Introduction

"When I use a word,... Humpty Dumpty said in rather a scornful tone, ...it means just what I choose it to mean ' neither more nor less." Lewis Carroll, Alice in Wonderland.

Commentators on the future of the state have forecast doom, catastrophe and emasculation since the eighteenth century. The logic of economic interdependence meant limits to the state's traditional role as protector and regulator of its citizens . Numerous observers such as Norman Angell in 1912 and the interdependence theorists of the 1970s hypothesized the imminent marginalisation of the state. This trend has emerged again emboldened in the globalisation debate.

Theorists: Globalists, Sceptics and others

In order to devise a satisfactory answer to this question it is necessary to provide an idea of where the debate sits currently. There are three broad streams of thought about the position of the state in the globalisation debate: the globalists (or sometimes hyperglobalists), the skeptics and a middle way.

Globalists see the world as more or less evolving towards one world; states as we know them are increasingly irrelevant in the global structure. Some of the leading proponents are Reich, Ohmae, Strange and Friedman. Whilst there is some internal debate, most generally believe that the current bout of globalisation is the most intense of a process stretching back to the fifteenth century (Fulcher 2000: 525, Scholte 2000: 63).Control of territory and population are being progressively removed from the national state. The growth of international law; economic integration; challenges from below by ethnic groups and transnational movements; and the growth of communication technology making policing borders more difficult are all contributing to the state's demise (Fulcher 2000: 523). This group contains not only the enthusiasts but also those fearful of the consequences of such changes.

Globalists are confronted by the sceptics. The sceptics generally acknowledge an increasing integration between the activities of states, but still see the world as one composed of nation'states whose borders matter. However, some of the more extreme sceptics dismiss globalisation as a myth (Zysman in Scholte 2000: 18). Supposedly global companies are still very much embedded in their respective countries and their actions are enmeshed in the logic of interstate relations (Wade 1996: 70 ' 75).

In between these positions a moderate group has emerged. They accept that globalisation is a distinctive and important development in the contemporary world, but it is not the most important development and its spread has been uneven (Scholte 2000: 18). The state is still an important factor (Hirst and Thompson 1996, Weiss 2000, Helleiner 1995 in Cohen 2002: 77) and retains significant capacities to regulate the terms of economic activity that crosses their borders. Other observers want to look beyond the economic aspects of globalisation and examine the relationship between the modern state and its territorial borders (Cohen 2002:77).

Unfortunately for the globalists despite their visions of a brave new world the evidence does not support their view of an emerging stateless world. However, the sceptics also are mistaken to suggest that globalisation is not distinctive and that the state has remained unaltered. I will take more of a moderate position that recognises globalisation as distinctive but the state is still a central unit in organising world politics.

The argument

This essay will argue that the state is not retreating from the forces of globalisation. Rather the state still possesses considerable resources and is redefining what roles it will take and what functions it will pursue. State change is not merely a reaction to globalisation; the state has and will continue to shape the many aspects of globalisation. Furthermore, we can observe that many of the changes to the state both ideational and material in nature that have occurred in state have little to do with globalisation.

However if we are to draw any analytically parsimonious conclusion from answering this question, then it must be acknowledged that there is no such thing as a stock standard and homogenous state. States all possess similar claims to authority in the Westphalian system. The UN Charter buttresses this authority. However they come in all different forms and with widely varying capabilities of enforcing their rights. Therefore many if not most of the conclusions that this essay reaches are most relevant to advanced western capitalist states.

Before we can embark upon an exploration of this question we must define two of the most contested and misused areas of terminology in political science: globalisation and the state. Mountains of scholarship have gone into trying to formulate coherent and all encompassing definitions of both these concepts. However, all this essay will attempt to do is give a general but workable definition for this question.

From there we will examine four separate realms where the forces of globalisation and the state interact: immigration, the Keynesian welfare state, finance markets and changing notions of community both within and across states. Across these areas we see examples where the state has changed its behaviour concurrently with the current bout of globalisation. There is of course some causal interrelationship between the two. But clearly the demise of the stable and all encompassing state from the immediate post war period cannot be totally ascribed to globalisation. Practices and visions of what the state should do have moved a long way from the all pervasive Keynesian welfare state to the Competition or Virtual State that is presently evolving. However, to answer the question at hand we must decide how much globalisation has to do with it.

