In the snobbish left-wing milieu into which cruel fate has cast me, the name George Soros provokes faint smiles or arched eyebrows. How could a financier who has made billions claim to follow a philosophic system? In the bare-walled, strip-lit cafes of Clerkenwell, proper understanding of Popper, Bertrand Russell, Marx and other Sorosian ports of call seems possible only for those who are financially challenged. Soros has given away a bigger slice of his wealth than Andrew Carnegie or John D Rockefeller. The books that appear under these philanthropists' names claim no more than that they were simple fellows who, through a combination of personal fortitude and the example of pious parents, were fortunate enough to rise and now wish to give back something to humanity - whereas Soros explains his giving as the result of correctly distinguishing between expectation and value.

Perhaps most surprising, Soros's new book, The Crisis of Global Capitalism, is a critique of the capitalism which has made him so immensely rich. As a book, it makes for strange reading. Sometimes we hear the voice of a smug and self-satisfied man, as when Soros discusses his early Swedish investments; sometimes the language of the book is modest and perplexed, as when the author discusses his recent financial disasters in Russia. In the first, philosophical sections, passages of depth and insight co-mingle with the most banal cliches. In the second half, detailed and trenchant analyses of the current Asian crisis are rounded off by what seem to be notes for after-dinner speeches on the role of the United Nations.

However, the different Soros voices are a logical outcome of the philosophy he espouses. His philosophy emphasises self-criticism and the willingness to entertain multiple points of view, and more largely he focuses on the disequilibrium and instability of social life. Soros writes as he thinks. After two readings I came indeed to admire the polyphony in this book - someone so fully engaged in the world could not sing a simple tune - but have also come to believe that Soros's philosophic liberalism disables him from making a truly radical critique of modern capitalism.

The core of Soros's philosophy is what he calls "reflexivity". In contrast to Bertrand Russell, he says: "I am setting logical positivism on its head. Far from being meaningless, I claim that statements whose truth-value is indeterminate are even more significant than statements whose truth is known." Reflexivity is the process of focusing on complex, messy situations, refashioning one's own ideas to account for the ambiguity, and then acting on those reflections. What gives this advice its grit is Soros's insistence that instability and disequilibrium rule the real world; the machinery of experience always misfires.

Soros thus takes aim at those economists who believe that, in the end, supply and demand tend to balance out; this is an academic illusion. Similarly, in politics one might be tempted to think that there are fixed rules of conduct or government structure - another and more repressive illusion. The search for certainty is a kind of mental cowardice, an avoidance of reality.

Wasn't this, your mortgage and Visa-addled brain dimly recalls from school, just what Karl Popper said, in asserting the mental virtue of falsifying clear hypotheses and the social virtue of combating fixed Platonic ideals of right conduct? Popper taught Soros at the London School of Economics where the young Hungarian refugee was a student after the second world war; Soros's intelligence and his modesty are most winningly on display in relation to his teacher, whom he has moved beyond. For instance, in the brilliant sections of this book on boom-and-bust cycles, Soros shows how the stripping away of one conviction often begets embrace of the opposite extreme, as in the lurch from bullish euphoria to bearish despond in stock markets. More generally, Popperian exposes can generate the hunger for new certainties or, as our postmodern friends say, every demystification creates a new mystification.

More tellingly, Soros has moved beyond what he calls the "binarism" of Popper's political views, the contrast of open and closed societies. Soros's experience of Russian affairs after the fall of the communist state seems to have altered his thinking. From the closed conditions of Soviet dictatorship, the country has swung to the opposite extreme of rudderless anarchy; eclipsed in the middle is the open society that Soros cherishes, in which people could think productively about the uncertainties they face and cope collectively.

That same fate, with due modifications, Soros fears for Clerkenwell. We know too well that sudden flights of capital, a ceaseless exportation or extinction of jobs, the merging and dismantling of companies which mark today's capitalism, are things to which no nation is immune. Soros has a special take on this familiar litany. He is interested in the extreme fashion today in which "transactions" have replaced "relationships", both in doing business and in conducting society. The contrast is part of his own biography.

