The European Union has been an astonishing success. It has helped create prosperity and peace across a continent devastated by the two most destructive wars in human history and then divided by an iron curtain. Its challenge now is to adapt to the world of the 21st century.

On March 25 1957, the six original members (Belgium, France, Germany, Italy, Luxembourg, Netherlands) signed the treaties known as the treaties of Rome. Today, after successive enlargements, the EU has 27 members, with an aggregate population of 493m that generates 30 per cent of world gross product, at market prices. If imitation is the sincerest form of flattery, then enlargement is flattery’s apotheosis. Each wave of members has chosen to absorb not just the EU’s values, but its body of laws, the celebrated acquis communautaire, recently estimated at 170,000 pages of legislation.

The great achievement of the EU is to establish the co-operative “service state” as the norm across the continent. Such a state sees its purpose as serving its citizens, not dominating them, and as co-operating with other states, not dictating to them. The genius of the founders was to realise that a law-governed market economy was the means to this end. It would do so by binding the discretionary interventions of each, thereby creating predictability and stability for all.

The remainder of Martin Wolf’s column can be read here (FT.com subscribers only). Discussion from our guest economists is free.

Is the market turbulence of the last week telling us something or is it no more than “a tale told by an idiot, full of sound and fury, signifying nothing”? Some analysts are prepared not only to explain day-to-day movements in markets, but to predict them. I am neither clever enough for the former, nor rash enough for the latter. I am prepared, however, to make four statements: first, a period of market volatility is welcome; second, core equity markets do look overvalued; third, that this does not appear to be the case is due to the extraordinary condition of the world economy; finally, the big question is how long those conditions will endure.

Any long period of market stability encourages speculation. Taken to excess, such risk-taking, particularly when fuelled by huge amounts of borrowing, can create significant instability. At a time when asset markets are generally buoyant and risk premiums low, the need for a reminder of riskiness is valuable. It is far better, as natives of San Francisco must know, to suffer a series of mini-earthquakes than a long period of calm, followed by a huge one. Similarly, euphoria in markets is dangerous. From time to time it needs to be punctured, before bubbles reach the proportions seen in Japanese markets in 1990 and US markets in 2000.

The remainder of Martin Wolf’s column can be read here (FT.com subscribers only). Discussion from our guest economists is free.