Forces of Globalisation

Globalisation is a highly contested concept, wherever it is used or abused. The primary cause of this is that observers are often referring to different phenomenon (Stalker 2000, Scholte 2000: 13 ' 15). Is globalisation the new world order as Friedman (2000: 5) claims? Or is it something specific and unique as Scholte (2000: 17 ' 19) believes?
Cohen (2001:81) sees globalisation as a set of economic, cultural and technological processes that are reducing the significance of territorial boundaries in shaping the conditions of life of persons and societies. The processes are the increasingly global scope and operation of capital markets, the global integration of systems of production and consumption, and the flow of information and cultural practices around the world via communication technologies. However, there is a bias towards seeing it as merely economic processes. If we are to more fully understand how these forces effect the state then we need to take a deeper look at what actually defines globalisation.

Philip Cerny (1999: 154) views globalisation as the sum total of the wide range of political, economic and social processes of transnationalisation and internationalisation taking place in the world today. However, many observers such as Hirst and Thompson (1996: 7) view it more as an economic phenomenon. For them globalisation is, "in its radical sense ... the development of a new economic structure, and not just conjunctural change towards greater international trade and investment within an existing set of economic relations." Scholte (2000: 15 ' 16) dismisses much of the above phenonomen associated with globalisation as already covered by existing definitions (such as internationalisation) and sees only one new phenomenon: the decline of the importance of boundaries or supraterritoriality.

So where does that leave us? There is agreement among commentators (Dicken 1998: 152; Harvey 1989: 284, Robertson 1992: 8 in Fulcher 2000: 524) that globalisation involves the destruction of distance and the development of relationships that cut across national boundaries. Furthermore, some observers (Stalker 2000 in Cartwright 2001: 415) such as Robertson (1992:8 in Fulcher 2000: 525) argue that globalisation involves the intensification of consciousness of the world as a one unit. Therefore we might accept Fulcher's (2000:525) synthesis that: [globalisation is] the development of relatively distanceless relationships that extend beyond national units and involve a growing consciousness of the world as a whole. However, that would be to neglect perhaps the only unique element to globalisation: deterritorialisation (Scholte 2000: 15 ' 16). This being the reconfiguration of geography so that social space is no longer wholly mapped in terms of territorial places. Therefore perhaps this is more appropriate as a working definition:

"... globalisation is the deterritorialisation of culture, and the formation of a total and integrated economic system, stimulating political interaction between states and promoting the cultural diversity of identity (Petito 2001: 1140)."

The Sovereign State

A state possesses a territory, has a resident population, a government (effective or otherwise) and is free to conduct foreign relations (James 1999: 459) States have always been in Cohen's (2001: 79) view boundary setting and maintaining institutions over the areas they claim authority: both internally and externally. Hence it should come as no surprise that what the state chooses to regulate has evolved since the seventeenth century. During this time religion was of prime importance to the state; currently economic prosperity occupies this position.

The state emerged from the Great Depression and the Second World War with greatly enhanced powers. These were used with the support of institutions created for the new global structure of 'embedded liberalism' to produce strong Keynesian welfare states (Ruggie in Cohen 2001: 82). Since the 1970s emerging globalisation helped break down this model of the state. More important however was that some states, especially the US, desired a new dynamic and competitive world economic order. A 'competition state' or to use Rosencrance's term a 'virtual state' (1996: 72) developed. This state determines overall economic strategy and invests in its people; formerly state functions are then contracted out to specialists. Acting as a shield from economic competition has been replaced as the state's primary purpose. It now acts as a facilitator for the increasing economic and cultural interdependence of globalisation (Cohen 2001: 83).

These changes that have occurred concurrently with globalisation have led globalists to see the state as retreating. They claim that sovereignty is disappearing or transferring both upwards to supranational bodies such as the WTO or downwards to regions (Krasner 2001: 231). Those who argue this misunderstand sovereignty. This is not surprising as like globalisation it is a thoroughly contested subject.

