"I am very concerned because it will lead to basically the breakdown of the global capitalist system," he said.
Coming from a pre-eminent global capitalist, his words are all the more striking because he advises new restraints on the movement of international cash.
He spoke as the annual meetings of the International Monetary Fund and the World Bank wrestled with a financial crisis that has wrecked Asia and Russia and now threatens Latin America.
Mr Soros, in his speech and in a book to be published next month, attacks free marketeers - or "market fundmentalists," as he calls them - for weakening the world financial system, impoverishing developing countries and threatening democracy itself.
Governments have botched their efforts to tackle the crisis. "The authorities have failed to control the situation," he said. "The G7 or the G whatever should have been shut into a room and hammered this out."
Mr Soros said that in the future, limits would have to be put on the global casino to prevent it from destabilising states and societies.
"Some restraints on capital movements would have been very useful to protect countries against the onslaught of the wrecking ball," he said.
"The free movement of capital, totally free flow, is not advisable."
Mr Soros is chairman of Soros Fund Management, a leading financier who speculated against the pound - and won handsomely - in 1992. But he has become increasingly convinced that pure capitalism is just as dangerous to the world as communism, and has become a leading advocate of an economic third way.
"We have been living with and basing ourselves on a false model of how financial markets operate," he said.
Markets are capable of tipping into instability so severe that it threatens the roots of democracy itself.
"It is market fundamentalism that has rendered the global capitalist system unsound and unsustainable," he writes in his book The Crisis of Global Capitalism, a section of which was released yesterday.
So great had financial instability become that "market fundamentalism is today a greater threat to open society than totalitarian ideology", said Mr Soros, who grew up under first Nazi, then Communist rule in Hungary.
"Market forces, if they are given complete authority even in the purely economic and financial arenas, will produce chaos and could ultimately lead to the downfall of the global democratic capitalist system."
The impact had been particularly hard on developing nations forced to follow the course set by western institutions and banks, he said.
"Conditions have tilted too far towards the countries at the centre of capitalist system to the detriment of countries at the periphery. These conditions are unsustainable."
The only way to recover from the present crisis was to organise flows of capital back into the developing countries, he argued, but so far the IMF and western governments had been unwilling to meet this challenge.
Clinton's summit call,
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