The Third Pillar

Mostly, economists focus on the relationship between markets and the state. The social issues are often overlooked by them. The title of this book refers to the community that we live in. According to Rajan, ignoring the social issues can be dangerous as all markets are intricately influenced by human relations, values, and norms. In fact, throughout history, the technological phase shifts have drastically changed the old norms which led to violent backlashes and paved the way for populism. Even though an equilibrium has been reached, but it can get messy and ugly if not handled properly. Rajan argues that it has been done wrong, and as the markets and the state scale up, economic and political forces are being concentrated on the center. As a result, the peripheral, yet crucial, social structures are being destructed. Rajan advocates that local communities should be empowered to deflate unrest and despair. Thus, he emphasises on delegating the decision-making power to the grassroots in our democracy to avoid conflict and ultimate destruction.