Abergavenny Left

“Mountains, Markets and Marxists…”

Dan Iles – Despite the onset of globalisation, does the state remain a dominant actor in world politics?

With globalisation the boarders of the world are becoming increasingly blurred. This new web of interconnectedness between territories means the state has lost absolute control over the local area it used to govern. Global institutions are seizing control over economic policy, intergovernmental organisations are annexing legislative organs and Trans-national Corporations are accumulating vast amounts of capital to challenge even the largest economy. It seems that the traditional state, in order to become a competitive entity, has been forced to enter into the world economy by selling off its assets through privatisation, relinquishing its control over the market and trusting the invisible hand of international capitalism. However, has the process of turning into the competitive state meant losing dominance over world politics? The recent financial crisis has demonstrated how dependent the corporations are with the states abilities to harness collective action and to create a secure environment in which they can extract capital. It is also clear that the US state still wields immense coercive influence with its global monopoly of organised violence. This essay will critique the absolutist view of Hyperglobalists by looking closely at the relationship between the state and free flowing financial capital. What will be established is a differential view of the state, on the one side, the dominant western state that devolves its power to corporations, in order to exploit the weaker state by breaking down their borders. It will become clear that instead of fading into a system of global governance, the US state and the Western Bloc are benefiting from the spread of globalisation.

Hyperglobalists believe that the state has lost most if not all of its sovereignty during globalisation. They see the how “increasing economic and cultural connections reduce the power and effectiveness of governments at the nation-state level” (Waters, 1995, 97). The state is seen to be losing vast amounts of power to a civil society of states represented by institutions which do not govern nations but control states through a system of governance. In this process all states, but especially developing ones have surrendered sovereignty to larger supranational political units such as the EU, NATO, WTO, IMF and the World Bank. These “international financial institutions are involved in significant aspects of the economic policy making process of most countries in the developing world” (Bierstecker, 1992, 116). Their Structural Adjustment Programmes have been able to deconstruct the Keynesian state. Through the initiative of economic development; industries and banks were privatised, taxes were reduced and trade was liberalised. This meant that the state had lost direct control over the profits from its resources, manufactured goods and its currency (Willets, 2001, 430). Corporations are being able to maximise capital extraction particularly over the poorer countries. This means that many TNCs are now economically larger than most governments (Willets, 2001, 428), giving them huge financial coercive strength. Through this Hyperglobalists see a system of global governance is appearing, whereby the borders between states are disappearing.

However it is clear that the power of a state within this globalised system is highly dependent on it stage of development. On the one side matured western states, which are host to most of the biggest transnational corporation’s headquarters (Willets, 2001, 429) are able to benefit from the spread of free market capital. Their “commercial policy institutionalised the monopolising tendencies of merchant capital as a means of enlarging national wealth” (McMichael, 2000, 103). In this way the G8 states have invested in the IMF and WTO to open up the financial markets of the developing world so they can extract their cheap primary goods and unregulated labour and generate profit from out-competing their local industries. On the other side, states inside the global South have had to surrender their economic sovereignty in a desperate attempt to alleviate their international debt and boost their economy (Shah, 2008). The US and the Western Bloc have forced a globalised free trade market with the intention of undermining the economies of other states so they can build national profits. In this sense the powerful states have created globalisation to break down the resistance of developing states and open their economies to western exploitation. Thus the states of the global South have been imprisoned into export economies and debt service payments that serve both US and corporate domination. Whilst the ‘superpower’ states still remain to be dominant actors in world politics but only through a mutual relationship with capitalist forces.

