The Third Pillar: How Markets and the State Leave the Community Behind

The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram Rajan
The Third Pillar: How Markets and the State Leave the Community Behind

The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram Rajan


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Revised and updated

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.

Product Details

ISBN-13: 9780525558330
Publisher: Penguin Publishing Group
Publication date: 02/25/2020
Edition description: Reprint
Pages: 464
Sales rank: 520,502
Product dimensions: 5.40(w) x 8.30(h) x 1.10(d)

About the Author

Raghuram Rajan is the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. He was the 23rd Governor of the Reserve Bank of India between September 2013 and September 2016. Euromoney magazine named him Central Banker of the Year in 2014. Between 2003 and 2006, Dr. Rajan was the Chief Economist at the International Monetary Fund. He co-authored Saving Capitalism from the Capitalists with Luigi Zingales in 2003. He then wrote Fault Lines: How Hidden Fractures Still Threaten the World Economy, for which he was awarded the Financial Times-Goldman Sachs prize for best business book in 2010. Learn more about Dr. Rajan and his books at

Table of Contents

Preface xi

Introduction: The Third Pillar 1

Part I How the Pillars Emerged

1 Tolerating Avarice 29

2 The Rise of the Strong but Limited State 51

3 Freeing the Market … Then Defending It 75

4 The Community in the Balance 105

Part II Imbalance

5 The Pressure to Promise 143

6 The ICT Revolution Cometh 173

7 The Reemergence of Populism in the Industrial West 211

8 The Other Half of the World 243

Part III Restoring the Balance

9 Society and Inclusive Localism 287

10 Rebalancing the State and the Community 301

11 Reinvigorating the Third Pillar 325

12 Responsible Sovereignty 345

13 Reforming Markets 369

Epilogue 389

Acknowledgments 395

Notes 397

Index 419

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