James (1999: 4) sees sovereignty as very straightforward: it involves having no superior law making authority than the state itself. Petito (2002: 1139) agrees when he writes that, "traditionally sovereignty is defined as the supreme power exercised within a territorial unit and the world is divided into territorial units." However, others ( Krasner 2001: 233, Drahos and Braithwaite 2001: 106) see it as a broader more eclectic concept, like a bundle of goods. For him sovereignty is,

The attributes of sovereignty need never all be present at the same time; one being violated, voluntarily or not doesn't mean that it has been lost forever. Commentators like Barkin (2001:43) have simplified sovereignty into two broad contexts: internal and external. Internal sovereignty referring to the extent to which the state has authority over what happens within its borders. Both the extent to which it can control it own affairs and to whether it possesses the legitimate authority to do so. External sovereignty refers to the extent to which a state is recognised as the legitimate authority within its borders by other states.

There was a never a halcyon age of absolute sovereignty where the state was all powerful (Krasner 2001: 246 ' 248). Sovereignty is changing in meaning and presently it is becoming more conditional (Petito 2001: 1143), especially in interaction with external bodies: both states and International Governmental Organisations. The neo'liberal changes to the role and purpose of the state have been assisted by the globalisation that it helped create. However, these new multilateral governing bodies do not amount to a form of global governance that will supersede the state (Cohen 2001: 85, Drahos and Braithwaite 2001: 107). State authority or sovereignty has taken on a new role as a promoter of a global economic system and the national interests and actors who are willing to participate in it.

The state has changed its emphases, functions and priorities due to globalisation and ideology; it has retreated little. It has also helped guide and facilitate globalisation. To illustrate this point we must examine a number of arenas where they interact.

Interaction between the State and Globalisation

Immigration

The late twentieth century has seen a large increase in migration; however, this time in the opposite direction to the late nineteenth century (Hirst and Thompson 1996: 22, Krasner 2001:235), from Empire to the metropole: both however have been motivated greatly by economic pressures. This trend has seen all advanced capitalist countries under pressure from powerful domestic movements to reintroduce strict immigration controls ' in other words to reterritorialise the state's space. Hence this could be seen as an example where the state is not changing. However, the state has not reimposed such controls. If it had done so, it could represent in Conley's (2002: 450) words "an important counter trend to the general thrust of economic liberalization and globalisation". However, like the examples offered, the western state is not merely reacting to these trends but is restricting and assisting the processes of globalisation when it perceives them to be in its interests (Cohen 2001: 86, Conley 2001: 450). This is similar to the process of global financial liberalization, which we will explore below.

Two examples demonstrate the state's role as not merely as a passive agent vis'a'vis globalisation. Over the last generation, the USA has developed an economy which demands the influx of large numbers of unskilled workers to occupy poorly paid positions. The US government actively facilitated this flow by altering immigration laws to achieve a better match to the needs of the economy (Cohen 2001: 88). The UK has also performed a similar action in the most recent reform to its immigration legislation. Similarly its economy has generated skill shortages: for both low and highly skilled workers. It has also experienced and tolerated a significant amount of illegal immigration that had gone some way to solving this skill shortage. Therefore instead of letting it to continue spiraling out of control the state has adopted a policy to best utilise this influx of labour. Critics might argue that these examples represent the state merely accepting what cannot be changed. However, that is to forget that there resides a significant, if not majority, domestic support to re 'introduce stricter migration controls. Hence, rather than simply defending its borders, the US and UK have manipulated their control over territory to facilitate the flow of certain types of persons across those borders. And they have done so in a way that generally matches the structures of the increasingly globalised economic system (Cohen 2001: 88).

