Neglecting Social Issues Is Not Just Myopic But Dangerous, Says Raghuram Rajan
Rajan has come out with a new book ‘The Third Pillar: How Markets and the State Leave the Community Behind.’
Neglecting social issues is not just myopic but dangerous, warned the former governor of the Reserve Bank of India Raghuram Rajan as he called for a return to empowering local communities as an antidote to growing despair and unrest.
Local community government acts as a shield against the policies of the federal government, thus protecting minorities against a possible tyranny of the majority, and serving as a check on federal power, he said.
It is community-based movements against corruption and cronyism that time and again prevent the leviathan of the state from getting too comfortable with the behemoth of big business, he said, adding healthy communities are essential for sustaining vibrant market democracies.
Rajan has come out with a new book ‘The Third Pillar: How Markets and the State Leave the Community Behind’ in which he analyses critical issues plaguing societies globally.
He observes that large young migrant population, both tantalised and shocked by city life, and yet to be integrated into solid new communities, are ideal raw material for the populist nationalists’ vision of a cohesive national community.
The book is about the three pillars—state, markets and community—that support society and how the right balance among them can be restored so that society prospers. Rajan reintroduces the “neglected” third pillar—the community—into the debate.
He argued that many of the economic and political concerns today across the world, including the rise of populist nationalism, can be traced to the diminution of the community. The state and markets have expanded their powers and reach in tandem, and left the community relatively powerless.
In a section focused on India, Rajan observes that the country, with its more pluralistic and open-access political system, is better positioned for the community to create more separation between the state and markets.
Its weakest pillar is the state, he said.
The economy is not based on just two struts—markets and governments—but instead on a neglected third: the local community. “Neglecting social issues is not just myopic, it is dangerous,” he said and called for a return to empowering local communities as an antidote to growing despair and unrest.
India’s private sector is still dependent on the state, which makes it a feeble constraint on it. So India has the paradox of having an ineffective but only moderately limited state, the book said.
India’s challenge in the years to come is not its democracy, which is probably the only way to keep a country with such varied communities together, but the need to strengthen both state capacity and private-sector independence, Rajan said.
He discussed how to harness the strengths of a vibrant but chaotic democracy, why India has not done as well as China and the threat of populist nationalism, predicting that democratic, open, tolerant India will be an important, responsible contributor to global governance in the decades to come, though populist nationalism around the world will make this less likely.
The book, published by HarperCollins India, releases on Feb. 26.