in contrast to closed, authoritarian systems. Soros argues that global capitalism, while generating enormous wealth, also produces inequalities and instabilities that threaten the social fabric of open societies. He warns that market fundamentalism—the ideological conviction that markets should govern all aspects of social life—represents a form of extremism that undermines the very conditions that allow free markets to function.
Soros draws on his direct experience with financial crises to illustrate these themes. He discusses the Asian financial crisis of 1997, which he describes as particularly unnerving because of its scope and severity. He explains how his own fund identified the growing discrepancy between trade accounts and capital accounts in Southeast Asian economies and positioned itself accordingly. The book addresses the accusations made by Malaysian Prime Minister Mahathir Mohamad, who blamed Soros personally for triggering the crisis—accusations Soros rejects as wholly unfounded, noting that his fund was actually buying currencies as they began to decline.
The work also reflects on the late-2000s financial crisis, which Soros describes as the most serious since the 1930s. He attributes the crisis to market fundamentalism and its assumption that markets will correct themselves without government intervention. In his view, the “mood” of markets—a prevailing bias or optimism or pessimism through which markets view reality—can reinforce itself, creating initially self-reinforcing but eventually unsustainable boom-bust sequences. This analysis leads him to advocate for new approaches to economic thinking and regulation.
Structure and Approach
The book combines theoretical argument with practical observation drawn from Soros’s career in finance. It moves between abstract philosophical discussion of how markets work and concrete analysis of specific crises and events. Soros writes as both a practitioner who has operated successfully within the global financial system and a critic who believes that system requires fundamental reform. His approach reflects his conviction that understanding markets requires acknowledging the role of human fallibility and perception, not just mathematical models of rational behavior.
Significance and Influence
The book represents an unusual contribution to economic literature because its author is not an academic economist but a practitioner who made his fortune in the very markets he critiques. Soros’s credibility as one of the most successful investors in history gives his arguments against market fundamentalism particular weight. His analysis of financial crises, informed by his direct involvement in events like the 1992 Black Wednesday currency crisis and the 1997 Asian financial crisis, offers insights that purely theoretical treatments cannot provide.
The work also connects to Soros’s broader philanthropic and political activities. His advocacy for open societies, funded through the Open Society Foundations, reflects the same concerns that animate the book. By the time of the book’s publication, Soros had already donated billions to causes promoting democracy, transparency, and civil society around the world. The book can be read as an intellectual foundation for these efforts—an attempt to explain why open societies need protection from the excesses of unregulated capitalism and why the global financial system requires thoughtful oversight rather than blind faith in market forces.
Soros was born György Schwartz on August 12, 1930, in Budapest, Hungary, to a prosperous but non-observant Jewish family. His father, Tivadar, was a lawyer and a well-known Esperanto author who edited the literary magazine Literatura Mondo and raised his son to speak the language. Tivadar had been a prisoner of war during and after World War I until he escaped from Russia and rejoined his family in Budapest. In 1936, the family changed their name from “Schwartz” to “Soros” as protective camouflage in increasingly antisemitic Hungary. Tivadar liked the new name because it is a palindrome and because of its meaning: in Hungarian, soros means “next,” while in Esperanto it means “will soar.”
Soros was 13 years old in March 1944 when Nazi Germany occupied Hungary. The Nazis barred Jewish children from attending school, and Soros was made to report to the Judenrat (“Jewish Council”). He later described to writer Michael Lewis how the Council asked him to hand out deportation notices, which were lists of Hungarian Jewish lawyers. His father recognized the slips and instructed him to tell the people that if they reported, they would be deported. Soros did not return to that job, and his family survived the war by purchasing documents to say they were Christians. At age 14, he posed as the Christian godson of an official of the collaborationist Hungarian government’s Ministry of Agriculture. Tivadar saved not only his immediate family but also many other Hungarian Jews, and Soros later wrote that 1944 had been “the happiest [year] of his life,” for it had given him the opportunity to witness his father’s heroism. In 1945, Soros survived the Siege of Budapest, and he and his mother also spent time hiding with the family of Elza Brandeisz, attending their Lutheran church with them.
When he was 17, Soros relocated to Paris before eventually moving to England. There he became a student at the London School of Economics, where he studied under the philosopher Karl Popper. While a student, he worked as a railway porter and as a waiter, and once received £40 from a Quaker charity. He would sometimes stand at Speakers’ Corner lecturing about the virtues of internationalism in Esperanto. Soros obtained his Bachelor of Science in philosophy in 1951 and a Master of Science in philosophy in 1954. After graduating, he wanted to stay in the university and work as a professor, but his grades were not high enough, prompting him to work for an investment firm in London.
