Individuals frequently give gifts or make transfers to others for altruistic reasons. Parents devote time to raising their children, spouses make sacrifices on each other's behalf, and friends do favors for friends. We are also linked to many people indirectly because we care for someone who cares for them.

Today we are witnessing two dramatic processes: the fragmentation of old states and empires, followed by the emergence of new states and new forms of political association; and the construction of new economies out of the ruins of state socialism. These two processes—the redrawing of political boundaries and the creation of economies—are not independent of one another. In some cases, the desire for a new, more productive economy supplements other motives for state-breaking and state-making. In others, even if the fragmentation of political union results from other factors, such as ethnic divisions or the resurgence of nationalism against a weakened imperial center, the fragments may sort themselves out into new states, federations, or commonwealths, according to what they believe to be maximally productive economic units.

Recent decades have seen a resurgence of contractarian thinking about the nature and origins of the state. Scholars in this tradition ask what constraints rational, self-interested actors might deliberately impose upon themselves. In response, Hobbes, Rousseau, Locke, and other early contractarians answered that laws of property were an attractive alternative to “the war of all against all.” More recently, James Buchanan, Russell Hardin, Mancur Olson, Gordon Tullock, and others have used contractarian principles to justify laws that solve a variety of Prisoner's Dilemmas and other collective-action problems. And in the distributional realm, John Rawls and others have applied contractarian analysis to investigate how material wealth ought to be allocated among people.

Since the publication of John Rawls's A Theory of Justice, normative democratic theory has focused principally on three tasks: refining principles of justice, clarifying the nature of political justification, and exploring the public policies required to ensure a just distribution of education, health care, and other basic resources. Much less attention has been devoted to examining the political institutions and social arrangements that might plausibly implement reasonable political principles. Moreover, the amount of attention paid to issues of organizational and institutional implementation has varied sharply across the different species of normative theory. Neoliberal theorists, concerned chiefly with protecting liberty by taming power, and essentially hostile to the affirmative state, have been far more sensitive to such issues than egalitarian-democratic theorists, who simultaneously embrace classically liberal concerns with choice, egalitarian concerns with the distribution of resources, and a republican emphasis on the values of citizen participation and public debate (we sketch such a conception below in Section I). Neglect of how such values might be implemented has deepened the vulnerability of egalitarian-democratic views to the charge of being unrealistic: “good in theory but not so good in practice.”