The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram G. Rajan

An independent private sector is therefore important in a democracy, for it lies outside the state apparatus and embodies tremendous potential power. It is an essential source of funding, both for the parties in government and the political opposition as well as for nongovernmental organisations. Its intent may not solely be to lobby for regulations that enhance its profits, it may also be more public spirited – we will discuss later in the book whose views it might represent. The private sector also provides platforms for, and sometimes orchestrates, public opinion. Recall it was the muckraking press that was instrumental in breaking up Standard Oil as well as bringing regulation to the meatpacking industry. The Washington Post, a family-owned newspaper, effectively led the investigation that resulted in President Nixon’s resignation after the Watergate break-in. The private sector can also take positions with its business activities that have a political or social slant, and attempt to nudge reforms.

An independent private sector