Early Financial Career
Soros began his financial career in 1954 at the merchant bank Singer & Friedlander of London, working as a clerk and later moving to the arbitrage department. A fellow employee suggested he apply at his father’s brokerage house, F.M. Mayer of New York. In 1956, Soros moved to New York City, where he worked as an arbitrage trader for F. M. Mayer, specializing in European stocks that were becoming popular with U.S. institutional investors following the formation of the Coal and Steel Community. In 1959, he moved to Wertheim & Co., planning to stay for five years to save $500,000 before returning to England to study philosophy. He worked as an analyst of European securities until 1963.
During this period, Soros developed the theory of reflexivity to extend the ideas of his tutor Karl Popper. From 1963 to 1973, he worked as a vice president at Arnhold and S. Bleichroeder, though business was slack following the introduction of the Interest Equalization Tax. He spent the years from 1963 to 1966 focusing on the revision of his philosophy dissertation. In 1966, he started a fund with $100,000 of the firm’s money to experiment with his trading strategies. In 1969, Soros set up the Double Eagle hedge fund with $4 million of investors’ capital, including $250,000 of his own money, based in Curaçao, Dutch Antilles. Double Eagle was an offshoot of Arnhold and S. Bleichroeder’s First Eagle fund established by Soros and that firm’s chairman Henry H. Arnhold in 1967.
In 1970, Soros founded Soros Fund Management and became its chairman. In 1973, due to perceived conflicts of interest, he resigned from the management of the Double Eagle Fund and established the Soros Fund. By the time it was renamed the Quantum Fund, the value of the fund had grown to $12 million. By 1981, the fund had grown to $400 million, and then a 22% loss in that year and substantial redemptions reduced it to $200 million. In July 2011, Soros announced that he had returned funds from outside investors’ money (valued at $1 billion) and instead invested funds from his $24.5 billion family fortune, due to changes in U.S. Securities and Exchange Commission disclosure rules. The fund had at that time averaged over 20% per year compound returns. In 2013, the Quantum Fund made $5.5 billion, making it again the most successful hedge fund in history. Since its inception in 1973, the fund has generated $40 billion.
The 1992 Black Wednesday Crisis
Soros had been building a huge short position in pounds sterling for months leading up to the Black Wednesday of September 1992. He had recognized the unfavorable position of the United Kingdom in the European Exchange Rate Mechanism: the rate at which the UK was brought in was too high, their inflation was much too high (triple the German rate), and British interest rates were hurting their asset prices. By September 16, 1992, Soros’s fund had sold short more than $10 billion in pounds, profiting from the UK government’s reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or float its currency. The UK finally withdrew from the mechanism, devaluing the pound, and Soros’s profit on the bet was estimated at over $1 billion. He was dubbed “the man who broke the Bank of England.” The estimated cost of Black Wednesday to the UK Treasury was £3.4 billion. Stanley Druckenmiller, who traded under Soros, originally saw the weakness in the pound, and Soros’s contribution was pushing him to take a gigantic position. On October 26, 1992, The New York Times quoted Soros as saying: “Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell.”
The 1997 Asian Financial Crisis
During the 1997 Asian financial crisis, Malaysian Prime Minister Mahathir Mohamad accused Soros of using the wealth under his control to punish the Association of Southeast Asian Nations (ASEAN) for welcoming Myanmar as a member. Mahathir made specific reference to Soros’s Jewish background and implied Soros was orchestrating the crash as part of a larger Jewish conspiracy. Nine years later, in 2006, Mahathir met with Soros and afterward stated that he accepted that Soros had not been responsible for the crisis. In 1998’s The Crisis of Global Capitalism: Open Society Endangered, Soros explained his role: “The financial crisis that originated in Thailand in 1997 was particularly unnerving because of its scope and severity… By the beginning of 1997, it was clear to Soros Fund Management that the discrepancy between the trade account and the capital account was becoming untenable. We sold short the Thai baht and the Malaysian ringgit early in 1997 with maturities ranging from six months to a year… Subsequently, Prime Minister Mahathir of Malaysia accused me of causing the crisis, a wholly unfounded accusation. We were not sellers of the currency during or several months before the crisis; on the contrary, we were buyers when the currencies began to decline—we were purchasing ringgits to realize the profits on our earlier speculation. (Much too soon, as it turned out. We left most of the potential gain on the table because we were afraid that Mahathir would impose capital controls. He did so, but much later.)”
