World capitalism has been undergoing a profound restructuring since the 1970s. Many have come to refer to this process as globalization, although what this concept exactly means, the nature, extent and importance of the changes bound up with the process, is hotly debated. In my view, globalization is a concept useful intellectually and enabling politically. It helps us to organize empirical information on the restructuring of capitalism in such a way as to provide explanation on the nature and direction of world social change at the dawn of a new millennium, and therefore to gain a better grasp on the prospects for emancipatory social action. In this essay I will analyze capitalist globalization and develop an historical materialist analysis of the transnationalization of the state. Some of what Marx had to say about the world in his day no longer applies but the method of historical materialism as knowledge grounded in praxis is not restricted to particular historical circumstances. Indeed, historical materialism is emancipatory precisely because it allows us to cut though the reification that results from naturalizing historical arrangements and reveals the historical specificity of existing social forms.

I will argue here that the nation-state is an historically specific form of world social organization that is in the process of becoming transcended by capitalist globalization. The debate on globalization has increasingly centered on the relation of the nation-state to economic globalization. But the issue of globalization and the state has been misframed. Either the nation-state (and the inter-state system) is seen as retaining its primacy as the axis of international relations and world development in a dualist construct that posits separate logics for a globalizing economic and a nation-state based political system, or the state is seen, as in diverse "end of the nation-state" theses, as no longer important. Rejecting these frames, I intend here to clarify the relationship between globalization and the nation-state by critiquing and moving beyond this global-national dualism and by developing the concept of a transnational state (henceforth, TNS). I call for a return to an historical materialist conception of the state, and on this basis explore three interrelated propositions: 1) economic globalization has its counterpart in transnational class formation and in the emergence of a transnational state (henceforth, TNS) which has been brought into existence to function as the collective authority for a global ruling class; 2) the nation-state is neither retaining its primacy nor disappearing but becoming transformed and absorbed into this larger structure of a TNS; 3) this emergent TNS institutionalizes a new class relation between global capital and global labor.

This essay is divided into six parts. The first discusses globalization as a new stage in the development of world capitalism. The second calls for a break with the Weberian conception of the state that underlies much discussion of globalization. This section also develops the concept of a TNS. The third situates the rise of a TNS in the context of a new class relation between global capital and global labor. The fourth reviews empirical evidence for the rise of a TNS between the 1960s and the 1990s. The fifth examines the transformation of national states as part of the globalization process. Parts four and five also specify the relationship between the national state and the TNS. Finally, the sixth refers by way of conclusion to the prospects for emancipatory social action in light of the preceding. I should note, as a caveat, that space constraints to preclude a full discussion of the theoretical and analytical issues at hand.

Globalization is a relatively new idea in the social sciences. But it constitutes, in my view, not a new process but the near culmination of the centuries-long process of the spread of capitalist production relations around the world and its displacement of all pre-capitalist relations ("modernization"). It marks the triumph of the capitalist mode of production, what Istvan Meszaros calls "the end of capital's historical ascendancy." The capitalist system since its inception has been expanding in two direction, extensively and intensively. The final phase in capitalism's extensive enlargement started with the wave of colonization of the late 19th and early 20th century and concluded in the 1990s with the reincorporation of the former Soviet bloc and Third World revolutionary countries. Under globalization, the system is undergoing a dramatic intensive expansion. Capitalist production relations are replacing what remains of all pre-capitalist relations around the globe. The era of the primitive accumulation of capital is coming to an end. All remaining "Chinese walls" the world over are being battered down in hothouse fashion. In this process, those cultural and political institutions that fettered capitalism are swept aside, paving the way for the total commodification or "marketization" of social life worldwide.

