Book Review: The Third Pillar by Raghuram Rajan - A lost opportunity

At last, a modern academic and bureaucrat/technocrat is writing a serious thesis on 'Community' and that is a matter of celebration in itself. That it is an economist trying to factor in Community into the system of economics is a bigger reason for joy. That it is an  Indian writing should have been a matter of greater significance. But we shall see whether the third promise holds or otherwise. Irrespective of all, that it is somebody of Raghuram Rajan's stature, fame and prominence is not any less important in the scheme of things.

Rajan rightly identifies the weakening of Community as a fundamental reason for the imbalance and inequality in the economic world. For this he deserves special credit, as arguably the first liberal (well one atleast propheses so), non-socialist, capitalist economist of great stature to elevate Community and provide it a formal status in the modern system of economics. 

In summary, Rajan makes the following claims.

1. There are three Pillars that support Society - Community, Markets and the State.
2. The Community is a critical Pillar in realizing a balanced dynamic created by Markets and State and ensuring equitable Economy or Economic Progress.
3. Any imbalance in one of three has some aspect of the society suffering such as progress, equity/equality and security.

Rajan visualizes the three Pillars as each being independent of the other with the ability to influence and partially control. However, he does not explore possible relationships between them. For eg., he does not ask the question if Markets can be merely a virtual entity shaped by every community through negotiated incremental action - rather than being an independent establishment, the security of which is guaranteed by the State. The two lead to very different realities with different implications but Rajan does not go into those unchartered territories.

The book is organized at three levels

1. How the Pillars have Emerged
2. The Imbalance of Today
3. How do we restore the balance by strengthening the participation of communities in Economy

The First Section

The first section is quite weak to say the least. It provides a very simplistic narrative on how the pillars have emerged. It is way too simplistic and paints all the world in one narrative of evolution. At one level, it is an economist writing about sociology and that lack of exposure to the discipline is clear. At a certain level, this section is organized  to present convenient hypothesis towards the end. The Eastern Civilizations - India in particular is wholly absent from the narrative and in that the book misses the opportunity to explore the great evolution of Economy and Community in India until the British snuffed life out of it in the last 300 years. His point of how tribal communities functioned is utmost laughable and way too simplistic. His view that Market separated from the community is purely a western reality of arguably recent times driven by the modern western state and through separate philosophy. In India, in spite of Nehru and later capitalism, neither the state has had absolute control over the market nor has community withdrawn itself from it, has always remained complex. In the eastern world the state has partially separated from the Community because of the influence of western models but it is partially invested. 

It is true that the Markets and States have confused the Communities. Some rights have been simply taken away, needlessly, and weakened their functioning. Eg., Communities cannot establish schools for education according to their world view with ease. However, it is to be noted that the real culprit is not only the State but the very philosophy driving the Modern State that we conveniently celebrate and praise elsewhere at other times. Modern Liberal States fundamentally aim to transform and change societies. They do not want communities on the ground to have absolute freedom to run their affairs. For eg., they want the state to regulate Education so that all communities conform to a stated ideology. Progressively, this taking away of autonomy of the Community, has reduced the community into a heap of individuals. It has built a lack of trust leading to inactivity in these communities and dependence on state to deliver certain services. This is not a result of merely the authoritarian, greedy state wanting control. It is the very liberal state wanting to transform societies into the modern world that is leading into this problem.

The best part of this section is Rajan recognizing why the Community still matters. Real life is still that of one lived in a community. An isolated individual is weak and insecure. If that insecurity drives economy, then creating equity and balance in distribution is never going to be easy. Much of what Market runs outside of the community today could in reality be dealt within the community even if that means nothing to the GDP numbers. Rajan presents Case Studies of success and impact. Sadly once again not a single Case Study comes from India. Rajan recognizes the need for both Centralization and Decentralization but fails to elevate it into a hypothesis. It has remained at the level of Centralization equated to State and Decentralization equated to Community. The healthy interaction between the two, one pushing the other - their sinusoidal relationship, their being visualized as part of the whole - these are totally absent from Rajan's imagination in the book.

