Yes, just as economics in its physics-envy has ignored reflexivity, so does reflexivity ignore the need for an unshakeable moral compass, as you point out. Soros' analysis is definitely a step up from economic dogma, but nevertheless it is also philosophically flawed: we cannot begin to talk about a moral compass, if we believe morality is a social construct that is always open to revision. For such a belief is truly one of the bitter logical out-workings of reflexivity, which itself is very much akin to evolutionary theory. That, to me, is the unnoticed tragedy of his analysis.
The Volker example is a fair point: yes, it took moral courage to do raise rates high enough to break inflation, incurring major pain in the short run for longer term stability. It does feel as though we have lost even that modicum of decency however, as the political class is ever beholden to their interest groups and without a will to do what's right, regardless. Soros talks about the need for regulators to intervene against the dangers of market fundamentalism. He is right in a sense but ultimately finally wrong in that regulators themselves are operating under uncertainty (which he recognizes to his credit) and therefore also prone to a fundamentalism of their own, driven by a relentless liberal bias, the other poison (something he might not be so willing to admit). We can expect the 'regulators' to eventually ban the purchase of gold and silver, and to make it illegal as a store of money when the wheels really start to come off. They did it in 18th century France and they will do it again here.
Interestingly, it was the response to Volker's act that shows the weakening in the already weak moral fabric of the regulators. It is fundamentally immoral to spend more than you take in because it eventually leads to default and tremendous pain for all. That should be obvious. But it isn't now is it? Greenspan and Bernanke took over and failed to courageously stand against the dangers of cheap credit, reflexively glorying in their short sighted results and reinforcing each other's results. But it's all a mirage. As a result, we are now in the mother of all bubbles, a sovereign debt bubble. I'm thinking Japan will be the catalyst that unravels our own, but the timing of this is hard to pinpoint. Abe's failure might be the spark...
The danger is not in preventing the excesses of capitalistic greed, that's indeed morally good. Ironically, the danger is in such a success by regulators reflexively hampering awareness of their own fallibility. Which is why I said earlier that top down political leadership (without a spiritual/theological and therefore a fixed moral referent ), cannot mix with fallibility. This stance of humility driving policy/leadership is ultimately a spiritual stance...it can be grounded in nothing else if it is to have any lasting value.
Technology can only be a tool toward moral outcomes, it cannot in and of itself, promote them. As an example, think of Google's motto "Don't be evil...". And then they turn around and promote Google Glass, to the horror of everyone hanging on to a thread of what's left of privacy... Capitalism left unfettered goes awry as does a Command driven economy, and we have veered from one to the other, going from the frying pan to the fire. There ought to have been a checks and balances approach with the American people countering and correcting the mistakes of their leaders through the vote. But instead, there's now a two way reinforcing relationship between voters and politicians: the votes are a function of entitlements granted, and the entitlements granted are a function of the votes. And this regardless of morality. Down the drain we go.
Soros' thinking is a step forward, but it ironically fails to recognize that the only way to break the curse of a self referential system is by realizing that the answer lies Outside of ourselves, in the revelation of the One who is Greater than ourselves. No amount of education and talks can change that if this true fallibility is missing from our self examination.
