Hamlet without the ghost

Trevor Grundy critiques Dr Raghuram Rajan’s new work on reviving community in an increasingly globalised and polarised world

The Canadian banker and economist Mark Carney is due to step down as Governor of the Bank of England this summer. Among the prominent names tipped to replace him is India’s Raghuram Rajan, Professor of Finance at the University of Chicago’s Booth School of Business and a man eminently qualified for the Bank of England job after stints as chief economist at the IMF and as a former head of the Indian Central Bank.

The Third Pillar –The Revival of Community in a Polarised World by Raghuram Rajan (William Collins. 2019, 433pp. £20)

But it is Dr Rajan’s combination of economic and socio-economic vision that is arguably his strongest qualification, and his new book, The Third Pillar – the Revival of Community in a Polarised World, is a timely contribution to our understanding of why the world is in such an unstable, upside-down state.
‘This book,’ he tells us, ‘is an attempt to imagine the future and what we can do to get to a better place. Two of the pillars (the state and markets) are the usual suspects. It is the neglected third pillar, the community, that I want to re-introduce into the debate.’

In a hard-hitting Preface, Rajan writes: ‘Once we understand that the community matters, then it becomes clear why it is not enough for a country to experience strong economic growth. How that growth is distributed across communities in the country also matters immensely. People who value staying in their community are not very mobile. Since they cannot move to work where growth occurs, they need economic growth in their own community. If we care about the community, we need to care about the geographic distribution of growth.’
Many of the most worrying problems of our time – including the rise of populism – can be traced to the diminution of the community, believes Rajan. ‘The state (pillar one) and the markets (pillar two) have expanded their powers and reach in tandem and left the community (pillar three) relatively powerless to face the full and uneven brunt of technological change.’

His main concern is that politicians are busy centralising power rather than spreading it out to regions and towns so that they can rebuild a sense of local responsibility and autonomy – the glue that keeps pillar three upright and strong.
But what happens when the glue fails to stick?
Rajan laments the resulting loss of community on a near-global scale and how technology, while raising living standards, has also brought its own problems. ‘We used to rely on neighbours, or perhaps the local midwife, to deliver our children at home. Today we go into hospital. We used to offer to take our elderly neighbour shopping because she did not have a car. Today she can order groceries online. Our homes are nowless likely to fall down and child mortality is lower, but something has been lost along the way.
‘In my adult life,’ he adds,‘I have never been more concerned about the direction our leaders are taking us than I am today.’

The book is divided into three parts: how the three pillars emerged, the current imbalance between them, and the means of restoring equilibrium.
Rajan argues that many of the economic and political concerns that reverberate across the world today, including the rise of populist nationalism and radical leftist movements, can be traced to the dwindling of community. Crucially, the solution to many of these problems can be found in ‘bringing dysfunctional communities back to health, not in clamping down on markets. This is how we will re-balance the pillars at a level more beneficial to society and preserve the liberal market democracies many of us live in.’

Dr Raghuram Rajan is certainly a man to take seriously.His peers will remember that in 2005, he was one of a handful of economists to warn of a financial collapse which rocked the world in 2008.As we turn the pages of this engrossing book, his contempt for both Britain’s Margaret Thatcher and her infamous ‘There is no such thing as society’ mentality is apparent – although alluding to Thatcher’s quote in full would have offered a fuller picture.
‘The world as created by the United States after World War Two is reaching the end of its shelf life,’ warns Rajan. ‘There are a number of economies that are large now but weren’t large then, China and (soon) India, and the European Union didn’t exist then.’

One is reminded of the attempt by Marxist philosopher Antonio Gramsci to explain the dilemma of modern men and women: ‘The crisis consists precisely in the fact that the old world is dying and the new one cannot be born; in this interregnum a great variety of morbid symptoms arise.’ (The Prison Notebooks)
There are times when Rajan sounds a bit like a campaigning politician– or a Governor of the Bank of England in-waiting – with this book serving the purpose of exhibiting his vast knowledge, especially of history from classical times to the present.

A section is devoted to the origins of capitalism and how the impact of the IT revolution has eroded, and in many cases destroyed, communities the world over.Other parts warn of a looming economic class war that could fuel a revival of Fascism or Communism as ‘only the children of the successful succeed’ and marginalised individuals, ‘bereft of the hope that comes from being grounded in a healthy community’, succumb to demagogues who cater to their worst prejudices. ‘Popular politicians strike a receptive chord when they blame the upper-middle-class elite and establishment parties,’ Rajan asserts. How a man with such a longing for fair-play and de-centralisation would fit into the chaos of modern Britain with its greedy bankers and out-of-touch celebrity politicians, we can but imagine.

This is in many ways a deeply insightful book, informative, engaging and humane in its outlook,as well as highly relevant to our times – though it might have benefitted from some illustrative maps and graphs.
However, for me there was one glaring omission. Right at the end of the book, Rajan makes reference to arguably the single most disturbing development in world history. But it is no more than a reference as this great economist barely touches on one of the most significant subjects of our age – climate change.
‘I have said little about one our most pressing problems, climate change and associated problems like water scarcity,’ he writes on page 396.

One wonders why.For all The Third Pillar’s strengths, this is a notable weakness. Writing a book that seeks solutions to the problems facing global communities large and small which does not give space to climate change is like staging Hamlet without the ghost.


Trevor Grundy is an English author and journalist who lives and works in Canterbury, England

 Related Post