The Age of Fallibility | George Soros

Summary of: The Age of Fallibility: Consequences of the War on Terror
By: George Soros

The Radical Fallibility of Knowledge

As people acquire knowledge, they rely on existing information to explain new discoveries, even if that knowledge may no longer apply, leading to distorted explanations called radical fallibility. This issue affects not only science and history but also current events, such as the misconceptions shaping the U.S.’s war on terrorism and the world’s perception of it. Societies that demand a singular worldview are closed, while those based on freedom and fallibility are open. While the U.S. is an open society, it has yet to recognize its own fallibility, as demonstrated by the manipulation of information after September 11, 2001. The book highlights the importance of acknowledging fallibility in fostering an open and free society.

Introduction

In ‘The Age of Fallibility: Consequences of the War on Terror,’ George Soros explores the complexities of human knowledge, perception, and reality that influence decision-making and society building. By investigating the concept of reflexivity, which highlights the interaction between our cognitive and participating functions, he dismantles the traditional correspondence theory of truth. Through vivid examples, Soros presents the inescapable limitations in human decision-making, the flaws in market rationality, and the impacts of radical fallibility on sociopolitical situations.

Our Imperfect Understanding

Our understanding of reality is imperfect, and our decisions often have unintended consequences. We rely on our thoughts and perceptions to shape our version of reality, and this affects how we build societies and relationships. Science is making strides in uncovering how we acquire knowledge, but the mental interaction between ideas and facts remains a mystery. Our pursuit of knowledge and attempt to shape reality involve cognitive and participating functions that interact but do not co-operate, producing reflexivity. Reflexivity can lead to an exaggerated or mistaken worldview since it is not solely based on objective knowledge.

Reflexivity and the Flaws in Economic Theory

The traditional economic theory suggests that markets are rational and seek equilibrium based on perfect knowledge. However, reflexivity challenges this view by stating that determining an equilibrium price is impossible due to the lack of a set proportion or connection between values and prices. This produces so-called “far-from-equilibrium conditions” that generate financial boom-and-bust cycles. The connection between reflexivity and the financial markets also produces ‘short circuits’ that are relatively easy to identify. While traditional economic theory still holds its ground, multiple points of equilibrium are now recognized due to the theoretical flaw in perfect knowledge. Today’s real-estate market is poised in a reflexive situation, due to the creation of a speculative bubble based on the dysfunction between the actual and perceived values of home prices. Identification of disconnects in reflexivity in society is more difficult because logical short circuits are common, unlike in the financial markets.

Reflexivity and Rational Thought

This book explores the limitations of rational thought in explaining the world and presents reflexivity as a better alternative. The author highlights how far-from-equilibrium conditions occur in both financial markets and social and political situations. He also underscores the distinction between reason and emotions, mind and brain, and thinking and reality. The book argues that modern society still operates on the premise of rationalism despite its fallibility, and that reflexivity can bridge the gap between perception and reality. The author draws on examples from history to illustrate how rational thought can fail even in well-planned programs, with unintended and often devastating consequences. The book also touches on the dangers of ideology-based truth, as seen in Nazi and Soviet versions of “truth,” which refuted any validation without violence. The pain of acknowledging our imperfections is necessary, as reflexivity recognizes that a discrepancy exists between our perception and reality.

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