Economic globalization has been well researched. Capital has achieved a newfound global mobility and is reorganizing production worldwide in accordance with the whole gamut of political and factor cost considerations. This involves the worldwide decentralization of production together with the centralization of command and control of the global economy in transnational capital. In this process, national productive apparatuses become fragmented and integrated externally into new globalized circuits of accumulation. Here we can distinguish between a world economy and a global economy. In the earlier epochs nations were linked together through commodity exchange and capital flows in an integrated international market (a world economy). Different modes of production were "articulated" within a broader social formation, or a world system. The globalization of the production process in the current epoch, however, is unifying the world into a single mode of production and a single global system and bringing about the organic integration of different countries and regions into a global economy. The increasing dissolution of space barriers and the subordination of the logic of geography to that of production, what some have called "time-space compression," is without historic precedence. It compels us to reconsider the geography and the politics of the nation-state.

The political reorganization of world capitalism has lagged behind its economic reorganization, with the result that there is a disjuncture between economic globalization and the political institutionalization of new social relations unfolding under globalization. Nevertheless, as the material basis of human society changes so too does its institutional organization. Globalization represents a transition from the nation-state phase of capitalism to a qualitatively new transnational phase. This transnational phase is not a radical rupture but an outgrowth of capitalism's development, characterized by a period of major restructuring of the system, including its institutional form. Each epoch in capital's historical ascendancy has seen a successive expansion of the system over the preceding epoch and has also seen the establishment of sets of institutions that made this expansion possible and organized long-term cycles of capitalist development. From Westphalia into the 1960s, capitalism unfolded through a system of nation-states that generated concomitant national structures, institutions, and agents. Globalization has increasingly eroded these national boundaries, and made it structurally impossible for individual nations to sustain independent, or even autonomous, economies, polities, and social structures. A single headquarters for world capitalism had become untenable as the process of transnational market, financial, and productive integration proceeded in recent decades. A key feature of the current epoch is the supersession of the nation-state as the organizing principle of capitalism, and with it, of the inter-state system as the institutional framework of capitalist development. Capitalism is a constantly revolutionizing force which perpetually reshapes the world in new and often quite unexpected configurations. In the emerging global capitalist configuration, transnational or global space is coming to supplant national spaces. There is no longer anything external to the system. The internal social nexus is a global one. Organic social relations are always institutionalized, which makes them "fixed" and makes their reproduction possible. As the organic and internal linkage between peoples become truly global, the whole set of nation-state institutions is becoming superseded by transnational institutions.

Globalization has posed serious difficulties for theories of all sorts. The embedded nation-state centrism of many extant paradigms, in my view, impedes our understanding of the dynamics of change under globalization. My propositions regarding the integration of the entire superstructure of world society is a conception of the current epoch that differs from that of world system analysis, which posits a world system of separate political and cultural superstructures linked by a geographic division of labor, and from many Marxist analyses, which see the nation state as immanent to capitalist development. The notion that the continued internationalization of capital and the growth of an international civil society has involved as well the internationalization of the state has been recognized by a number of traditions in the social sciences. And the interdisciplinary literature on globalization is full of discussion on the decreasing power and significance of the nation-state and the increasing significance of supra or transnational institutions. However, what these diverse accounts share is a nation-state centrism that entraps them in a global-national dualism. They assume phenomena associated with a TNS to be international extensions of the nation-state system. The conception is one of international institutions created by nation-states individually or collectively as mechanisms to regulate the flow of goods and capital across their borders and to mediate inter-state relations. Here I wish to go beyond such nation-state centrism and to distinguish between international and transnational (or global). The former is a conception of world dynamics founded on an existing system of nation-states while the later identifies processes and social relations that have superseded that system.

The question of the state is at the heart of the globalization debate. But this debate has been misinformed by the persistent conflation of the nation-state and the state. The two are not coterminous. This conflation is grounded in a Weberian conception of the state that informs much analysis of this subject. For Weber, the state is a set of cadre and institutions that exercise authority, a "legitimate monopoly of coercion," over a given territory. In the Weberian construct, the economic and the political (in Weberian terms, "markets and states") are externally related, separate and even oppositional, spheres, each with its own independent logic. Nation-states interact externally with markets. Consequently, globalization is seen to involve the economic sphere while the political sphere may remain constant, an immutable nation-state system. State managers confront the implications of economic globalization and footloose transnational capital as an external logic. This has become the dominant framework for analysis of globalization and the state, especially prevalent in realist approaches to international relations, ever since Raymond Vernon published his seminal Sovereignty at Bay in 1971. In the globalization literature this approach emphasizes the increasingly impotence of nation-states in the face of world market forces.

