- Hardcover: 464 pages
- Publisher: HarperCollins India; 1 edition (26 February 2019)
- Language: English
- ISBN-10: 9353028396
- ISBN-13: 978-9353028398
- Package Dimensions: 22.8 x 15 x 4.8 cm
- Average Customer Review: 52 customer reviews
- Amazon Bestsellers Rank: #904 in Books (See Top 100 in Books)
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The Third Pillar: How Markets and the State Leave the Community Behind Hardcover – 26 Feb 2019
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About the Author
Raghuram G. Rajan is the Katherine Dusak Miller Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. He was Governor of the Reserve Bank of India between 2013 and 2016, and is the bestselling author of I Do What I Do and Fault Lines, and the co-author of Saving Capitalism from the Capitalists.
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52 customer reviews
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A must read for everyone who truly wanna understand how the states and markets affect the community.
I havent finished the book yet but first 2 chapters had already aroused a hunger for more, its so astoundingly gripping.
I was waiting for this book and here I am completely satisfied😀😀😀
thank you Rajan Sir for penning down this piece!!!
Rajan take on the China growth story is interesting and covers whole set of factors starting with retrenchment of staff from loss making PSUs to release labour, shifting focus to cities as epicenter for economic development and governments ability to delicately manage the control and support to start-ups and private enterprise. Future challenges to China growth would off-course require some fine-tuning and rethink. Rajan attributes India relatively slower economic progress to difficulty in land acquisition, dearer credit, procedural delays; the costs associated with vibrant but chaotic democracy. Surely Rajan understanding of India goes much deeper, than the cryptic analysis shared in this book.
Rajan convincingly explains the surge of Populist Nationalists, riding on the disenchantment of majority against the elite, and how this surge may come with its own set of issues, including social unease. The remedy proposed as combination of constitutional patriotism (nations identity linked to shared values), and communities with hold stronger ethnic and cultural entities is an interesting paradigm- but how much of this can be designed and how much this comes as emergent structure as an outcome of societies evolutionary journey is an open question. Similarly the phenomenon behind residential sorting and its impact on the inequality in the society is another dimension that require conscious intervention at different levels.
How much should the international institutions decide for the world decide for cause of common good, and how much should sovereigns have rights to decide for themselves. A very touchy issue, especially in light of widespread mistrust within the community of nations, provoked by the real and imagined capture of international agreements by stronger nations and through the big corporations. Rajan uses the global insistence of Basel norms adoption for financial institutions to drive this fact well. Similarly the stringent intellectual property rights (and infringement claims) tends to disproportionately discourage innovation in the relatively less developed societies. The advice is to move towards more inclusive, transparent and negotiated approach to global common goods, then pushing for harmonized rules and regulations across nations. Easier said, than done!
Recognizing the limitations of taking shareholders vs stakeholders benefit maximization as guiding objectives for the Corporate, Rajan middle-path suggestion for taking up the value maximization which comes as sum of value created for genuine set of stakeholders is an interesting concept- that may be worthy of further research.
Clearly the book leaves reader with much to chew, with provocative and creative in its advice and without being prescriptive.
Finally, community-based governance is also proposed as a superior arrangement for enforcing efficient and accountable behaviour of public bodies.
For a brief while, the clean shaven, youthful and ever-ready-for-a-byte Raghuram Rajan was the poster boy of Indian financial journalism. His abrupt resignation as the RBI governor catapulted his columns and books onto the top of the reading list. If the expectation is of a tell-all tale about the shenanigans in the stately corridors of the RBI’s manors in Mumbai and Delhi, Rajan barely touches on that.
In this tome, he acquires the professorial avatar to which he has retreated after quitting the RBI. What follows is a read on the world’s economic trajectory, the gradual falling in place of the nuts and bolts of institutions, the arguments in communities and the corridors of power that precede and succeed the changes in the wielding of economic power and the fascinating tussles at various phases of human history among its actors of the day. Rajan gives the old story of the tussle between the markets and the state a more commonplace and hence easily understandable touch by inserting the subject of communities in the mix. The economic histories and prognosis of the past become more readable and enjoyable when presented as socio-economics with the addition of people and their feelings.
At one point the main actors were the church, the monarch, guilds, the serf and the landowner. Their intertwining gave way to capitalism as we know it. Another turning point is now close at hand. How do we redefine the relationship of the three major players — state, the community and the markets — after the revelations that the mega tech companies were not really treading the straight and the narrow path? Now that the governments, till now sleeping at the wheel, move to punish and overcorrect, the focus should not be just on the offending pillar — the market — because that will subsequently give rise to cronyism that will be more difficult to correct. Rajan’s solution is a disappointment — push the other two pillars up.
The evolution and foundation theory of capitalism, or in other words the history of socio-economics that originated from the west, has been adequately chronicled. Rajan makes that a little more made interesting with anecdotes and similes. Some aspects and tendencies among communities do have a resonance here in India for instance the resentment against the middle-class elite for insulating themselves against the economic forces they have unleashed. This has given rise to populism which, Rajan argues, at its core is “a demand for respect, and enveloped in the anger of those who feel they have been ignored.” Haven’t we heard this explanation a thousand times before?
Rajan’s brief stay at the RBI should have helped him impose a sub-continental or even Asian perspective to global economic history. In the end, the reader is reduced to an humbled appreciation of the author’s sweeping reading list, his scholarship and the admirable but easy-enough virtue of parking all his arguments in the left-liberal boat whether it is about the dilemmas of immigration, non-tariff barriers and intellectual property rights. However, Rajan’s treatment of these dilemmas is so wide ranging, covering all possible perspectives, that they often give a glimpse into the future of countries on the path of development. For instance Chinese, or even, Indian cavalierism with the western definition of intellectual property rights is not aberrant behaviour. Countries currently at the global economic high table nursed and pursued similar temptations at a lower stage of developed.
But for the most Rajan has trodden the path of the erudite chela of western economic thought. As for the Indian context, it is too pat. To point out that the Indian businessman is at the lower end of the pecking order, he cites a reception for Barack Obama where Mukesh Ambani was number 83 in the protocol list, after the President’s grandson! Could he not have seen the duplicity and hypocrisy of Indian political life while serving in the RBI? The manner in which Ambanis are feted, their appointments with the mighty secured in minutes? Yet, there are nuggets that governments might already be pursuing. Like, construction is the most important sector in the early phase of industrialisation (and the Modi government is majorly sold on the concept).
But in the end, the markets are imperfect, brutal and dehumanising. Rajan to be fair is among the lot that has not lost hope yet. Perhaps the perch of academics obviates the need to soil the hands in the muck and sewage of the everyday world. Yet, as Rajan brings out, today the developed and the developing are two sides of the same coin, in politics as well as in economics. @sanfunhindu