‘Globalization’ is a term that has come to be used in recent years increasingly frequently and, arguably, increasingly loosely. In a close analysis of the term, the author focuses on the concept of globalization as the transcendence (rather than the mere crossing or opening) of borders arguing that this interpretation offers the most distinctive and helpful insight into contemporary world affairs. The article goes on to explore one of the key questions raised by this trend, namely how the growth of supraterritorial space has altered capitalism in general, and the role of the state within capitalism in particular. The author concludes by suggesting that globalization poses a threat, it is not (as is often argued) to the state itself, but rather to democracy

A number of commentators on globalization have recently speculated that the logic of modern economic development is making the state redundant.* The argument is hardly new. Early in the twentieth century both Leninists and certain liberal internationalists forecast the demise of the state. Functionalist theories of international integration reiterated the prediction in mid-century while some versions of what was called ‘transnationalism’ recycled the argument in the 1970s. In the latest revival, several best-selling management consultants of the 1990s have suggested that, with the contemporary advance of globalization, the state has seen its day.1 In a similar vein, various public policy analysts have proposed that global companies are creating a world beyond states and nationalities.2

As in previous rounds of this debate, 1990s predictions of the end of the state have provoked insistent refutations. For example, in a series of publications Paul Hirst and Grahame Thompson have maintained that arguments of globalization are greatly exaggerated and that states retain many crucial capacities for governance.3 In the realist tradition of international relations theory, Stephen Krasner has affirmed that in the late twentieth century ‘de facto [state] sovereignty has been strengthened rather than weakened’.4 Sociologists like Michael Mann who ‘brought the state back in’ to their discipline during the 1980s have also been skeptical of any proposition that the state is making its exit from history.5

Of course, one can like Mann, refute the globalism of Reich et al. without turning to the realism of Krasner et al. In this vein Susan Strange has described important shifts in the quality as well as the quantity of state power and authority.6 For his part Phil Cerny has traced a transition ‘from the welfare state to the competition state’ in advanced industrial economies, as governments ‘attempt to respond to, and shape and control, growing international economic interpenetration’.7 Other, more deeply critical analysts of international political economy have proposed that, under globalizing capitalism, a globally oriented state and/or supra-state governance agencies are – without adequate democratic control – supplementing, if not substantially supplanting, the territorial nation-state of old.8

This article likewise regards the relationship between globalization and the state in terms of subtle interplays of continuity and change. Broad underlying continuity is discerned in so far as the state and interstate relations persist at the core of governance arrangements in the contemporary globalizing world. Yet there is also the notable change in the character of the state: its capacities; its constituencies; its policy-making processes; its policy contents; and so on.

This thesis is developed below through an analysis of global capitalism. Both the causes and the consequences of globalization are substantially bound up with a capitalist political economy.9 On the one hand, the dynamics of surplus accumulation have been a major force behind contemporary globalization and on the other, globalization has considerably reshaped the workings of capitalism, including in particular the activities of the state.

To be sure, globalization cannot be reduced to a question of capitalism alone. Thus, when taken as a whole, my study of globalization has not espoused a narrow materialist political economy, it has also accorded causal significance to structures of, for example, identity, community, knowledge, and ecology.10 Yet no account of globalization and the state is adequate without extended attention to capitalism either, and it is regrettable that so much analysis of globalization has neglected even to consider the importance of processes of surplus accumulation.

The remainder of this article elaborates an argument concerning the changing state under circumstances of globalizing capitalism in three sections. First, in view of the great diversity and the usual vagueness of notions of ‘globalization’, it is necessary to specify how that term is understood in the present context. I argue in the first section that ‘globalization’ acquires a distinctive and analytically extremely helpful meaning when it is conceived of as the spread of ‘supraterritorial’ or ‘transborder’ relations. This approach contrasts with the more prevalent conceptualizations of globalization as ‘internationalization’ and/or ‘liberalization’.

The second section examines in general terms the relationship between globalization and capitalism. As a causal force, processes of surplus accumulation are seen to have encouraged the rise of supraterritoriality in three broad ways, namely, through the pursuit of (a) larger market range; (b) lower costs of labor, taxation, and regulation; and (c) new opportunities for accumulation through intangible items such as information, telephone conversations, and mass media productions that circulate in global space itself. At the same time, globalization has also had major repercussions for capitalism. For one thing, a great deal of capital has adopted a supraterritorial mode of organization: in terms of trans-border companies, global strategic alliances, and Transworld business associations. Furthermore, struggles for world market position in the present globalizing economy have encouraged waves of mergers and acquisitions between firms both within and between countries. As a consequence, levels of concentration have risen in many industries. Globalization has also affected a substantial deterritorialization of money that key channel of capital accumulation.

Having developed this broader account of global capitalism, the article turns in the third section to the character and activities of the state in relation to transborder accumulation. Here it is argued that global capitalism has contributed to (a) the end of sovereign statehood; (b) a rise of supraterritorial constituencies; (c) possibly, a decline in interstate warfare; (d) increased constraints on state provision of social security; (e) a growth of multilateralism; and (f) the impracticability of achieving democratic governance through the state alone. In sum, then, although the state survives under globalizing capitalism, it is in at least six important respects a different kind of state.