The other day I came across an article in the newspaper about George Soros, the well-known self-made investment guru who runs the Quantum Funds and Soros Foundation. His name became very well known when Dr. Mahathir Mohamad, Prime Minister of Malaysia, criticized him for the reckless money games he had played in Asian and emerging nations. What interested me most was not Mr. Soros's battles in the financial market, but his criticism of Long Term Capital Management (LTCM), also known as "hedge funds," which recently suffered substantial losses in their investments in Russia. To paraphrase Mr. Soros, the two Nobel Prize winners in Economics, who invented the financial derivatives and work for LTCM, are the source of the problem. The market never works as those scholars imagine.

This story took me back to my university freshman social science class. On the first day of class, the professor posed this question, "Can social science be a science like physics or other natural sciences?" He then gave us an example to make his point. "Suppose you run a restaurant and have a customer. You explain the menu of the day to this customer. Today we have Sukiyaki, Tempura, and Shabushabu. They are all the same price." The customer says, "I'll have the Tempura." The waiter acknowledges the order and goes back to the kitchen, but comes back a few minutes later and says to the customer, "I forgot to tell you we also have Teppan Yaki as well." Then the customer says, "Oh in that case I've changed my mind. I'll have Sukiyaki."

The professor looked at us and said, "How can we explain his behavior? Do you see any scientific analysis possible in this situation? This is what social science deals with in some cases." At that time, my interests lay in physics and math, and I didn't think this subject was my cup of tea. And I was right; social science has continued to be a mystery to me ever since.

Social science is not a "hard" science like physics. It is based on many non-quantitative variables: culture, politics, human nature. Yet so much depends on it - sometimes even life and death. I sympathize with Dr. Mahathir. Mr. Soros's behavior appears to be no different from that of LTCM. The reality is that in a market economy, the "winner of the moment" can sway opinion with his words, until his reputation is marred by his losses. Surviving in this free market economy may be more of an art than a science. Regardless, perhaps if we view the free market as we view art, recognizing the subtle nuances and the interplay of colors and light, we may not be as surprised by the market's behavior, as we would be if we were to view it with a cold, hard scientific eye.

For us to survive, we have to figure out what will happen next in a given situation, especially in the so-called "free market economy," no matter how difficult it may be.

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