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

In this ambitious but flawed book, University of Chicago economist Rajan (I Do What I Do) rigorously argues the importance of local communities as one of the three pillars, along with the state and markets, supporting global economies. Rajan impressively builds the foundation for his view of society in a fleet history of economic development that tracks the development of mostly Western economies from the earliest prohibitions on usury to the development of the 20th-century Progressive movement. The historic survey and analysis are the strengths of Rajan’s work. The book falters when presenting potential paths to reasserting communities’ role as equal player alongside markets and the state, including a dramatic rethinking of educational systems and the decentralizing of governmental power. Rajan focuses on the benefits of change and does not seriously address the obstacles to implementing the changes he recommends. Though Rajan’s writing can stray into the academic, it is at times pithy (“Democracy preserved market competition, and market competition preserved democracy”), and he makes complex economic principles more accessible in brief end-of-chapter summaries. Rajan’s view of community makes sense, but the book undermines its arguments by failing to acknowledge that communities are not always willing to collectively act in their own best interest. This work may be imperfect, but it’s insightful and thought-provoking. [em](Mar.) [/em]