The deeper disappointment is the real missed opportunity. In Rajan's world view, Community is merely viewed as a pillar for the economy. There is no greater central role imagined for the Community. It is as though the purpose of life is economic development and growth. What if the purpose of life is to live a certain way imagined by a community and economy is subservient to that? Markets are then subservient to community or atleast a negotiated entity between various communities. The state then is not an equal protector of community and market. It is merely the protector of all communities. Rajan simply refuses to imagine it this way because for the modern educated mind in the Liberal education this is simply anathema. The liberty of the individual is most supreme to the modern liberal intellectual. However, this is exactly what makes the community weak and in turn makes the state and market strong. That Rajan fails to even recognize this contradiction, much less resolve, is a greatly missed opportunity. 

India has a 4000 years of Civilization with science, industry thriving alongside alive traditional communities until the British flattened them through immense brute force. If Rajan were to have the open mindedness to view India differently (unlike the simplistic 10 pages of an apology) he would have seen a different model.

The Second  Section

The simplified imagination of the problem in the first section makes it easy for Rajan to characterize the problem as merely one of economic inequality imbalance. If he had recognized the contradiction of individualism of Modernity in turn weakening the Community - then the problem would be in the realm of philosophy and perspective of life, a greater problem that is almost the real crisis of modernity. Nevertheless, the second section presents the imbalance of today and obviously how the ICT revolution - that very revolution of possibilities - contributing to it unwittingly. He correctly diagnoses weakening of the community as the problem. He has captured the disruption and characterized it realistically and meaningfully to establish the importance of a Community. In particular, the reverse spiral of negative impact cascading is well presented when the community weakens.

In the process he employs too many terminologies without adequately defining and characterizing them. There is an over glorification of mixed communities. Community is used as a too loose a term. He seems to have a greater affinity to loose organization or weakly coupled organization of people for a shared purpose - calling it a community. This arguably comes from his being guided by liberal philosophy where the individual is supreme. This looseness makes reading easy for the reader but with loss of insight. At the same time, the writer has the luxury in indulging in easy generalizations at the cost of deeper investigation. 

Like most intellectuals of our times, Rajan praises technology for having catapulted us into where we are today in history and continues to believe that it holds the biggest promise to solve the imminent problems of poverty and climate change. At the same time, Rajan recognizes the imbalance it can create in terms of wealth distribution if factors such as 'values' and 'institutions' (they are in the realm of Civilization - not economy or technology) are not adequately positioned to balance the disruptive ability of technology. However, Rajan also does not peel out the imbalance and inequality and characterize it further. Further, Rajan disappoints by not going into what aspect of humanity drives technology development and what drives the design and realization of civilization values and institutions. He does not explore the relationship between the two. With this Rajan loses the opportunity to explore a critical element - what commonly drives humanity's technology ambition and civilization aspiration are also the reason for this imbalance. He fails to locate the root of the problem. Why did the Community weaken in the modern world? Was it a chance? Was it merely the State or is it the greed or is it fundamentally rooted in any philosophy that is guiding the modern world itself? What is the root of such a philosophy and how did such a philosophy evolve? This lack of curiosity in somebody who is considered an intellectual is quite disappointing. End of the day he is not writing a manual but a book of enquiry.

What is worse, however, is - Rajan, in a simplistic fashion, dubs the emergence of populist nationalism as a consequence of weakening of the Community. In this, he wholly brings down and disappoints a serious reader looking forward to deep reading. He simply accepts handed over theories of the left-liberal sociologists and simply does not apply his own independent mind to peel if there is merit  or if there are other possibilities. The very simple example of India must make it clear that this hypothesis is hallow. It is the strengthening and leveraging of the community that has made a cultural nationalism possible and successful. Its fundamental motivation is outside the economy. Any frustration with economy has the potential to distract people from such nationalism, not sustain it. What more, in years of seeming economic slowdown, its the strengthening of the community that is providing security and cushion to the common man. Merely attributing it to Populist Nationalism is viewing things with a Nelson's eye. 

