In a book just published in the United States - and due to appear in Britain tomorrow - international currency regulation is exactly what Mr Soros advocates. The danger, as he sees it, is nothing less than the collapse of "global capitalism". And if he gets his way, no one whose business is money will again be able to do to a national economy what he did to Britain six years ago.
The reasons for his change of heart can be summed up in one word: Asia. In the space of a few weeks from July 1997, a generation's worth of economic progress was lost - just like that - as a result of a flight of foreign capital that threatened to bankrupt one Asian "miracle" economy after another. The sequel to Asia was Russia, which created near-panic on world markets when it defaulted on its government treasury bonds in August, and the sequel to Russia, it is feared, is Latin America.
Moreover, the global effects of the Asian crisis are by no means exhausted. This week's announcement by Boeing of 48,000 job losses - 20 per cent of the workforce - is the clearest sign yet that the ripples from the Asian crisis are now lapping at America's shores.
Mr Soros's gloomy prognosis was further supported last week by the World Bank's annual survey, which warned that the current slowdown could "accelerate into a world recession". Developing countries, it said, were facing their worst slowdown for 30 years.
Mr Soros says that the world, and the US as sole remaining superpower and the country so far least affected by the spreading crisis, has a choice, to regulate global financial markets internationally or leave it to each individual state to protect its own interests "as best it can". His choice is clear: "The latter course will surely lead to the breakdown of the gigantic circulatory system."
His chosen remedy is a combination of urgent action to prevent further damage, and the introduction of longer-term regulation. The urgent priority, he says, is to "arrest the reverse flow of capital" from the afflicted countries. In Asia, he says, the situation is so bad a way has to be found to "pump liquidity" back in.
In print, Mr Soros's "conversion" dates from last year, when - he says - he saw the Asian crisis coming. But his views have gathered force and acceptance, as evidence has mounted that capital movements, as they currently occur, are a recipe for instability and even collapse.
Mr Soros denies he was a player in the Asian crisis. His celebrity following his British dealings, he says, transformed him from an anonymous speculator to someone who could influence markets in advance. This, he says, has clipped his wings as a currency speculator. Aside from a little gentle speculation in the Thai baht early on, he kept out of Asia, and he rejects utterly the accusations from the Malaysian leader, Mahathir Mohammad, that he was the chief villain in that country's near-collapse - but he delights in his role as Mr Mahathir's Public Enemy Number One: "He really invented me. He needed me for political purposes."
While easy to dismiss as a sideshow, his duel with Mr Mahathir provides Mr Soros with an example of the nationalistic approach to capital and currency control, closely followed by political repression, that he regards as the biggest threat to the international financial system. Mr Soros concedes that what Mr Mahathir has done has worked - in its own terms - in stabilising Malaysia's economy. In effectively shutting his country off and taking it out of international markets, "he's doing the right thing for himself and can bail out his cronies".
But Mr Soros says locking out the world will not work for Malaysia as a whole or any other country. Instead, he proposes an international body to funnel outside financial assistance to countries in trouble. Such a body, an International Credit Insurance Corporation, would support the flow of money into emerging economies. This, in turn, would reduce the cost of borrowing to these countries. Crucially, it would also "provide a reward for belonging to the global capitalist system and discourage defections along the Malaysian lines".
He also proposes informal arrangements agreed among political leaders and central bankers, but not announced in precise terms, to keep currencies within target zones. He shies away from either fixed exchange rates that would be tantamount to a single "world" currency and impinge on national sovereignty, or from the current total absence of exchange controls.
"An informal arrangement without announcing targets is probably the best way to co-operate to try to manage policy decisions to keep a balance," he told a Washington symposium last week.
Details of proposals to rein in international capital flows differ. A European version has been offered by the new German finance minister, Oskar Lafontaine, who wants target zones for the variation of exchange rates. A leading US economist, Fred Bergsten, director of the Washington- based Institute of International Economics, has reached a similar conclusion. He says members of the Group of Seven should set exchange rate targets among themselves and be prepared to "alter their monetary policies to defend the ranges". He also advocates an "intermediate currency regime" for emerging market economies, modelled on controls already exerted nationally by Colombia, Chile and some other countries. This bases the exchange rate on a link to a trade-weighted basket of G7 countries, a less rigid peg than the Thai currency had to the US dollar.
It is the changing attitude of the US government to international currency regulation, however, that is most striking. Until a week or so ago the orthodox views of the Federal Reserve Bank, the US Treasury, and the International Monetary Fund held sway. Currency regulation not only depressed growth, but also did not work.
The same view has been held by the heads of the European Central Bank (ECB) and the German Bundesbank. The ECB and the Bundesbank have argued that target zones for exchange rates would be especially difficult to enforce without direct intervention in national economies. They also have warned that a country could "fall out" of a currency zone, as Britain did in 1992.
Some of those who object on practical grounds also share some philosophical objections to Mr Soros's remedies. At the same Washington symposium, the thinker and historian, Francis Fukuyama, questioned whether Mr Soros's pessimism about global capitalism was justified. He doubted that capitalism itself - rather than implemented capitalism - risked collapse, and so questioned whether drastic correction was warranted.
A similar view, reflecting very different interests, has been expressed in the past month by Michel Camdessus, the managing director of the IMF, which that has taken so much flak over the Asian crisis and its aftermath. He not only rejects anything more than greater "transparency" on the part of recipient countries and small adjustments in the current methods of helping countries in economic crisis but insists that, at least in South Korea and Thailand, IMF medicine is working. In the Washington Post, he wrote that interest rates had now been sharply reduced, foreign exchange reserves had been rebuilt, exchange rates had strengthened and current accounts were in surplus.
Mr Soros, though, has friends in high places - very high places. Among those who take his views seriously is said to be none other than Bill Clinton, whose pronouncements on the economy increasingly stress the need to counter the inevitable impact of the Asian crisis on the US and consider new forms of international financial regulation. The Treasury Secretary, Robert Rubin, who was until recently aligned with Alan Greenspan's view, is said now to be drawing closer to that of Mr Clinton.
Chief among Mr Soros's complaints is his view that the power of international markets and financiers has outstripped the power of political leaders and is threatening democracy.Reuse content