Book Review: The Third Pillar

The Third Pillar, written by Dr. Raghuram Rajan, was published in 2019. The book has received praise for highlighting the role of communities  from distinguished members of the economics community, such as Dr. Amartya Sen.

About the author: 

Dr. Raghuram Rajan is a renowned economist who has held numerous important positions in the past, including but not limited to the Chief Economist at the International Monetary Fund (IMF) and the Governor of the Reserve Bank of India (RBI). He is especially known for foreseeing the 2008 financial crisis at the Jackson Hole meeting in 2005.

 As of April 2020, he is the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business.


The Third Pillar argues that the world requires a balance between markets, state and communities – the three pillars – to function efficiently. Over time however, this harmony has been disrupted. The state and the market pillars stand tall next to the community today.

The imbalance

The first part of the book talks about the emergence of the 3 pillars. By drawing on historical accounts dating back to 300 BCE until the world wars, Rajan explains why the 3 pillars are crucial for a society. 

The second part is an excellent account of the post-war era. It summarizes how the markets and the state grew at the cost of the community creating an imbalance in the world. It allows the reader to thoroughly understand the need for a connected world post the wars that shaped the 21st century global economy.

The third and final part talks about possible solutions to restore the balance. One educational reform in particular caught my attention. Let me know in the comment section if you spot it.

What to look out for:

The first part is an excellent lesson in world history from an economist’s lens. I, for example, was surprised to learn the role of the Church shaping the economy at various points in time.

The second part very well points out the roots of key issues faced by western economies today, notably their developed but gradually burdening social security nets. This most certainly puts first-world problems in perspective..

Some downsides:

Readers might find themselves lost in the timeline as the book swiftly switches centuries, mostly in the first part. While the book undoubtedly is fast, the selected examples do justice to the overall trend that the author intends to illustrate. 

Some of the proposed solutions are too idealistic. They seem to be intended to provoke thought, rather than address the issue directly. However, given the complexity and pervasive nature of the issues being talked about, even provoking thought is a mammoth task.

In a nutshell:

The book is a great read for beginners in business history and pros alike.

The beginners should use it as an opportunity to identify key historical events that interest them and build their reading list further. For people well versed with the events discussed, the book shares an interesting perspective to connect the individual dots looking back.

Let us know what you thought of the book in the comments!


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