Former Reserve Bank of India governor Raghuram Rajan's latest book, “The Third Pillar - How Markets and the State Leave the Community Behind” is slated for a February 26 release. Contrary to expectations, he may not be revealing much on the RBI, the finance ministry or the Indian economy.
The Third Pillar is the community, which Rajan makes central to the book. It is a neglected pillar, and the renowned economist traces many of the economic and political concerns across the world today, as well as the rise of populist nationalism to the diminution of the community. The state and the markets—the other two pillars—have expanded their powers and reach in tandem, and left the community relatively powerless, he argues.
Rajan writes that wrong choices could derail human economic progress at this critical moment in history. He sees that economic progress and a humanity that has “never been richer”, is worried to death, literally. Why the worry? While the press release issued by publishers Harper Collins India does not mention artificial intelligence or job losses on account of robots, it does quote from Rajan's book that the “primary source of worry seems to be that moderately educated workers are rapidly losing or at the risk of losing, good 'middle class' employment, and this has grievous effects on them, their families and the communities they live in...”
According to him, when any of the pillars weakens or is overly strengthened relative to the others, society suffers. The former RBI governor's exit from the post was met with a rare degree of sadness in the country where he became extremely popular among the youth. He observes that India, with its more pluralistic and open-access political system is better positioned for the community to create more separation between the state and the markets. India's weakest pillar is the state, and the challenge in the years to come is not its democracy, but the need to strengthen state capacity and private-sector independence.
Refering to the large population of young migrants from the rural to the urban, he says they are shocked by city life, yet to be integrated into solid new communities and so are ideal raw material for the populist nationalist's vision of a cohesive national community. This trend, he observes, is creating a dissention in societies around the world.
Rajan's "Fault Lines: How Hidden Fractures Still Threaten the World Economy" came soon after the 2008 global meltdown.