The state-market dualism is closely related to the global-national dualism. Globalization is said to be overstated since nation-states "have more power" than is claimed, or because there are "national" explanations that explain phenomena better than globalization explanations. Some point to the continued relevance of nation-states to claim that globalization is overstated or even imaginary. In this construct, what takes place "within" a nation-state becomes counterposed to what takes place in the global system. In these recurrent dualisms, economic globalization is increasingly recognized but is analyzed as if it is independent of the institutions that structure these social relations, in particular, states and the nation-state. The problem is manifest, for instance, in the notable work of sociologist Christopher Chase-Dunn, Global Formation, which argues from a world-system perspective for a dual logic approach. At the economic level the global logic of a world economy prevails, whereas at the level of the political a state-centered logic of the world-system prevails. Relatedly, much has been written about "global governance," an approach that assumes as well the duality of a nation-state system with its own logic alongside a global economy. Nation-states are to cooperate in coordinating expanding international activity and in confronting the problems of the new age.

The way out of these antinomies is to move beyond Weber and return to a historical materialist conception of the state. In the Marxist conception, the state is the institutionalization of class relations around a particular configuration of social production. The separation of the economic from the political for the first time under capitalism accords each an autonomy - and implies a complex relationship that must be problematized - but also generates the illusion of independent externally-related spheres. In the historical materialist conception, the economic and the political are distinct moments of the same totality. An internal relation is one in which each part is constituted in its relation to the other, whereas an external relation is one in which each part has an existence independent of its relation to the other. The relation between the economy, or social production relations under capitalism, and states as sets of institutionalized class relations that adhere to those production relations, is an internal one. It is not possible here to address the theoretical debates that have raged since the revival of interest in the state in the 1960s - which have remained inconclusive and open-ended. Note, however, that: 1) Marxist theories on the relative autonomy of the state, whether emphasizing a "structuralist" or "instrumental" subordination of the state to economically dominant classes, do not posit an independent state as a separate sphere with its own logic (in Marx's words, there is no state "suspended in mid-air"). The task of the analyst is to uncover the complex of social processes and relations that embed states in the configuration of civil society and political economy; 2) there is nothing in the historical materialist conception of the state that necessarily ties it to territory or to nation-states.

Nation-states are geographic and juridical units, and sometimes cultural units. States as coercive systems of authority are class relations and social practices congealed and operationalized through institutions. In Marx's view, the state gives a political form to economic institutions and production relations. Markets are the site of material life while states spring from economic (production) relations and represent the institutionalization of social relations of domination. It is crucial to analyze the composition of social forces that congeal in state structures and practices in particular historical periods. Consequently, the economic globalization of capital cannot be a phenomenon isolated from the transformation of class relations and of states. In the Weberian conception, states are by definition territorially-bound institutions and therefore a TNS cannot be conceived so long as the nation-state system persists. Weberian state theory reduces the state to the states apparatus and its cadre and thereby reifies the state. States are not actors as such. Social classes and groups are historical actors. States don't "do" anything per se. Social classes and groups acting in and out of states (and other institutions) "do" things as collective historical agents. State apparatuses are those instruments that enforce and reproduce the class relations and practices embedded in states. The institutional structures of nation-states may persist in the epoch of globalization, but globalization requires that we modify our conception of these structures.