These superpowers have made a rational decision to enter into the global market in order to boost the economies that were failing under Keynesianism. In order to adapt to the ‘offshore’ economy states had to enter into the private sphere by “gradual withdrawal from the direct ownership of the means of production,…curtailment of union power [and] lower[ing] regulatory barriers to both domestic and international investment”(Cameron et al, 2004, 18). This is not as a sign of the disappearance of state power, but a shift in the strategy of state based power. “international competitiveness, counts for more in terms of domestic economic growth and prosperity than maintaining an autonomous, self sufficient national economy” (Cerny, 2000, 27). The nature of global capitalist development has meant that by entering into the international institutions, states gain a lot more benefits than by opting out. Indeed “governments are bigger than ever, but under neoliberalism they have far less pretence to being concerned with addressing non-corporate interests” (McChesney, 1998, 13). This neoliberal tactic is allowing large states particularly the US to maintain the position of metropolis and preserve the dependent status of the developing world thereby ensuring there global dominance.

However not every barrier to US hegemony and capitalist profit can be tackled financially. Iraq is an example of a state where financial capital relied on the US Empire to militarily intervene. By invading, the US could control the Middle East oil spigot and use that to advance its economic and military global hegemony. But Halliburton stood “to gain a billion dollars in contracts for oil services” (Harvey, 2003, 18). The capitalists required the military might of the US Empire to conquer Iraq but the US had required the corporate capital accumulation of the private sphere in order to afford its huge military budget. In terms of global interests, it is clear that states and corporations have shared goals. By uniting with globalised capital the US Empire has been able to “extend the fruits of its hegemony by using multilateral enforcement mechanisms to institute a global free trade regime” (McMichael, 2000, 107). The US Empire invests heavily in the international civil society of global institutions in order to achieve economic dominance over the world. However at the same time its actions are underlined with the expansion of free market capital which settles in countries after neoliberal intervention. Through this “an unholy alliance between state powers and the predatory aspects of financial capital form the cutting edge of a ‘vulture capitalism’” (Harvey, 2003, 136) It is this symbiosis of territorially bound state power and free flowing capitalist influence that makes it very difficult to identify the dominant actor in world politics.

Nevertheless, despite this alliance the state is still a big player in world politics. “Unlike economic markets…where firms are constantly the object of successful predation or bankruptcy, states have an impressive record of survival and endurance” (Holsti, 1992, 31). Indeed the recent collapse of financial markets in 2008 has demonstrated the sheer strength of tax payers’ money that the state’s governments can wield. It was the state that controlled the power to save international capitalism, not the financial institutions or the corporations. “The problem with the European Union is that it was an institution designed to manage prosperity. When it confronted serious adversity, however, it froze, devolving power to the component states.” (Friedman, 2008). US and European central banks were able to pump billions of dollars into the failing private banking system, saving global capitalism from near collapse. While suddenly big business yearned for state intervention to stop bankruptcies. Corporations can only extract their capital from forced exploitation, states; however have been able to create complex relationship with their citizens that allow them to extract revenue through taxation. This “structured coherence usually extends well beyond pure economic exchanges, fundamental though these may be, for it typically encompasses attitudes, cultural values, beliefs and even religious and political affiliations among capitalists and those whom they employ” (Harvey, 2003, 102). The multifaceted superstructure that holds a state together generates consent from its citizens and allows it to direct their efforts in directions that international institutions and corporations would struggle. Indeed when things are going well and economic development is occurring states are happy to enter into the favourable conditions of the market. Nevertheless when things go wrong the sheer power of the state in world politics is demonstrated.

It is not only through financial backing that States prop up Corporations. Their ability to protect them from social movements and provide an institutional framework with which to be able to extract capital is vital for capitalist survival. “capital accumulation through price-fixing market exchange flourishes best in the midst of certain institutional structures of law, private property, contract and security of the money form”(Harvey, 2003, 89). The states’ coercive power invested in the police and the armed forces guarantee these public goods and legitimise them within a social contract (ibid). (example of how a corporation was aided by the states public goods needed). The protection that business pays in the form of corporation taxes is in return for these public goods that the state provides and without them they would find it hard to maintain dominance over the workforce. Thus corporations do not operate socioeconomic dominance over the world system because they lack “the entire complex of practical and theoretical activities with which the ruling class not only justifies and maintains dominance but manages to win the active consent of those over whom it rules”(Gramsci 1971, 244). Consequently the state relationship with its citizens along political, administrative and judicial lines makes it able to construct social consent not just military or economic coercion. Therefore in order to achieve uncontested global hegemony, free flowing market forces would have to get “the successful mobilisation and reproduction of ‘active consent’ of…through their exercise of intellectual, moral and political leadership” without the protection of the state (Jessop, 1982, 148). In global terms, this is clearly a long way off.

