SYNOPSIS: The strange case of George Soros, a speculator who hates speculation. Ponders his case for restriction, arguing that overall benefits are worth some inefficency.

Recently I found myself in not one but two meetings that also included George Soros, and I was inspired to furious intellectual effort. You see, I'm convinced it's possible to construct a terrific palindrome centering on the famous investor's reversible last name. Unfortunately, the best I've come up with so far is an imaginary conversation wherein I ask the great man what to make of the gyrations of Japan's exchange rate, and he tells me it means we must introduce a unified global currency: "Yen omen, O Soros?"; "One money!"

Of course, that's not what Soros is really saying. His actual message--expounded in a series of articles and speeches over the past two years, and soon to be restated in his forthcoming book, The Crisis of Global Capitalism--might be described as "Stop me before I speculate again!" And considering the source--a man whose funds have attacked currencies around the world, from the British pound to the Hong Kong dollar--it's a message that needs to be taken seriously.

I'm not necessarily suggesting you read Soros in the original. It's not that he writes like a businessman; it's that he writes like a Central European intellectual, which is far worse. Someone should tell him it doesn't help his case to dress up fairly simple ideas in pretentious philosophical language. In particular, many people have argued that financial markets tend toward boom-and-bust cycles, that investors tend to engage in herd behavior, and that financial systems are subject to self-justifying panics. But such observations are not enough for Soros: For him they must serve as illustrations of the general principle of "reflexivity," whichI take to mean that human perceptions both affect events and are themselves affected by them. Gosh, I never thought of that!

But if reading Soros isn't exactly a pleasure, he is nonetheless saying something important--namely, that the rules of the game under which he and others like him have prospered are dangerous for society as a whole. This is not what you'd expect to hear from a speculator, or for that matter anyone in the financial world. The typical view from Wall Street or London's City is that left to its own devices, the global capital market will always reward economic virtue and punish only vice. As one Wall Street Journal op-ed writer enthused, "Foreign-exchange markets are a continuing, minute-by-minute election in which everyone with wealth at stake, including residents of the country, gets to vote, an election in which the winners are those countries whose governments have the most pro-growth policies." Accordingly, if these days national economies seem to be falling like dominoes, it must be their own fault--or that of the IMF, which many conservatives see as having a demonic ability to wreak economic havoc with very little actual money. (Has anyone noticed just how small a player the IMF really is? That $18 billion U.S. contribution to the IMF, which has finally been agreed upon after countless Administration appeals and conservative denunciations, is about the same size as the short position that Soros single-handedly took against the British pound in 1992--and little more than half the position Soros' Quantum Fund, Julian Robertson's Tiger Fund, and a few others took against Hong Kong last August.) Soros, however, believes that financial markets are "inherently unstable," that left unregulated they inevitably produce recurrent crises. And he should know.

What would a defender of free capital markets say in response to Soros? True believers would doubtless be unshaken. Never mind who Soros is and what he's done, they would claim that people who worry about destabilizing speculation just don't understand how markets work. Others, however, would agree that financial markets are inherently unstable, but argue that this is a price worth paying, that the presumed huge returns from free markets outweigh the risks. And indeed that was the position I myself took a year and a half ago, when Soros and I staged a fundraising debate on global capitalism for the Council on Foreign Relations. (Yes, I was pro, he was anti.) But events since May 1997 have certainly reinforced his position, and led those of us who still believe in the extraordinary merits of free markets in goods, services, and long-term capital to search for ways to protect those merits from the destructive effects of destabilizing hot money flows.

Rather oddly, I can't quite figure out what Soros himself thinks we should do. In general, for a businessman his approach seems peculiarly abstract and philosophical: He seems far more concerned with denouncing laissez-faire ideology than with proposing workable ways to regulate markets without strangling them. (Maybe we need a super-IMF, big enough to take on the Soroi of this world. Or maybe, horrors, we actually need to control capital movements.) But if Soros doesn't have the answer, at least he asks the right question. Next time somebody tells you that the global capital market is our friend, that only economies that deserve it get punished, tell him to tell it to George Soros.