Introduction

We are at a crucial decision point in history. The political landscape as we have known it since the end of the Second World War is undergoing a radical transformation. Communist dogma has lost its sway over people's minds and the Soviet empire, which had been based on that dogma, is collapsing. A process that has been gathering momentum over decades has accelerated to a point where it qualifies as a revolution. Events are happening so fast that it is hard to keep up with them. East Germany is transformed from one day to the other, followed by Bulgaria and Czechoslovakia in quick succession. The demise of the Communist system in Eastern Europe has become an accomplished fact in the space of not much more than a month. What is now at stake is the fate of the Soviet Union' itself. And that, in turn, will help to shape the political future of the whole world.

There 'are two possible outcomes. Either the Soviet Union will become integrated into the free world or it will continue to disintegrate. The events of the next few months will, in my opinion, have a decisive influence on the ultimate outcome. In any case, the pace of events cannot continue to accelerate much further, so that much more is likely to happen in the next few months than in the years and even decades to come.

We have seen similar historical decision points in the past. The year 1945 was one; 1919 was another. But the closest parallel is with 1848, because that was the last time a revolutionary fervor swept from country to country and the raw manifestation of the people's will had a major impact on the nature of government. There is another similarity with I848: the people's will manifests itself in the form of nationalism. Yet there is a common goal which unites the various manifestations: the desire to get rid of an oppressive system of government. This gives national movements a universal character: there is a sense of brotherhood that connects them.

The destruction of the old system is more or less assured. What is at stake is the shape of the new one. Will it be possible to replace the old structure with new ones so that people of various nationalities can live side by side and among each other in peace, or will the process of disintegration continue until it deteriorates into civil war? Unfortunately, the line of least resistance leads to the latter alternative. It takes time and energy to construct a new system and both are in short supply. It is my firm conviction that only the deus ex machina of Western assistance can tip the scales in favor of a constructive solution. That is the conviction that has guided me in my actions and that is the case I want to argue here.

My own involvement in the historical process I describe has grown with the process itself. I started out by trying to create small cracks in the monolithic structure which goes under the name of Communism in the belief that in a rigid structure even a small crack can have a devastating effect. As the cracks grew, so did my efforts until they came to take up most of my time and energy.

Until recently, my involvement prevented me from voicing my views publicly because there was a conflict between my roles as participant and as observer. The conflict was both external and internal. Externally, I was constrained by the fact that the dissolution of Communist dogma was proceeding at a different pace in different countries and views that could have been expressed in one country would have caused difficulties in another. That constraint was largely removed when my foundation in China, the Fund for the Opening and Reform of China, was wound up after the Tiananmen Square massacre.

The internal conflict was more enduring. As a participant I felt genuinely inspired and optimistic. There was so much to do and I was so effective in what I was doing. However, as an observer I could not help but become increasingly pessimistic because perestroika was producing no tangible benefits. I was afraid that if I were to give voice to my pessimism I might endanger my effectiveness as a participant. I preferred to keep my views as an observer to myself.

The conflict was resolved by the revolution in East Germany. As an observer, it became clear to me that events were heading for a showdown and, unless there was a radical shift in Western policy towards the Soviet Union, developments within the Soviet Union would take a nasty turn within the foreseeable future. I could pinpoint the cause of the impending trouble with considerable precision: it would be in the Baltics and it would revolve around the issue of a separate currency. As a participant it became equally clear to me that anything I could do to influence Western policy would far outweigh in importance the activities connected with my foundations. Thus the two points of view coalesced and I found it not only possible but also necessary to state my views. Hence my decision to write this book.

It has to be an instant book, because there is no time to write it. This holds true in both senses. Events are moving so fast that the time taken in writing the book may render it out of date. At the same time I, personally, am so involved both in running my foundations - in Hungary, Poland and the Soviet Union (with autonomous branches in the Ukraine, Estonia and Lithuania), not to mention Czechoslovakia and Bulgaria - and in trying to influence Western policy that I cannot take time out for writing a book. I must write and act at the same time.

The task is not as impossible as it may seem. Writing is action, whether we admit it or not, and it may be more effective to acknowledge that I am both observer and participant than to try and preserve an artificial distinction between the two roles.

I have been preoccupied with the relationship between observer and participant all my adult life and I have explored it in different contexts. My view of that relationship is the basis of my philosophy and it is that philosophy which has guided me, first as a speculator in financial markets and, more recently, as a participant in history.

My attempts at formulating my philosophy have not been crowned by success. As a young man I tried to state my views in a short book entitled The Burden of Consciousness but, by the time I had completed it, I found it wanting and so it was not published. Then came a series of attempts at reformulation, which ended only when one day I could not make head or tail of what I had written the day before. I gave up abstract philosophy and devoted myself to making money. But the urge to try and formulate my ideas did not disappear altogether and I kept on returning to it in various ways at various times. Finally I managed to break through the tangled web of abstractions by using my experiences as a financial speculator. My book, The Alchemy of Finance, allowed me to state my philosophy in a context that assured me of an audience. Author and audience were working at cross purposes: I was interested in the relationship between the participants' thinking and the situation in which they participate, while my readership was interested in the secret of my financial success. Nevertheless, the book served its purpose. It allowed me to break out of my intellectual isolation. I came in touch with a whole new trend in scientific thought, variously described as the theory of complex systems, self-organizing evolutionary systems and chaos theory, which I found much more congenial to my way of thinking than traditional philosophy.

I am now ready to have another go at trying to state my philosophy in the context of the present historical situation. The philosophy is needed to explain both my actions as a participant and my views as an observer. But my primary interest is in the historical situation itself. Philosophy will have to take second place. That is rather fortunate, both for me and for my readers. I cannot afford to get bogged down in abstractions. Nevertheless, philosophy will play a crucial role in my argument. It will be the basis not only of my explanations and predictions but also of the policy I shall advocate.

Interestingly, the theoretical framework I need to put the present historical situation into perspective is the same as the one I proposed in The Burden of Consciousness. There, I tried to contrast two social systems - open and closed societies. I argued that each social system has a peculiar mode of thinking associated with it - the critical mode of thinking with open society, and the traditional or dogmatic mode with closed society. Each social system leaves something to be desired something that can be found only in the opposite system. Thus, there is a genuine choice to be made between two principles of social organization. We are at a very special moment in history, a time when the choice actually presents itself. How we respond will have far-reaching consequences for the future of mankind.

24 November I989