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

by Raghuram G. Rajan

inclusive localism fulfills at the community level the natural human instinct to congregate with others similar to us. It thus heads off more divisive and artificial attempts in diverse nations to fulfill that tribal instinct at the national level through populist nationalism. Also, by enhancing the local infrastructure, the means of building capabilities, and the safety net at the community level, inclusive localism attempts to broaden and equalise opportunities. It allows each community’s members to participate in, and benefit from, global markets. The proposed path builds on what we have. I do not advocate dispensing with any of the pillars – I neither recommend eliminating markets and private property nor do I suggest putting everything, including governance, for sale. The state is necessary, but has to cede power to the community and can be much more effective. The community is essential for us to express our humanity, but it needs to carve out space from both markets and the state to flourish. Even if seemingly moderate, the reform path is ambitious for it eschews easy but often wrong solutions.

inclusive localism to express our humanity