Indeed globalisation is a process that rather than threatening the hegemonic state’s powers it is intentionally being pursued. It is true that some states in the global system are losing vast amounts of sovereignty from external influence. However the more developed states inside the western bloc have entered into an international capitalist market in order to be able to effectively dominate other states within a modernised world. Just as feudal states formed alliances with religious forces to be able to wield more influence so to have capitalist states allianced themselves with multinational corporations. The US in particular dominates the developed world not only through military means, bought from its extracted capital, but through its institutionalised economic dominance over a dependent developing world. The state, however, has proved that it does not solely depend on the market for its strength but also it’s coercive and legitimate power over its people. It is this that corporations are dependent upon for their ability to survive and participate within as well as beyond the state system. As well as this, globalised international organisations that Hyperglobalists claim to have appropriated state power are dependent on state funding to exist and easily become useless when states reclaim their sovereignty to follow internal interests. The symbiotic relationship between the state and the globalised capitalist market makes it very difficult to say that the state is the only dominant force in world politics. However the hegemonic state has effectively evolved to fit into the competitive capitalist system so that it can remain to be the dominant actor in a globalised world.


Biersteker, T. J. 1992 ‘The ‘Triumph of Neoclassical Economics in the Developing World: Policy Convergence and bases of governance in the International Economic Order’ in ‘Governance without Government: Order and Change in World Politics’, J. Rosenau, N. Czempiel, E. (eds), (Cambridge University Press)

Cameron, A. Palan, R. 2004, ‘The Imagined Economies of Globalization’ (Sage)

Cerny, P. G. 2000, ‘Structuring the Political Arena- Public Goods, States and Governance in a Globalising World’ in ‘Global Political Economy’, Palan, R. (eds) (Routledge)
Freidman, G. 2008 ‘2008 and the Return of the Nation-State’ on http://www.stratfor.com/weekly/20081027_2008_and_return_nation_state, Date Accessed: 18th December 2008
Gramsci, A. 1971 ‘Selections from Prison Notebooks’, Hoare, Q. Smith, G. N. (eds, translation) (Lawrence and Wishart)
Harvey, D. 2003 ‘The New Imperialism’ (Oxford University Press)

Holsti, K. J. 1992 ‘Governance without government: polyarchy in nineteenth- century European international politics’ in ‘Governance without Government: Order and Change in World Politics’, J. Rosenau, N. Czempiel, E. (eds), (Cambridge University Press)
Jessop, B. 1982 ‘The Capitalist State’ (Martin Robertson & Company Ltd)
McChesney, R. 1998 ‘Introduction’ in ‘Profit over people – Neoliberalism and Global Order’ Chomsky, N. (eds) (Seven Stories Press)

McMichael, P. 2000 ‘Globalisation: trend or project’ in ‘Global Political Economy’, Palan, R. (eds) (Routledge)

Shah, A. 2008 ‘Structural Adjustment—a Major Cause of Poverty’, http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty Date accessed: 18th January 2009

Waters, M. 1995 ‘Globalisation’ (Routledge)
Willets, P. 2001 ‘Transnational actors and international organizations in global politics’ in ‘The Globalization of World Politics- An introduction to international relations’, third edition Baylis, J. Smith, S. (Oxford University Press)

February 28, 2009 - Posted by | Uncategorized

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