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

by Raghuram G. Rajan

As goods markets and the market for labour grew to span many communities within a country, such community-based solutions came under pressure. One problem had to do with those who moved from one community to another in search of work. Internal migration picked up as nation-states emerged and security improved, and as opportunities sprang up in distant parts of the country. Who was responsible for supporting the destitute migrant – the migrant-receiving community or the migrant-sending community? Even today, the European Union struggles with this question. A second problem was that the size of economic shocks transmitted through manufacturing and finance across the increasingly integrated world economy continued to increase. Such large shocks could overwhelm entire groups of communities, leaving few in a position to hold out a helping hand to the fallen.

Problems for large migrant societies