Also during this time, Soros, through his Quantum Fund, attempted to sell short the Hong Kong dollar, using similar strategies to his bets against the pound, baht, and peso. However, due in part to China’s backing by maintaining a fixed exchange rate with the Hong Kong dollar, Hong Kong’s currency remained more or less stable, and he lost most of the money shorted against the HKD. In 1999, economist Paul Krugman was critical of Soros’s effect on financial markets, writing: “[N]obody who has read a business magazine in the last few years can be unaware that these days there really are investors who not only move money in anticipation of a currency crisis, but actually do their best to trigger that crisis for fun and profit. These new actors on the scene do not yet have a standard name; my proposed term is ‘Soroi’.”
The Late-2000s Financial Crisis
In an interview concerning the late-2000s recession, Soros referred to it as the most serious crisis since the 1930s. According to Soros, market fundamentalism with its assumption that markets will correct themselves with no need for government intervention in financial affairs has been “some kind of an ideological excess.” In Soros’s view, the markets’ moods—a “mood” of the markets being a prevailing bias or optimism/pessimism with which the markets look at reality—”actually can reinforce themselves so that there are these initially self-reinforcing but eventually unsustainable and self-defeating boom/bust sequences or bubbles.” In reaction to the Great Recession, he founded the Institute for New Economic Thinking in October 2009, a think tank composed of international economic, business, and financial experts mandated to investigate radical new approaches to organizing the international economic and financial system.
The Société Générale Insider Trading Conviction
In 1988, Soros was contacted by a French financier named Georges Pébereau, who asked him to participate in an effort to assemble a group of investors to purchase a large number of shares in Société Générale, a leading French bank that was part of a privatization program. Soros eventually decided against participating in the group effort, opting to personally move forward with his strategy of accumulating shares in four French companies: Société Générale, as well as Suez, Paribas, and the Compagnie Générale d’Électricité. In 1989, the Commission des Opérations de Bourse (COB) conducted an investigation of whether Soros’s transaction should be considered insider trading. Soros had received no information from the Société Générale and had no insider knowledge of the business, but he did possess knowledge that a group of investors was planning a takeover attempt. Initial investigations found Soros innocent, and no charges were brought forward. However, the case was reopened a few years later, and the French Supreme Court confirmed the conviction on June 14, 2006, although it reduced the penalty to €940,000. Soros denied any wrongdoing, saying news of the takeover was public knowledge and it was documented that his intent to acquire shares predated his own awareness of the takeover. In December 2006, he appealed to the European Court of Human Rights, which agreed to hear the appeal on the basis of Article 7 of the European Convention on Human Rights. In October 2011, the court rejected his appeal in a 4–3 decision, saying that Soros had been aware of the risk of breaking insider trading laws.
Political Involvement in the United States
Until the 2004 presidential election, Soros had not been a large donor to U.S. political campaigns. During the 2003–2004 election cycle, Soros donated $23,581,000 to various 527 Groups aimed at defeating President George W. Bush. After Bush’s reelection, Soros and other donors backed a new political fundraising group called Democracy Alliance, which supports progressive causes. In August 2009, Soros donated $35 million to the state of New York for underprivileged children, given to parents who had benefit cards at the rate of $200 per child aged 3 through 17. Soros was an initial donor to the Center for American Progress and continues to support the organization through the Open Society Foundations.
In October 2011, a Reuters story, “Soros: not a funder of Wall Street Protests,” was published after several commentators pointed out errors in an earlier Reuters story headlined “Who’s Behind the Wall St. Protests?” with a lead stating that the Occupy Wall Street movement “may have benefited indirectly from the largesse of one of the world’s richest men [Soros].” Reuters’s follow-up article reported a Soros spokesman and Adbusters’ co-founder Kalle Lasn both saying that Adbusters had never received any contributions from Soros.