Emerging Communities and Transnational movements

Another symptom of globalisation, the most novel and unique symptom in the eye's of some observers, deterritorialisation, is the result of the devaluation of citizenship. In most western states there is often little substantive difference between the rights of citizens and the rights of other legal residents ' other than the right to vote. This has occurred to a greater extent in western Europe than the USA. Such a change strikes at the heart of the traditional definition of a state as a bounded community of persons. However illustrative of this change is that despite significant support for reconnecting with the citizenry, such a reconnection has only sporadically occurred. The constituency of the state is no longer only or simply a population of citizens defined by territorial borders and demanding protection from forces outside of those borders (Sassen 1996: 33 ' 62 in Cohen 83: 2001; Scholte 2000: 139 ' 140). It is increasingly the global economy, institutions and émigré communities.

A natural concomitant of the development of broader state constituencies is the emergence of transnational and nonterritorial communities. These new communities are based around professional and managerial class solidarities, gender and sexual orientation, religious affiliation and ethno'nationalism (Scholte 2000: 159 ' 182). Technology has especially promoted the emergence of such groupings. Another aspect of this is the emergence of a universalistic cosmopolitanism best exemplified in the plethora of humanitarian relief campaigns and environmental activism. These developments demonstrate that the state has changed its policy priorities and functions in response to globalisation. However, similar to the other examples provided, the state is not retreating, rather the state as a static ahistorical creature is evolving. This is the most recent evolution that tries to include and manage more disparate communities. This will be a challenging task and might well weaken the state; however, only it has the resources and the authority to do so (Castells 1997: 307 in Fulcher 2000: 536). Moreover it is still the only institution capable of doing so and it has performed this task in the past ' prior to the First World War (Krasner 2001: 237 ' 239).

Welfare State

The welfare state that evolved to ameliorate the vicissitudes of twentieth century capitalism has been pronounced incapable of survival in the globalised world (Esping'Anderson 1994, 1996; Teeple 1995; Bowman and Wagman 1997 in Scholte 2000: 140). It is true that the social insurance elements of the (we will deal with the macroeconomic policy elements below) Keynesian welfare state have been wound back both in fact and in the perceptions of the populace. But is this a case of the state retreating before the irresistible advance of globalisation or something else? The movement towards neo'liberal policies, which include the demise of the Keynesian welfare state, has not however just happened because of globalisation. It has been imposed and steered by national governments, with particular national interests and ideologies, and the international organisations that represent them (Fulcher 2000: 530).

Globalists declare that the footloose nature of capital means that policy autonomy, in particular national taxing powers has been reduced. International competition has resulted in a race to the lowest tax rates. Hence the ability to spend on public services and social transfers is limited. Furthermore, redistributive policies are constrained. However, the evidence seems to suggest that this has not in fact occurred. Firstly generally labour taxation has always been the main source of revenue rather than capital taxation. Furthermore, there appears to be little evidence that the taxation burden on businesses within the OECD is declining; rather the opposite has occurred since the 1970s. Econometric studies also indicate that the more integrated in the world economy a country is the higher they systematically tax capital (Genschel 2003: 513).

The primary reason why the social insurance elements of the welfare state are being dismantled is that they cause problems for the state. The neo'liberal consensus that the Keynesian welfare'state stifles the economy that it serves has been accepted by policy makers in advanced capitalist societies. It does in three ways: by blocking creative destruction through regulation; by taking funds that the market could better use and finally by enhancing citizens dependence on welfare especially in the form of unemployment insurance. The theory and practice suggest that the effect of these factors is to make a state less economically prosperous, therefore they have set about to reform themselves. The forces of globalisation have been helpful to states performing this task by increasing pressure on entrenched interests opposed to such changes within society. (Genschel 2003: 515) However, they have not themselves driven the task of imposing the neo'liberal orthodoxy. Economic integration does not automatically mean that the welfare state is under threat (Scholte 2000: 142). Some would argue that the state has indeed been made stronger as a result (Fulcher 2000: 531).

Finance

Commentators advocating the state's imminent demise have often cited the state's subjection to the whims of impersonal capital flows as decisive evidence in their favour. Whilst it is true that finance markets are the most integrated and least controlled by states of all markets, they still retain significant freedom of action. Capital markets have not sprung out of the ether; they emerged following the relaxations of state capital controls during the 1960s and 70s. There was a growing perception that controls on capital mobility were not only harder to maintain but counterproductive for national economies (Conley 2001: 464). Therefore I would support Helleiner (1995: 150 in Conley 2002: 464) when he argues that today's globalised financial order should be seen as being actively made by political choices and state decisions.

