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

"Raghuram Rajan is a very distinguished economist and was governor of India’s central bank until recently. His book, Fault Lines , won the prize back in 2010. This book is really an analysis of the populist backlash against globalization. It’s called The Third Pillar because that’s essentially the community that we all live in. The other pillars are markets and the state. It’s an interesting ideological book, really, with a way of explaining how the balance between market, state and community can be restored. He’s making the case that community and civil society need to be put back into this relationship with the market. Local communities are the antidote to the populist unrest that we’re seeing around the world at the moment. If you’re looking at the shift in the attitudes to capitalism, they are triggered at the extreme end, and this is where populism also comes from, by a lack of trust in business in particular. That has continued since the financial crisis of 2008-9. It’s also fuelled by concerns about climate change, by demographic change—with young people being particularly angry about issues that haven’t been resolved—and also by technology. But while it may be difficult to get agreement on the fine detail, there is more consensus than there has been for a while about the broad need to do something . Rajan’s book, The Third Pillar, is a contribution to that debate and he comes at it, interestingly, as an orthodox economist. He’s exactly the kind of person that the Financial Times writes about and he has himself written for the FT in the past, about competition. He’s not a radical revolutionary on economics and that probably gives his prescription more power."