Rajan further explains how, it is the dissolution of proximate community networks, that is primarily responsible for waves of anti-elite populist movements in recent years, where local communities feel powerless and perturbed to act against the elite and those (immigrants) perceived to have more opportunities than themselves (native-proximate community).

Addressing this feeling of powerlessness amidst rising inequality, The Third Pillar argues for an urgent need to decentralise and bring some power back to the community’s proximate roots.

This can allow the community, with a common sense of identity and more agency, to have a greater say on meeting its civic obligations, influencing decisions that concern schooling, healthcare access, waste management and employment opportunities.

The case of Pilsen

A cited reference to Pilsen – a community populated by Eastern European immigrants around Chicago, and its revival story can help one understand Rajan’s argument better (on strengthening the third pillar).

Pilsen as a community in late 1970s faced serious issues of drugs, alcoholism and a high crime rate. This was largely due to the low levels of education, incomes and high unemployment rate in the community. Since late 1990s, the community with local leadership to coordinate its revival effort pulled the community up in most performance criterion, ultimately bringing crime rates down in the neighbourhood.

From the church to everyone else in Pilsen’s proximate community – the collective effort in cultivating a civic-culture of building schools, cleaning streets, reducing alcoholism, reduced crime incidence rates. The effort further allowed different virtuous cycles to emerge – with everyone else contributing to the cause.

In Rajan’s view, the case of Pilsen – as one of the many community-driven examples- reflect a feature of “inclusive localism”, where, a strong Mexican-American community worked hard to fulfil basic civic obligations, allowing themselves to be open to other American communities.

The book, in its core thesis, draws an important distinction between: a need to acknowledge the waning effect of regressive community networks (from ancient tribal systems) with the rise of markets and individual autonomy in democratic societies, as against, (acknowledging) a need now to develop an inclusive sense of localism – built upon shared civic obligations- in areas of local education systems, need for healthcare access, creating the right kind of social safety net for the local people.

In context to societies outside North America and Europe, in countries like India – those witnessing a high population diversity with greater levels of ethno-linguistic fragmentation, striking a balance between needs of the state, the market and the community remains tough.

There is a collective need to recognise and consciously tackle issues around internal/external migration, while addressing other concerns around climate change, technological challenges of automation (widening divide between three pillars), to limit job-losses and loss of social safety nets. A direct consequence from some of the above challenges is observable in widespread movements of populist nationalism with majoritarian characteristics – India with rise of Hindutva-nationalism; U.S. with the rise of Trump (and his onslaught on immigrants); the crisis across Europe (resisting inter-country migration), and in Brexit affected UK (where immigration fuelled a rhetorical axis of ‘us versus them’).

Incubating civic nationalism

As a way forward, in avoiding the exclusionary practice of populist majoritarian-nationalism waves, Rajan, in his concluding chapters, stresses on a need to bring some powers back to the community via “inclusive localism"– enabling them to take charge of basic civic obligations with greater agency in decision making.

In case of nations with diverse social and cultural diversity like India, United States, France, Australia, inclusive localism can be made best possible with a much broader discussion around civic-nationalism, allowing citizens– independent of their community bonds, to associate themselves in civic duties, while abiding by principles laid out in the constitution.

Raghuram Rajan’s The Third Pillar offers useful insights on some of the structural problem in 21st century capitalist economies. It is rare for economists to consistently highlight the wrongs taken by economies across different points of time. Rajan has done this brilliantly in most of his books so far, including this one.

The Third Pillar, helps us take a step back, to question why and how do successful capitalist systems work better for a nation’s well-being. Realising the value of the community, in challenging times of economic and political uncertainties, Rajan provokes social thinkers to underpin the value proximate community networks offer, in connection to the needs of the market and the state.

The Third Pillar

The Third Pillar: Incubating civic nationalism