Students of IIM-Ahmedabad are spoilt for choice when it comes to celebrity speakers. But very few academicians turn out to be charismatic crowd-pullers like Raghuram Rajan. His earlier books addressed a larger audience, but The Third Pillar strongly underlines his new status as a public intellectual.
The 'third pillar', as the book lays out, is the community, which the author believes, has been neglected (at least by economists) vis-a-vis the State and the Markets. As Rajni Bakshi and Rohini Nilekani put it: Samaj, sarkar and bazaar need to be in balance. So, this is not an original insight. However, Rajan's larger concern is that he finds the "establishment discredited". The fact that it comes from someone who has worked in the innards of both national and international institutions with the critical eye of an academician makes the book significant.
The writer's concern takes him down the route of tracing the evolution of the 'establishment' as it stands now. Those waiting to find out what is happening to the 'community' at this point may feel impatient about the journey that Rajan eruditely takes us through, but it is worth taking. There are chapters here that should be compulsory reading for anyone in an MBA programme or in businesses which employ MBAs.
Rajan builds on his academic background and works to explore areas that probably go far beyond his expertise. Nevertheless, they reflect concerns of an individual who has grappled with reality outside the ivory tower. The book might be weakest in precisely those areas that Rajan wants us to pay attention to, but he raises questions for conversations which need to be held urgently if a more hopeful society is to be imagined. For those inclined to believe in the power of markets (and Rajan is clearly one of them), the book is probably one of the most precise and easily digestible articulations of the fact that no market operates outside of political, social and cultural values. All 'free markets' operate within institutional limits and, as Rajan repeatedly highlights, "institutions... rest on a bedrock of any underlying distribution of power". His blunt statements that "property rights is a social construct" is a mantra that a lot of us need to chant and understand.
Along this journey come candid confessions. Here is one that stands out: The revival of declining communities resembles the development of nations in many ways, especially in that economists understand very little about either process. Of course, the revival of declining communities is the rationale here, but the statement is a harsh indictment of an entire edifice of work that has dominated most public policy thinking. If economists understand very little about development, why are they working with policymaking institutions tasked with development? If communities have to be brought back in, as Rajan very strongly articulates, where will the ideas and the action to do so come from? The suggestions that the author espouses may seem superfluous to those who have worked with communities. If, indeed, a new ethos emerges, will these researchers, who have spent a lot of time trying to understand and strengthen communities, be given a greater say in the policy discourse?
Given his penchant for reasoned, informed and impassioned logic, many have looked at Rajan to speak more forthrightly on current political and economic scenarios in India. But I think his strong desire to remain objective and apolitical will never allow him to do so freely. But probably realising that this is a particular moment in history, he admits that he has "never been more concerned about the direction our leaders are taking us than I am today". Considering the countries and communities to which he is closely connected, one is bound to place it in the immediate context.
It is perhaps this concern that leads him to describe, albeit analytically, "the truly committed majoritarian Hindu leader, drawn from a young age into the RSS, is usually personally austere - which endears him to those who dislike corruption - and committed to the cause, which makes him ruthless in his methods. They are a serious threat to a liberal tolerant innovative India... and effective in using their periods in power to infiltrate India's institutions with their sympathisers." Coming from a person who chooses words very carefully, one cannot help but wonder if these words come from personal experience.
The writer is Associate Professor, Public Systems Group, IIM-Ahmedabad.