On September 27, 2012, Soros announced that he was donating $1 million to the super PAC backing President Barack Obama’s reelection, Priorities USA Action. In October 2013, Soros donated $25,000 to Ready for Hillary, becoming a co-chairman of the super PAC’s national finance committee. In June 2015, he donated $1 million to Priorities USA Action, which supported Hillary Clinton in the 2016 presidential race, and donated additional sums in December 2015 and August 2016. Soros launched a new super PAC called Democracy PAC for the 2020 election cycle, donating $5.1 million to it by July 2019. Since 2016, Soros has been donating sums exceeding $1 million to the campaigns of progressive criminal justice reform proponents through the Safety and Justice PAC in local district attorney elections. Larry Krasner was elected as the District Attorney of Philadelphia with the help of a $1.5 million ad campaign funded by Soros in 2017. Soros was the largest donor supporting the campaign of George Gascón for Los Angeles County District Attorney in 2020, contributing $2.25 million to superPACs in Gascón’s favor. Soros gave $2 million to a PAC supporting Kim Foxx’s campaign for Cook County State’s Attorney in 2020. In the second quarter of 2020, Soros gave at least $500,000 to presumptive Democratic presidential nominee Joe Biden, becoming one of the campaign’s largest donors. For the 2022 United States elections, Soros was the country’s largest donor, donating $128.5 million to support the Democratic Party. As of August 2026, Soros was the largest single donor in 2026 United States elections, spending $102 million in support of Democratic campaigns.
Political Involvement in Central and Eastern Europe
According to Waldemar A. Nielsen, an authority on American philanthropy, “[Soros] has undertaken… nothing less than to open up the once-closed communist societies of Eastern Europe to a free flow of ideas and scientific knowledge from the outside world.” From 1979, as an advocate of ‘open societies’, Soros financially supported dissidents including Poland’s Solidarity movement, Charter 77 in Czechoslovakia, and Andrei Sakharov in the Soviet Union. Since the fall of the Soviet Union, Soros’s funding has played an important role in the newly independent countries. A 2017 study found that a grant program by Soros which awarded funding to over 28,000 scientists in the former Soviet republics shortly after the end of the Soviet Union “more than doubled publications on the margin, significantly induced scientists to remain in the science sector, and had long-lasting [beneficial] impacts.” His funding of pro-democratic programs in Georgia was considered by Georgian nationalists to be crucial to the success of the Rose Revolution, although Soros has said that his role has been “greatly exaggerated.” Alexander Lomaia, secretary of the Georgian Security Council, is a former executive director of the Open Society Georgia Foundation. Former Georgian foreign minister Salome Zourabichvili wrote that institutions like the Soros Foundation were the cradle of democratization and that all the NGOs that gravitated around the Soros Foundation undeniably carried the revolution.
Some Soros-backed pro-democracy initiatives have been banned in Kazakhstan and Turkmenistan. In 1997, Soros closed his foundation in Belarus after it was fined $3 million by the government for “tax and currency violations.” Soros called the fines part of a campaign to “destroy independent society.” In June 2009, Soros donated $100 million to Central Europe and Eastern Europe to counter the impact of the Great Recession on the poor, voluntary groups, and non-government organizations.
In March 2017, six US senators sent a letter to then secretary of state Rex Tillerson asking that he look into several grants the State Department and the US Agency for International Development (USAID) have given to groups funded by Soros. The conservative group Judicial Watch filed a Freedom of Information Act lawsuit against the U.S. Department of State and USAID compelling them to release records regarding $5 million transferred from USAID to Soros’s Open Society branch in Macedonia. The suit alleges that the money was deliberately used to destabilize the Macedonian government. The Open Society Foundation has said its activities in Macedonia were aimed at ethnic reconciliation with the Albanian minority and other forms of assistance since the collapse of Yugoslavia. In January 2017, the “Stop Operation Soros” (SOS) initiative was launched in Macedonia, with one of its founders stating that SOS would work towards the “de-Soros-ization” of Macedonia.
Hungary
In 1984, Soros founded his first Open Society Institute in Hungary with a budget of $3 million. Since 2012, the Hungarian Fidesz government has labelled George Soros as an enemy of the state. The government has disagreed with Soros’s involvement in the 2015 European migrant crisis, has attacked the Open Society Foundations, and tried to revoke the licence of Central European University (Budapest), which failed mostly due to significant public outrage. In response, Soros called the government “a mafia state.” As the 2018 election period started, the government introduced public posters with a photo of Soros to create hostility in the general public towards him, using statements such as “Soros wants millions of migrants to live in Hungary” and “Soros wants to dismantle the border fence.” The government also prepared a three-part law plan called the “Stop Soros package” which would include various steps against NGOs doing volunteer work related to the refugee crisis. On May 16, 2018, Soros’s Open Society Foundations announced they would move its office from Budapest to Berlin.
