Wednesday , December 19 2018
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Reclaiming Community

Summary:
Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, and sometimes markets and states undermine them. CAMBRIDGE – Economics teaches that the measure of an individual’s wellbeing is the quantity and variety of goods he or she can consume. Consumption possibilities are in turn maximized by providing firms with the freedom they need to take advantage of new technologies, the division of labor, economies of scale, and mobility. Consumption is the goal; production is the means to it. Markets, rather than communities, are the unit and object of analysis.

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Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, and sometimes markets and states undermine them.

CAMBRIDGE – Economics teaches that the measure of an individual’s wellbeing is the quantity and variety of goods he or she can consume. Consumption possibilities are in turn maximized by providing firms with the freedom they need to take advantage of new technologies, the division of labor, economies of scale, and mobility. Consumption is the goal; production is the means to it. Markets, rather than communities, are the unit and object of analysis.

No one can deny that this consumer- and market-centric vision of the economy has produced plenty of fruit. The dazzling array of consumer goods available in the megastores or Apple outlets of any major city in the world would have been unimaginable as recently as a generation ago.

But clearly something has gone wrong in the meantime. The economic and social divisions within our societies have provoked a broad backlash in a wide range of settings – from the United States, Italy, and Germany in the developed world to developing countries such as the Philippines and Brazil. This political turmoil suggests that economists’ priorities may not have been entirely appropriate.

Two books, one forthcoming from Raghuram Rajan and another published this month by Oren Cass, revisit our economistic worldview and argue that we should instead put the health of our local communities front and center. Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, and sometimes markets and states undermine them.

The authors come from different vantage points. Rajan is an economist at the University of Chicago and a former governor of the Reserve Bank of India. Cass is at the right-of-center Manhattan Institute for Policy Research and was domestic policy director for Republican Mitt Romney’s presidential campaign. You would not necessarily expect either a Chicago economist or a moderate Republican to treat markets and hyper-globalization with skepticism. But both are disturbed by what they see as the effects on communities.

Rajan calls community the “third pillar” of prosperity, as important as the other two pillars – the state and market. No less than excessive centralized state power, he writes, unmanaged globalization can tear apart the fabric of local communities. Cass is explicit that US trade and immigration policy should focus on American workers first and foremost. This means ensuring that local labor...

Dani Rodrik
I am an economist, and a professor at the Harvard Kennedy School. My most recent book is Economics Rules: The Rights and Wrongs of the Dismal Science (Norton, 2015). I was born and grew up in Istanbul, Turkey. I still follow Turkish politics very closely, as you will find out if you spend any time with this blog.

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