Soros and the next big idea

It isn’t just economies that have been in trouble over the past couple of years; the profession of economics has also been going through a rough patch. Critics argue that, in the wake of the financial crisis, some of the favourite ideas of mainstream economists in recent decades are now looking a little threadbare.

Few have had more to say on the subject than George Soros, the billionaire investor and philanthropist. But rather than just complaining, Soros is trying to do something about it. He’s spent $50 million to establish The Institute for New Economic Thinking, which aims “to confront the flawed mechanisms in our economic and financial infrastructure and develop new paradigms in economic understanding.”

The institute has assembled an impressive advisory board of 26 men (the absence of women has not gone unnoticed), including five Nobel laureates (Amartya Sen and Joseph Stiglitz are among them), leading academics such as Harvard’s Kenneth Rogoff, the former IMF chief economist and blogger Simon Johnson, and the former BIS economist William White, who now chairs a senior economics committee at the OECD.

The institute’s first conference starts today (Thursday, 8 April) at King’s College, Cambridge – John Maynard Keynes’ alma mater – under the title “The Economic Crisis and the Crisis in Economics”.

The economics commentator Anatole Kaletsky, another of the institute’s advisors, describes the event as an opportunity “to reopen many of the debates closed down by unrealistic theories”.

This is not the first time Soros has challenged economic orthodoxies. The author of a number of books, he’s long questioned approaches like the efficient markets and rational expectation hypotheses, which have provided the intellectual underpinning for market liberalisation in recent decades. Instead, Soros promotes his own theory – “reflexivity” – that he believes better describes the complex interaction between realities and perceptions in markets.

Soros introduces some of his ideas in this lecture series, and they’re summarised in this book review by John Cassidy.

Whether Soros’s theories will ever become mainstream economic thinking remains to be seen. But his commitment to fresh thinking – and deep pockets – may well ensure that The Institute for New Economic Thinking is a player in the search for economics’ next big idea.

Useful links

OECD Insights: From Crisis to Recovery

Brian Keeley

6 comments to “Soros and the next big idea”

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  1. Brian Czech - 08/04/2010 Reply

    In political economy, the “next big idea” can take a long time to manifest in public policy and consumer preferences. I think the next big idea has been brewing for decades, at least since Herman Daly’s path-breaking work in steady state economics. We know economic growth is not sustainable; nor is degrowth. What is left?

    Sign the CASSE position and help get the “next” big idea into the mind and body politic:

  2. Brandon - 08/04/2010 Reply

    I have a question: How is the Institute for New Economic Thinking supposed to create new economic ideas when its advisory board is full of individuals that established many of the current economic ideas? Moreover, not only do they not have any women, they don’t have anyone under 60 on the board.

    Maybe it’s just me, but I think that if you want to reformulate economic theory, you should engage and support younger economists – e.g., perhaps fund thinkers/economists who find it difficult to publish new theories/ideas in top journals. Isn’t the younger generation going to do the heavy lifting anyway?

  3. Rick Casey - 08/04/2010 Reply

    I second Brian Czech’s mention of Heman Daly’s work in steady state economics, now generally referred as ecological economics, which has been slowing developing outside the economics mainstream for the past three decades. For an excellent introduction to the field, see the online text: Introduction to Ecological Economics at

    The prime website for more information on steady state economics is Center for the Advancement of the Steady State Economy,

    However, there are other weighty authors who have much to contribute to the new direction which economics needs to take, and I highly recommend the works by David Korten. In his detailed and well-researched works, stretching back to 1996, Korten meticulously details how the history of today’s multi-national corporation descends directly from the age of the colonial Empires, who more or less legalized piracy, and every form of physical violence and economic exploitation, against their colonies and their enemies. We are still much living with these consequences; a corporate sociopath like Enron was a prime example. (Korten’s work is available at

    Next, consider the works by Eileen Risler, who also inspired Korten. She similarly shows with scholarly authority how the systematic cultural repression of the feminine, both within the male stereotype and against the female sex, has led to economic structures that have institutionalized violence against the female and the weak by its devotion to “competition” and maximizing growth at all costs. Dr Risler’s most recent book, The Real Wealth of Nations, is available at
    She makes it terrifying clear how we as a society have arrived at our current global situation where never-ending war has become the norm, and the US will calmly authorize the spending of billions per month on new weapon systems and global military campaigns, yet has millions of its citizens without healthcare, or wandering the streets homeless.

    Lastly, I would comment that I personally no longer believe in anything called “the business cycle.” To accept that recessions, much less depressions, are “necessary” or “stimulating” is utterly false, cynical and amounts to living in denial — denial of the truth that the source of so much of our collective economic misery is due to the psychotic greed and egotism that is so emblematic of Wall Street. If we look into the history of finance, as Reinhart and Roghoff recently did in “This Time Is Different: Eight Centuries of Financial Folly,” it should become common knowledge that every recession and every depression, outside of war or a natural disaster, has been cause speculative greed. The 2008 financial meltdown is perhaps the most perfect example of this we have ever witnessed.

    It is high time people started to rise up and demand this insane approach to economic and monetary policy that serves Wall Street, and create the world we all want, centered around Main Street. It is why I have returned to teaching economics at my local community college, and have become involved in the grassroots movement to abolish the absurd legal notion that corporations deserve to have “human rights.” You can find out more about this at

    Very Sincerely,
    Rick Casey

    • Baye Kambui - 09/04/2010 Reply

      I agree, Rick. Greed and bad policies create many of these “business cycles.” The dot-com bust is another example. Investment banks — with straight faces — drummed up demand for companies with a questionable profit outlook. And we all know what happens when demand for capital out-paces the supply of capital with solid fundamentals…

      As for Soros’ new initiative, I am willing to hold my judgment until I read some of the organization’s output…

  4. Jeff Biset - 10/04/2010 Reply

    Soros: is this the guy that almost invented the hedge funds, speculating since years on currencies, putting national economies in critical situations, making billions (literally) out of the subprimes crisis, and trying to buy himself a reputation with sprinkling money on Moveon. org, Obama and now a so called institute for new economy thinkings…. ?
    probably a form of irony

  5. Robert Searle - 15/04/2010 Reply

    The next big idea is probably the development of TRANSFINANCIAL ECONOMICS…………………..See the p2pfoundation entry

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