This article explores the roles of markets, states, and partnerships in economic co‐ordination and considers their respective tendencies to failure. The first section addresses the growing interest in governance and seeks explanations in recent theoretical developments. The second section then asks whether the rise of the governance paradigm might also reflect fundamental shifts in economic, political and social life, such that governance will remain a key issue for a long time, or is a response to more cyclical shifts in modes of co‐ordination. The third section considers the logic of ‘heterarchic governance’ in contrast to anarchic, ex post co‐ordination through market exchange and imperative ex ante co‐ordination through hierarchical forms of organization. It also offers some preliminary reflections on the nature, forms, and logic of ‘governance failure’. The final section addresses the state's increasing role in ‘metagovernance’, that is, in managing the respective roles of these different modes of co‐ordination.