Strengthening and empowering local communities

Rajan a former governor of Reserve Bank of India, is an expert of world of economics, economic policymaking and public debate. In his latest book he argues that the balance between the market economy and the state has been disrupted. The solution is to empower a third pillar: the local community. He also recommends reforms like shifting from maximising shareholder value to maximising the overall economic value of business, taking in investments by workers and suppliers.

All economics is actually socioeconomics – all markets are embedded in a web of human relations, values and norms. Technological innovations have ripped the market out of old wens and led to violent backlashes, and to what we now call populism. A new equilibrium is reached, but it can be ugly and messy especially if done wrong.

As markets scales up, government scales up with it, concentrating economic and political power in flourishing central hubs and leaving the periphery to decompose figuratively and even literally. Rajan wants to rethink the relationship between the market and civil society and argues for a return to strengthening and empowering local communities as an antidote to growing despair and urest.

The Third Pillar: The Revival of Community in a Polarised World by Raghuram Rajan, William Collins £30/ Penguin Press $30.