Raghuram Rajan’s new book: The Third Pillar: How Markets and State Leave the Community Behind

The book, The Third Pillar: How Markets and State Leave the Community Behind, written by former Reserve Bank of India (RBI) governor Raghuram G Rajan is based on his paper with Luigi Zingales–Saving Capitalism from Capitalists.

As the title suggests, this book talks about the third pillar which is indeed not given much importance in the global economic discourse, i.e. community. The larger issue Rajan is trying to discuss is the exclusion of community from the market. It seems that he is having some hesitation in using the term ‘exclusion’ which perhaps he feels is political.

A critical focus of Rajan’s book is populist nationalism. According to him, “populist nationalism will undermine the liberal market democratic system that brought developed countries the prosperity they enjoy”. For Rajan, populist nationalism is an impediment to market freedom and hence limits the economic prosperity of developing countries. He defines the market as an agent to social and economic change and says all other agents are irrelevant.

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