Introduction
Modern social order rests on three fundamental pillars: the state, the market, and the community. In his "three pillars" concept, Raghuram Rajan argues that the stability of modernity depends on their balance. Unfortunately, recent decades have seen the community pillar drastically shrink while the state and market have expanded. This imbalance makes the entire structure unstable, generating crises that technocracy alone cannot solve. This article explores how to restore local agency and why the market and state become dysfunctional without strong communities.
State, Market, and Community: The Triad of Social Order
Historically, these functions were inextricably linked—in the feudal order, the lord settled disputes, and survival depended on local obligations. Only the expansion of trade and the abstraction of contracts allowed the market to emerge from the community. Today, we make two cardinal mistakes: we reduce community to a sentimental decoration and grant the market the status of a moral force, believing that competition alone will produce justice.
This imbalance creates a vicious cycle: a market stripped of community generates polarization and anger. This leads to "shortcut politics" and state interventions that create regulatory rents and strengthen crony capitalism. Consequently, the market loses legitimacy, fueling the temptation of authoritarianism and stifling innovation. The only way to break this spiral is to create an institutional feedback loop between local agency and the global network.
State Expansion and Globalization: Severing the Ties
The information revolution and the globalization of finance favor scale, promoting metropolises and leading to residential segregation. Elites, seeking to maximize opportunities, choose an exit strategy, while the rest of society, stripped of influence, resorts to voice (protest). Populism is a symptom of an agency deficit—people rebel because they no longer have anywhere to direct their voices.
In this context, decentralization cannot be merely technical (dispersing decisions for efficiency); it must have a moral dimension—linking power with responsibility. Rajan suggests reforming corporate governance toward stakeholder capitalism. Business should move away from pure shareholder value maximization toward building relationships with employees and suppliers. Social trust is now becoming a hard risk parameter rather than just a decorative element in annual reports.
Inclusive Localism and the Data Act: Foundations of Agency
The answer to the crisis is inclusive localism. Communities must regain competencies but cannot become closed ghettos. The conditions are accountability, openness to new members, and the right to take prudent risks. Data ownership is becoming a key tool in this process. The EU Data Act (effective September 12, 2025) transforms the abstract right to privacy into a real title to an asset, allowing communities to regain agency in the digital economy.
Fiscal subsidiarity is also a foundation of agency. Decentralizing spending without decentralizing revenue is merely a "delegation of anger." The state must serve an equalizing function, protecting against inequality without imposing local details. Unlocking zoning is equally important. Current regulations often allow wealthy groups to restrict housing supply, turning real estate into a barrier to entry and a tool for inheriting meritocratic privileges.
Conclusion: Local Action vs. Global Challenges
Rajan’s project faces aporias: how to reconcile local decisions with the global scale of challenges like climate or finance? Inclusive localism requires citizens to recognize the limits of their own competencies and the state to firmly protect individual rights against tribal violence. Business is already adapting to these changes through nearshoring and friendshoring, building supply chain resilience based on trusted relationships.
In the archipelago of society, community islands must become strategic network nodes, and the state the guardian of fair bridges. The future will unfold between the regionalization of trade and digital sovereignty. Will we dare to build bridges that provoke change, or will we condemn ourselves to living in enclaves, pretending that culture is just a matter of borders rather than their constant crossing?
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