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Saving Community From the Beasts of Market and State

Unfortunately author Raghuran Rajan wants to protect it for the wrong reasons: against populism and for cosmopolitism.

The Third Pillar: How Markets and the State Leave the Community Behind, by Raghuram Rajan, Penguin Press, 464 pages

There has been no dearth of books in recent years on the collapse of community, the rise of populism, and the evolution of American politics. Each work promises more or less the same: it will show how we arrived at our present moment (whatever that moment may be), make sense of contemporary America, and explain why people are so darn angry. One wonders how many more such tomes are yet to be written, and how many of them actually need to be.

Nevertheless, into this crowded field comes economist Raghuram Rajan with his own addition to the genre, The Third Pillar: How Markets and the State Leave the Community Behind. Rajan—professor at the University of Chicago and previously chief economist at the International Monetary Fund and governor of the Reserve Bank of India—wants to reorient our debates by bringing the community back into focus. The state and the market too often receive all the attention, he says, but the community is also an essential component of our society—one that we have ignored at our peril.

To make his case, Rajan spends the first few hundred pages narrating the three pillars’ uneasy pas de trois over the centuries. Beginning with the European feudal manor and ending with the present day, Rajan ably shows how the institutions have shifted in and out of balance, with one always in danger of being subsumed by the others. From the evolution of usury laws in medieval Europe, through the emergence of the modern nation-state and capitalism, to the dawn of the information and communications technology age, and finally to the recent growth of populism, Rajan reveals the dangers of letting the market or the state, or both, grow too powerful.

We tend to see these two institutions as opposing forces, but they can also form an unholy alliance, working in tandem to weaken the community. Pitting the market against the state can blind us to their similar abilities to hollow out civil society and erode any tradition that fails to meet a cost-benefit analysis. Though Rajan does not refer to it, his argument here echoes Patrick Deneen’s in Why Liberalism Failed. Yet while Deneen turned to perennial questions of political philosophy, Rajan instead looks to more tangible matters of political economy and public policy. The conclusion, however, remains the same: as the state and the market have emerged triumphant, the pillar of community has crumbled, leaving many in the U.S. and elsewhere alienated and angry. Rajan’s historical survey provides a valuable reminder of how much we miss when we think of ourselves merely as autonomous individuals, free from any associations or mediating institutions.

But as goes the community, so goes the book. When Rajan moves from historical analysis to contemporary commentary, he falls back on platitudes and empty rhetoric. Between recalling that Gandhi exhorted us to be the change we wish to see in the world, and invoking Martin Luther King, Jr.’s “arc of the moral universe,” Rajan gives prescriptions that amount to wishing the problems away. We should “improve the functioning of the market, even while also refocusing the state and strengthening the community” and seek “an overall national framework of common values.” Who could object? If such vague sentimentalism corresponded to reality, there would be no need for such a book in the first place. It’s a wonder he doesn’t quote “We Are the World.”

Amidst the bromides, Rajan eventually reveals that he does have actual views on the community, and they are not very positive ones. Despite his hand-wringing over our dissolved communities, Rajan doesn’t much care for them, as they tend to obstruct more grandiose cosmopolitan plans. He writes, “It would be nice to go toward one borderless world—where we feel empathy for one another as citizens of the world, even while celebrating our specific cultural traditions. …But we are not ready for it yet.” And why not? Because some people remain tethered to their old customs and maintain their parochial hostility to multiculturalism.

The main reason to be concerned about the erosion of community, in Rajan’s estimation, is that it leads to populist nationalism, which “cannot work without creating an authoritarian apartheid regime.” We therefore ought to protect communities, lest the people who value them cause trouble. Rajan seems less interested in convincing people to care about the community than in persuading his fellow citizens of the world to put up with those who do, until—the “arc of the moral universe” willing—they finally go away.

Rajan does eventually seek to understand the community’s purpose. Three quarters of the way through the book, he finally tells us what “the benefits of a vigorous physically proximate community” are:

Less divisiveness in nations with diverse populations when ethnic identities are expressed in communities rather than at the national level; greater social engagement in community institutions; a greater sense of self-determination for ordinary citizens, as power is decentralized back to the community; stronger local bonds that allow neighbors to fill in the gaps in formal structures of support; more room for political economic experimentation, as well as political influence; and a structure to create meaningful local work that is not remunerated by the market.

This list is not exactly wrong, but it misses what anyone but an economist could tell you. Given Rajan’s vision of one-world cosmopolitanism and the eventual withering away of the community, it’s not surprising that he does not acknowledge a more fundamental and prosaic reason to value communities—namely, that they are people’s homes. Attempting to justify the community through its “benefits” is already to perform a kind of category error, as though people belong to communities merely for the rewards. People’s attachment to their communities surely does come partly from the material benefits that Rajan highlights, but it cannot be reduced to them.

G.K. Chesterton was closer to the mark when he wrote, “Men did not love Rome because she was great. She was great because they had loved her.” The more tangible benefits of decentralized knowledge and local networks are certainly invaluable to thriving communities, but they follow from, at the same time that they strengthen, an irreducible sense of belonging—one that neither the state nor the market can provide.

A flourishing society in the 21st century requires a kind of Mexican standoff among the state, the market, and the community, with each strong enough to fulfill its role while keeping the others at bay, but not so strong that others cannot do the same. Rajan is right to say that when the community cannot fulfill that need, or is not permitted to do so, people will look to the ersatz substitutes of the state and the market. But if Rajan’s incongruous mix of warmed-over sentimentalism and cosmopolitan economism is the best we can do, we are sure to see even less of the good, and more of the bad and the ugly.

Robert Bellafiore is a congressional staffer. His writing has appeared in the Wall Street Journal.

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