Regardless of the fact that the US has been the main driver of this process, it is still necessary to note that this level of integration remains limited to a few markets. Most markets especially equity ones are still nationally based. More importantly as Sassen (1996: 33 in Conley 2002: 465) notes, is that many of the strategic places where the global processes materialise are embedded in national territories and hence fall, at least partly, under the various state'centered regulatory umbrellas. Furthermore, differences in the cost of capital between states remain wide (Wade 1996: 33). Hitherto formed and nurtured in a single state, financial markets are still beholden them. Political and economic decisions by these states acting both individually and collectively will determine their future status.

Globalists argue state policy is subject to the whims of the most integrated and least regulated of markets. It does not necessary follow that the state is declining in relevance or that the state is significantly constrained in its policy choices. They hold two broad concerns: one is the risk of systemic failure that states are unable to prevent ' such as occurred in the Asian Financial crisis of 1997'98 and the Long Term Capital Management bailout of 1998; the second is that these markets will place unpalatable constraints on sovereign state's policy choices. This market is volatile and probably requires greater governance than present (Hirst and Thompson 1996: 130 ' 136). Hence the emergence of imperfect supra'territorial structures (Fulcher 2000: 532). The evolution of the IMF into a provider of assistance during these crises is a prime example of this. Moreover other wealthy states, especially the United States using a more capable Federal Reserve, have been able to provide funds and other assistance during these crises (Fulcher 2000: 530). This occurred in both of the above examples, even though at least some of the help was worse than the problem in the Asian Financial crisis.

The second concern is the state has lost the freedom to follow macroeconomic policies of its own choosing. Claims about the constraining effects of globalisation or interdependence on domestic policy autonomy have been advanced as far back as the eighteenth century (Garrett 1998: 822). These have not been borne out in the past: but are they here presently? Many would claim that the golden straitjacket administered by the electronic herd places significant if not overwhelming constraints on policymakers (Friedman 1999: 112 ' 116). However, Genschel (2003: 512) argues that the state's ability to control monetary policy has not been diminished by integration of finance markets. Exchange rate policy is now used rather than interest rates. He notes that there is one occasion when policy autonomy cannot be maintained: this is when a stable exchange rate is also required. This is supported by Garrett (1998: 823) who writes, "[that] governments should simply not feel any compunction to give up monetary autonomy in the era of global financial markets." Despite great integration of financial markets, governments are not hapless victims to their whims; they retain the power and resources to develop new tools to reach the same macroeconomic policy objectives.

Conclusion

The state is not ahistorical. It has evolved almost beyond recognition since the Treaty of Westphalia. Its capacities to influence and control have grown and changed over that time; so have the rights and prerogatives that it possesses as have its priorities. These have changed concurrently with globalisation since the 1960s and have effected how globalisation has emerged. However, a change of ideology has affected to a great extent how states view their purpose and functions.

We can see these developments in each of the examples offered. Changes in finance and the welfare state although ascribed to globalisation have been driven more by a change in ideology. Finance markets despite being the most globalised of all, have not constrained the state terribly much at all. The constraints imposed have been by a move towards a neo'liberal framework. This explanation also rings true for the welfare state. Keynesian welfare statism and restricting capital flows have been deemed ineffective in promoting state interests hence their disappearance.

Changes have also been wrought to the human composition of the state. This has been more attributable to globalisation. However rather than retreating in the face of globalisation the state has redefined its constituency and its functions in order to strengthen itself. Broader constituencies, some not part of traditional definitions of the state, are now answerable to. However although this has seen the development of competing transnational loyalties this is not a novel situation for the state. Furthermore, in spite of strong domestic support for a reterritorialisation of the state, most have resisted.

The state has not retreated from globalisation; it has however changed from the form it emerged from the Second World War. The state made globalisation as much as any factor; it will also continue to do so. Politics reversed previous bouts of integration it remains capable of doing it again.

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