This article takes as its subject the growth of “governance beyond the state.” It highlights the problems resulting from the large number of organizations, networks and practices which are making authorita- tive rules and policies outside the state, and which lie beyond the control of nationaldemocratic and consti- tutional structures. Having set out the double dilemma posed by the rapid growth of transnational governance and its problematic relationship to democracy, the article criticizes existing approaches to the dilemma. The dominant current perspective, which I label the “compensatory approach,” takes the view that democracy cannot be transposedfrom the national to the transnationalarena, and that other compensatory mechanisms must be found to regulate transnationalgovernance. I take issue with the general consensus that democratization of transnational governance is not plausible ,and I argue that any convincing attempt to reform transnational governance must contend with the democracy problem. Although our contemporary understanding of the concept of democracy is closely tied to the state context, I argue that we should not jettison democratic ideals when attempting to design more legitimate governance structures beyond the state. Rather, we should acknowedge the powerful normative and social appeal of democracy as a governing ideal, try to identify its co ceptual “building blocks,” and think about the possible design of legitimate democracy-oriented governance processes beyond and between states.

In this spirit, the article proposes an approach to transnational governance which I call the democratic-striving approach. To ensure the public-oriented nature of norms and policies, this approach is built on one particular building-block of democracy: the fullest possible participation and representation of those affected. To illustrate the general argument in more concrete terms, the article draws on the example of the InternationalFinancialInstitutions and the recent reform of their development-assistance policies, known as the Poverty Strategy Reduction Program. The example demonstrates the practical potential of the democratic-striving approach for the reform of transnational governance, and suggests that it could be applied to many other instances of governance beyond the state.