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