The Third Pillar
How Markets and the State Leave the Community Behind
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4.2 • 13 Ratings
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- $14.99
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- $14.99
Publisher Description
Shortlisted for the Financial Times/McKinsey Business Book of the Year Award
From one of the most important economic thinkers of our time, a brilliant and far-seeing analysis of the current populist backlash against globalization.
Raghuram Rajan, distinguished University of Chicago professor, former IMF chief economist, head of India's central bank, and author of the 2010 FT-Goldman-Sachs Book of the Year Fault Lines, has an unparalleled vantage point onto the social and economic consequences of globalization and their ultimate effect on our politics. In The Third Pillar he offers up a magnificent big-picture framework for understanding how these three forces--the state, markets, and our communities--interact, why things begin to break down, and how we can find our way back to a more secure and stable plane.
The "third pillar" of the title is the community we live in. Economists all too often understand their field as the relationship between markets and the state, and they leave squishy social issues for other people. That's not just myopic, Rajan argues; it's dangerous. All economics is actually socioeconomics - all markets are embedded in a web of human relations, values and norms. As he shows, throughout history, technological phase shifts have ripped the market out of those old webs and led to violent backlashes, and to what we now call populism. Eventually, a new equilibrium is reached, but it can be ugly and messy, especially if done wrong.
Right now, we're doing it wrong. As markets scale up, the state scales up with it, concentrating economic and political power in flourishing central hubs and leaving the periphery to decompose, figuratively and even literally. Instead, Rajan offers a way to rethink the relationship between the market and civil society and argues for a return to strengthening and empowering local communities as an antidote to growing despair and unrest. Rajan is not a doctrinaire conservative, so his ultimate argument that decision-making has to be devolved to the grass roots or our democracy will continue to wither, is sure to be provocative. But even setting aside its solutions, The Third Pillar is a masterpiece of explication, a book that will be a classic of its kind for its offering of a wise, authoritative and humane explanation of the forces that have wrought such a sea change in our lives.
PUBLISHERS WEEKLY
In this ambitious but flawed book, University of Chicago economist Rajan (I Do What I Do) rigorously argues the importance of local communities as one of the three pillars, along with the state and markets, supporting global economies. Rajan impressively builds the foundation for his view of society in a fleet history of economic development that tracks the development of mostly Western economies from the earliest prohibitions on usury to the development of the 20th-century Progressive movement. The historic survey and analysis are the strengths of Rajan's work. The book falters when presenting potential paths to reasserting communities' role as equal player alongside markets and the state, including a dramatic rethinking of educational systems and the decentralizing of governmental power. Rajan focuses on the benefits of change and does not seriously address the obstacles to implementing the changes he recommends. Though Rajan's writing can stray into the academic, it is at times pithy ("Democracy preserved market competition, and market competition preserved democracy"), and he makes complex economic principles more accessible in brief end-of-chapter summaries. Rajan's view of community makes sense, but the book undermines its arguments by failing to acknowledge that communities are not always willing to collectively act in their own best interest. This work may be imperfect, but it's insightful and thought-provoking.
