With the end of the millennium approaching, the world is besieged by potential crises that require collective action, motivated for the good of the world community. These challenges involve global warming, a thinning ozone shield, contamination of water supplies, nuclear weapon proliferation, terrorism, antibiotic-resistant diseases, and increased income inequalities within and among nations. Are nations that cherish their autonomy prepared to cooperate in an unselfish fashion to confront collectively these challenges? An even more provocative question asks whether most of these challenges really require a “new world order,” for which nations eschew nationalism to form supranational bodies to deal with crises. Classical economics rests on the principle that, when markets function properly, the uncoordinated actions of self-interested agents result in an efficient outcome, from which no one can be made better off without making someone else worse off. Roughly speaking, the selfish pursuit of one's well-being promotes an optimum outcome. Can this analogy be applied to the international level, so that the self-interested pursuits of a nation's well-being will lead to a global optimum? As shown below, market failures can spell difficulties for these principles at both the national and international levels, and it is these market failures that are behind many of the crises confronting the world today. But the existence of market failures does not necessarily mean that nations must form governments beyond the national level – that is, supranational governments – to confront these challenges successfully.