"In the City of London in the 1950s," he writes, "it was almost impossible to transact any business without having a prior relationship. It was not a question of what you knew but whom you knew." And so the Hungarian refugee migrated a second time in the mid-1950s to New York, looking for a milieu in which the immediate transaction rather than the long-term relationship ruled. A lifetime of such transactions have made this outsider titanically rich. But now he has come to believe that, both as theory and in practice, the reign of transactions over relationships threatens to impoverish both economy and society.

In the economy, the reign of self-contained, instant transactions deepens the threats of instability. Via computerised trading programs or simple human panic, meltdowns in small economies like Thailand (or indeed Russia) can spread virus-like without restraint. Only when chaos threatens the centre, as in the disaster which recently faced the misleadingly named Long-Term Capital Management, will the firms that need sustained business relationships club together to effect a rescue. In society, Soros observes, the reign of short-term transactions owes no allegiance to national needs; it dissolves commitment to organisations; an endless experience of disconnected deals and jobs is a mindless force in the lives of individuals. "As an anonymous participant in financial markets," Soros says, "I never had to weigh the social consequences of my actions." You can work on a relationship to make it more open, mutual or just; the reign of transactions short-circuits the open society.

This critique is cogently written, and Soros seems alive to the irony of his writing it. One searches in vain through the biographies John D Rockefeller Sr commissioned for the least hint of guilt, pious and philanthropic as the old monopolist was. Andrew Carnegie, though haunted by a sense of remorse over various shoddy business practices, believed his Creator would forgive if only Andrew gave. Soros falls into neither of these categories. His philanthropies, which range from protecting Russian science to challenging the punitive drug regime of the United States, are too various to be explained as mere expiation. He observes that if he had not pulled off the transactions that abruptly beggared the Bank of England a few years ago, many others were lined up behind him only too willing to take his place. Still, he is clear-sighted enough to see that the regime in which he has prospered now diminishes the lives of less powerful people. The philosopher in him cannot let matters rest here. Somehow he has to reconcile what he thinks with how he has lived, to show how an open society might tame rather than suffer in the hands of global capitalism - and here he stumbles.

The philosopher in Soros wants to draw a distinction between expectations and fundamental values, the former self-serving calculations, the latter more communal beliefs in family, civility and responsibility. Religion once promoted fundamental values and curbed self-serving expectations; now this task falls to the open society. But how? Precisely because it is self-challenging and multi-voiced - in the open society there is an "absence of an objective criterion" for curbing the rule of transactions, no absolute standard to say, for instance, you cannot set up a megastore in this town if your megastore is likely to bankrupt small, high-street businesses. Soros admits this: "I can argue that the promotion of the profit motive into an ethical principle is an aberration but I cannot set myself up as the ultimate arbiter who adjudicates in the name of open society." Winningly modest, in accord with his reflexive anti-essentialism, but empty of concrete political content.

Soros's open society is a subtler, Europeanised form of American liberalism and suffers the same defects as its New World parent, with this emphasis on process at the expense of content. In principle, reflexively testing the principles in which you believe need not weaken your commitment to them. In practice, however, the history of modern liberalism is a story in which self-questioning begets impotence. Governed by its fear of absolutes, liberalism has proposed at most that the powerful might be restrained by the process of democratic debate. But Soros's own analysis of transactions argues against that happening: in our brave new world there is no sustained relationship between the economic rulers and the ruled, the rulers are too busy, otherwise engaged than in the public realm.

So Soros doesn't have the answer - but then, who does? The public, if it notices at all, treats socialists like myself as zoological specimens; my cafe mates, old Labour in designer spectacles, are fighting a Mammon who retired a generation ago. Soros helped create the new Mammon; perhaps it is enough that in this unusual, thoughtful and informative book he has, like Dr Frankenstein, turned upon his own creation.

Richard Sennett's most recent book, "The Corrosion of Character", is published by W W Norton (£14.95)