Future-proofing the European model
Inspired by Schumpeter’s seminal 1942 work Capitalism, Socialism and Democracy, this report identifies the triangular relationship between capitalism, sustainability and democracy as the fundamental dynamic that will decide Europe’s future. Currently, tensions between these are undermining Europe’s ability to benefit from the value[1]creating effects of capitalism, and they risk derailing Europe’s sustainability efforts and destabilising democracy. However, we argue that Europe is potentially well suited to combine capitalism, sustainability and democracy in a synergistic and mutually reinforcing relationship, and thus to forge a new path for a prosperous, thriving and sustainable society. To succeed, Europe and the EU will need to become much more dynamic, agile and above all, effective in responding to the geopolitical and economic challenges they are confronted with. This in turn requires far-reaching changes to how we govern, regulate and legislate, as well as to how we invest in future prosperity and well-being.
We hope our analysis provides a relevant complement to the 2024 Draghi report, by proposing how to strengthen competitiveness and innovation while driving sustainability and ensuring social cohesion. We argue that the EU’s ability to help shape a new world order requires both agency (economic and technological clout) and a powerful narrative (offering something others aspire to and want to be part of). In a world increasingly characterised by growing nationalism, isolationism and polarisation, the EU must reinvent itself if it wants to uphold democratic values and personal freedoms, drive sustainability, ensure its international competitiveness and prosperity and
contribute to a rules-based global order.
The analyses presented in this report call for the future-proofing of the European model. The EU policy debate needs a broader conceptual framing. A one-sided policy focus on competitiveness risks undermining the overall European project. Europe’s DNA and future depend on a dynamic combination of capitalism, sustainability and democracy, where one dimension cannot be isolated from the other. Several concrete lines of action are proposed, addressing the current strains that capitalism, sustainability and democracy face. More broadly, the claim is made that the EU’s current governance structure is not really fit for purpose. It lacks essential further integration elements, such as a European capital market, a European energy union or single regulatory regimes in areas of common strategic interest, as highlighted by Draghi and Letta among others. An excessive focus on process rather than outcome is preventing the EU from experimenting with new solutions and scaling those that work, from taking necessary but responsible risks, from tackling structural problems and from seizing opportunities when they present themselves.
SOETE Luc;
SCHWAAG SERGER Sylvia;
AYALA Luis;
FORAY Dominique;
GEORGHIOU Luke;
GOLEBIOWSKA-TATAJ Daria;
GROS Daniel;
JANSSEN Matthijs;
KATTEL Rainer;
KIVIMAA Paula;
LAURENT Eloi;
LUNN Pete;
MAZAK-HUEMER Alexandra;
MCCANN Philip;
RADOSEVIC Slavo;
RENDA Andrea;
RODRÍGUEZ-POSE Andrés;
ROGGE Karoline;
TUKKER Arnold;
BENCZUR Peter;
BOSKOVIC Ana;
DIJKSTRA Lewis;
MIEDZINSKI Michal;
REIMERIS Ramojus;
RUEDA CANTUCHE Jose Manuel;
STIERNA Johan;
CORNET Benoît;
ENTSMINGER Joshua;
VANKAN Arthur;
SOETE Luc;
SCHWAAG SERGER Sylvia;
STIERNA Johan;
LANDABASO ALVAREZ Mikel;
2026-03-27
Publications Office of the European Union
JRC144547
978-92-68-34362-3 (online),
978-92-68-34363-0 (print),
OP KJ-01-25-598-EN-N (online),
OP KJ-01-25-598-EN-C (print),
https://publications.jrc.ec.europa.eu/repository/handle/JRC144547,
10.2760/1893644 (online),
10.2760/5791695 (print),
