Raghuram Rajan
(2019), The Third Pillar, HarperCollins, New Delhi, pp. 436
The Third Pillar explores the neglected variable ‘community’ that economists
barely discuss in their analysis of market economy. The state-market is the bipolar
continuum within which all economic policies embed themselves. Leaving out the community is essentially
leaving out people. This omission has a human-centred cost because of the uncertainties
unleashed by automation, financial crises and climate change that characterize the
anthropocenic age that we live in. It seems that the explanatory models of
economics are complex; the policy prescriptions required to forestall
calamities dependent on large structures and institutions. People who are
caught in between are unable to secure quality university education, find
employment, access social security and settle in families of their own This
book examines the cause and consequence of this context, keeping the community,
at the heart of its analysis.
When a financial economist reviews the role and the
reality of the community, a lot of questions abound. How far can he go meaningfully
within the limitations of his discipline? What new idea does he bring that the
sociologists, anthropologists and historians have not given us? Rajan surprises
the readers on both counts: the breadth of his analysis of the variable ‘community’
in reference to state and markets and the depth of his enlarged vision for the community
in the near-future. To accomplish this creditable feat, he marshals evidence
from economic history as well as case studies of countries and cities.
Inclusive Localism
The book is divided into three parts. The first traces
the origin and rise of the three pillars- the modern state, the market economy
and the community. He describes the historical circumstances under which each
pillar rose with its particular characteristics and also addresses some lost
possibilities. The second part argues why an imbalance of the three pillars in
mid-twentieth century changed the equation of how we perceive them through
various models in social sciences. The ascent of the market has come about with
limited state capacity and unravelling community. Therefore, the problems of
the market such as recurring financial crises could scarcely be contained or
addressed by a depleted state and weakened community. The rise of populism and
the anti-competition rhetoric has been an attempt to retaliate against the
market’s logic of ups and downs that has resulted in widening economic and
social inequality. The third and final part of the book addresses the measures
to restore this imbalance. Rajan has proposed ‘inclusive localism’, a concept
by which communities can remain diverse and vibrant whilst having the power and
financial resources to improve their local institutions and keep the
neighbourhoods in good health.
This book marries the abstractness of theory with the concrete
implications of policy. It is one of those books that you will finish fast
because it is too important to miss. It is this contemporary relevance, the
authority of evidence and a delightfully fresh and non-pedantic voice that sees
you out of the last page. A winner through and through!
