Economists generally focus on interactions between markets
and society, but, University of Chicago economist Raghuram
Rajan argues that they leave out an immensely important ‘third pillar’ - the
smaller, local communities within a market, as opposed to the large metropolitan
areas.
Rajan provides a detailed analysis of the development of
Western economies, and attempts to prop up local communities to the same status
and importance of the state and market (the other two pillars), while explaining
how community was removed from the economy. We tend to rely on the state and
market rather than our local communities to solve problems and get things done,
which traditionally has not been the case, at the expense of our solidarity.
The benefits to strengthening local communities are vast, from limiting crony
capitalism to preserving democracy by checking the power of the
federal government. It is no wonder authoritarian regimes attempt to replace
community with other forces like nationalism. A major problem with society,
according to Rajan, is the imbalance between the three pillars.