Another aside is important here, It is partially related to this book. Rajan would do well to distinguish between Civilizational Nationalism and Populist Nationalism if he is seriously interested in looking at this problem deeper. A Nationalism that is based on Civilization will at once be both popular and nurturing of the community. While there is no evidence that such a nationalism would weaken the liberal market democratic system (as professed by Rajan), it may be compensating for the weakening of the community that resulted from the glorification of the individual by the Modern Liberal Philosophy and in turn may be strengthening the community. Such simplisitic dismissal and characterization of Nationalism is nothing but lazy intellectual behaviour not expected from Raghuram Rajan.

The Third Section

In this section, Rajan dwells upon restoring the Community to play an active and balancing role in the economy. That a modern intellectual came this far in itself is reason for celebration. In this Rajan disappoints big-time.

1. He correctly identifies that communities must have the freedom to fulfill their essential functions. But the world view of the community is still an entity that is shaped from the top. This comes from a world view of centralization where visions are, handed over to people to form communities. This means there is an indirect control over how the purpose of a community should be, possibly through an intellectual class if not through the state or market. This in reality is no freedom at all. This is a highly reduced vision of community - a Master-Slave version, where the Slave is visible and the Master is not. For eg., Liberals continue to want a control of education even in communities to shape those communities according to their world view. Rajan has to recognize the problem here. It is the Liberal democracy that has taken away this freedom from the community in the garb of protecting the individual and individual freedom. Until this is set right there is no real progress possible.
2. Rajan conceptualizes a new term - Civic Nationalism in opposition to what he contemptuously calls as Populist Nationalism - which in reality is the respectable Civilization Nationalism unnecessarily, unjustly vilified. What he defines as Populist Nationalism is nothing but a euphemism for Secularism. The sheer scare to use the word secularism itself is interesting and a half admission of guilt. The so called Civic Nationalism restores the community only to the extent of playing a role in equitable distribution of wealth and avoiding imbalance. The philosophy is still the modern liberal world view where the community is philosophically weak and is a slave in the receiving of world views from an invisible Master. A Civilization Nationalism on the other hand gives community a greater autonomy and does not view it with suspicion of trampling the individual liberty. A case in the making is the Khaps of Haryana. How much ever the modern media derides it, they have played a positive role in the evolution of the society and people continue to value them much to the chagrin of the missionary zeal of the liberals to liberate people within. In this world view, Nation is a collective communities bound of a shared philosophy that has evolved through negotiation between communities on the ground, not thrust by an elite sitting elsewhere.
3. Because of Modern Liberalism and Statism that Rajan is guided by, he simply does not ask bigger questions that such as - What are the essentials for Communities to thrive all by themselves in a society? Do they need a unique philosophy, ecosystem? What is the fabric that keeps a community or communities together? Can they be divorced by the culture and civilization elements of the land? Can mere Civic Nationalism ever bind a community or communities in country like India? If they have to be shaped from outside then that amounts to the formation of an Elite such as Modern Secularists - then is this whole project about they creating a navigation and arbitration space for themselves in the nation? Is that just at all - These are absent from the book altogether. The whole remedial approach the book takes, to restore communities, is way too economic and fixing an existing system approach, not a whole reimagination. This means Rajan thinks the current world order, view, philosophy is not the problem - it is merely tweaking of it. He presents no defence of why it is so because he characterizes the problem only in one way. It may also be because he is an Economist and not a Sociologist, Philosopher or Cultural personality. But a genuine intellectual is partially all of that. At a certain level, to make an uncharitable comment, it is possible to argue that it is a sociology book on economics with extraneous political considerations in mind. This in summary reduces the scope of the book and hence is a lost opportunity. 

The most disappointing aspect of this book is that India is not a case in consideration at all in this book. The 10 pages he dedicates does not sufficiently distinguish India and is like side-track to his main thesis. This means either the intellectual Rajan does not consider India as a land of successful communities or his upbringing in India has been so elite that he is not touched by ground realities of India at all or his international exposure has created such inferiority about India in him that he does not access any of his Indian experiences to qualify/evolve his hypothesis. This in summary is a great tragedy of this book. 

Nevertheless, thank you Raghuram Rajan for elevating Community into the conversations of economy elite. But can you go further into unchartered territories? For starters, you should begin with a reading of works of Dharam Pal and his hypothesis on communities of India. You may well end up rewriting the book.