The rejection of the proposed EU constitution by French voters on May 29 and even more decisively by Dutch voters two days later has brought the long brewing European economic, social and political crisis into sudden definition, ensuring that 2005 will earn a place in history books as a moment of globally significant transition. Of the three countries to put the constitution to the popular vote, two have now disdained it. Whatever happens next, one thing is certain: The utopian expectation of a Europe united around a continent wide attachment to a distinctive "Rhineland model" of social-democratic welfarism is at an end.

For at least two decades - and arguably for centuries - Europe has been fractured by a rift between two competing social visions. On the continent itself, the dominant political ideals have been based on a strong bureaucratic state, suspicion of market forces, anti-Americanism, and - critics would add - an affection for anti-Semitic totalitarianism. France is today the most significant flag-bearer of these ideas, which it identifies with the principle of "social solidarity". The "Rhineland model" has long given concrete shape to a moderate version of this social ideal.

In the opposite camp are social trends denounced in France as "ultraliberal" and associated with "Anglo-Saxon" countries, although they are shared today by most of the EU's new Eastern European members. These emphasize limited government, free trade, free markets and a strong trans-Atlantic relationship with the United States. Many on the continent identify such attachments - even in the diluted "third-way" form promoted by British Prime Minister Tony Blair - with an unfettered "savage" capitalism which civilization is duty-bound to repress.

The polarization between these visions has now reached a decisive point, driven by prolonged economic malaise, steep demographic decline, anxieties over immigration, new security threats and geostrategic controversies. In the continent's market-hostile economies unemployment has been stuck at around 10 per cent for over a decade, while growth rates persistently disappoint - on a downward trend - and rapidly greying populations threaten mammoth welfare states with financial ruin. As workforces shrink in proportion to dependents, tax rates spiral upwards, further stalling economic performance in a vicious circle. Europe's drastic relative failure, when compared to soaring Asian and the steadily growing Anglophone economies, further darkens the political atmosphere, as demonstrated by the resurgence of unreconstructed communist and fascist parties that entirely reject globalization and the elementary principles of open societies.

This dialectic - in the most sterile and destructive sense of the word - has now brought Europe to the brink of calamity. There is every indication that, in the wake of the recent votes and with Britain due to assume the rotating EU leadership, it will now fuel rancorous argument that paralyzes every meaningful impulse to reform in the continent's most troubled societies, as irresponsible populism and ethnic chauvinism shout down rational discussion of Europe's profound problems.

It would help if Europe's stagnant economies looked beyond Britain and the United States to the wider world, where the linkage between robust market-oriented reform and economic performance is starkly evident. Unless continental Europe takes "ownership" of such policies and rediscovers its indigenous market-friendly traditions, socio-economic degeneration will inevitably accelerate, bringing in its wake embittered nihilistic politics and the re-awakening of old demons.

The global market revolution of the last 25 years was inspired as much by Austrian economists and Chinese Marxists as by "Anglo-Saxon" politicians, yet Britain's Margaret Thatcher was correct in saying: There is no alternative. Of course, there is "an alternative" of sorts - stagnation, pessimism and decay. People everywhere - not least in Europe - deserve a better future than that.