‘The all-important question today’, we read in the introduction to a book entitled Global Dynamics and Local Environments, ‘is whether, beyond the limits of the nation-state, at the supranational and global levels, capitalism’s potential for playing ecological, social, and cultural havoc can be brought back under control.’footnote1 The market’s capacity to steer the economy and bring new information to light is beyond question. But markets only respond to messages coded in the language of prices. They are insensible to their own external effects, those they produce in other domains. This gives the liberal sociologist Richard Münch reason to fear that we will be faced with the depletion of non-renewable resources, cultural alienation on a mass scale, and social explosions unless we succeed in politically fencing-in markets which are, as it were, running away from enfeebled and overburdened nation-states.

It is true that states in advanced capitalist societies have stepped up, rather than defused, capitalism’s capacity to commit ecological mayhem in the post-war period, and that they have built up social security systems with the help of welfare-state bureaucracies hardly given to encouraging their clients to take charge of their own lives. Yet, in the third quarter of this century, the welfare state did succeed in substantially offsetting the socially undesirable consequences of a highly productive economic system in Europe and other oecd states. For the first time in its history, capitalism did not thwart fulfilment of the republican promise to include all citizens as equals before the law; it made it possible. For the democratic constitutional state also guarantees equality before the law, in the sense that all citizens are to have an equal opportunity to exercise their rights. John Rawls, the most influential theoretician of political liberalism writing today, speaks in this connection of the ‘fair value’ of equitably distributed rights. Confronted with the homeless, whose numbers are silently increasing before our very eyes, we are reminded of Anatole France’s bon mot: the right to ‘spend the night sleeping out under a bridge’ should not be the only one everybody enjoys.

If we read our constitutions in this material sense, as texts about achieving social justice, then the idea of citizens prescribing laws for themselves—according to which those subject to the law should regard themselves as the ones who make the law—takes on a political dimension: that of a society which deliberately acts upon itself. In constructing the welfare state in post-war Europe, politicians of all stripes were guided by this dynamic conception of the democratic process. Today, we are coming to an awareness that this idea has so far been realized only in the framework of the nation-state. But if the nation-state is reaching the limits of its capacities in the changed context defined by global society and the global economy, then two things stand and fall with this form of social organization: the political domestication of a capitalism unleashed on a planetary scale, and the unique example of a broad democracy that works at least reasonably well. Can this form of the democratic self-transformation of modern societies be extended beyond national borders?

I propose to examine this question in three stages. We need first to see how the nation-state and democracy are interconnected, and to identify the source of the pressures this unique symbiosis is currently being subjected to. I shall then briefly describe, in the light of this analysis, four political responses to the challenges raised by the post-national constellation; these responses also set the parameters of the ongoing debate about a ‘Third Way’. Finally, using this debate as a springboard, I shall map out an offensive position on the future of the European Union. If, in discussing their future, the generally privileged citizens of our region wish to take the viewpoints of other countries and continents into account, they will have to deepen the European Union along federative lines so as to create, as citizens of the world, the requisite conditions for a global domestic politics.

The trends that are today attracting general attention under the catch-all rubric ‘globalization’ are transforming a historical constellation characterized by the fact that state, society, and economy are, as it were, co-extensive within the same national boundaries. The international economic system, in which states draw the borderline between the domestic economy and foreign trade relations, is being metamorphosed into a transnational economy in the wake of the globalization of markets. Especially relevant here are the acceleration of world-wide capital flows and the imperative assessment of national economic conditions by globally interlinked capital markets. These factors explain why states no longer constitute nodes endowing the worldwide network of commercial relations with the structure of inter-state or international relations.footnote2 Today, it is rather states which are embedded within markets than national economies which are embedded within the boundaries of states.