A TNS apparatus is emerging under globalization from within the system of nation-states. The nation-state system, or inter-state system, is an historical outcome, the particular form in which capitalism came into being based on a complex relation between production, classes, political power and territoriality. The nation-state system is the outcome of the historically-specific correspondence between production, social classes and territoriality - a correspondence which led to a given political form that became the nation-state. The material circumstances that gave rise of the nation-state are presently being superseded by globalization. If capitalism's earlier development resulted in a geographic (spatial) location in the creation of the nation-state system then its current globalizing thrust is resulting in a general geographic dislocation. What is required is a return to an historical materialist theoretical conceptualization of the state, not as a "thing" but as a specific social relation inserted into larger social structures that may take different, and historically determined, institutional forms, only one of which is the nation-state. Nothing in the current epoch suggests that the historic configuration of space and its institutionalization is immutable rather than itself subject to transformation.

The state as a class relation is becoming transnationalized. The class practices of a new global ruling class are becoming "condensed" in an emergent TNS. This TNS comprises those institutions and practices in global society that maintain, defend, and advance the emergent hegemony of a global bourgeoisie and its project of constructing a new global capitalist historical bloc. A TNS apparatus is an emerging network that comprises transformed and externally-integrated national states, together with the supranational economic and political forums and that has not yet acquired any centralized institutional form. The rise of a TNS entails the reorganization of the state in each nation - I will henceforth refer to these states of each country as national states - and it involves simultaneously the rise of truly supranational economic and political institutions. These two processes - the transformation of nation-states and the rise of supranational economic and political institutions - are not separate or mutually-exclusive. In fact, they are twin dimensions of the process of the transnationalization of the state. Central to my argument is that under globalization the national state does not wither away but becomes transformed with respect to its functions and becomes a functional component of a larger TNS.

The TNS apparatus is multilayered. The supra-national organizations are both economic and political, formal and informal. The economic forums include the International Monetary Fund (IMF), the World Bank (WB), the World Trade Organization (WTO), the regional banks, and so on. Supranational political forums include the Trilateral Commission, the Group of 7 (G-7), the World Economic Forum, and the recently formed Group of 22, among others, as well as more formal forums such as the United Nations (UN), the Organization of Economic Cooperation and Development (OECD), the European Union (EU), the Conference on Security and Cooperation in Europe (CSCE), and so on. They also include regional groupings such as the Association of South East Asian Nations (ASEAN), and the supranational juridical, administrative and regulatory structures established through regional agreements such as the North American Free Trade Agreement (NAFTA) and the Asia-Pacific Economic Cooperation (APEC) forum. These supranational planning institutes are gradually supplanting national institutions in policy development and global management and administration of the global economy. The function of the nation-state is shifting from the formulation of national policies to the administration of policies formulated through supra-national institutions. However, it is essential is to avoid the national-global duality: national states are not external to the TNS but are becoming incorporated into it as component parts. The supranational organizations function in consonance with transformed national states. They are staffed by transnational functionaries that find their counterparts in transnational functionaries who staff transformed national states. These transnational state cadre act as midwives of capitalist globalization.

The TNS is attempting to fulfill the functions for world capitalism that in earlier periods were fulfilled by what world-system and international relations scholars refer to as a "hegemon," or a dominant capitalist power that has the resources and the structural position which allows it to organize world capitalism as a whole and impose the rules, regulatory environment, etcetera, that allows the system to function. We are witnessing the decline of U.S. supremacy and the early stages of the creation of a transnational hegemony through supra-national structures that are not yet capable of providing the economic regulation and political conditions for the reproduction of global capitalism. Just as the national state played this role in the earlier period, the TNS seeks to create and maintain the pre-conditions for the valorization and accumulation of capital in the global economy, which is not simply the sum of national economies and national class structures and requires a centralized authority to represent the whole of competing capitals, the major combinations of which are no longer "national" capitals. The nature of state practices in the emergent global system resides in the exercise of transnational economic and political authority through the TNS apparatus to reproduce the class relations embedded in the global valorization and accumulation of capital.

As class formation proceeded through the nation-state in earlier epochs, the world-wide class struggle unfolded through the institutional and organizational logic of the nation-state system. During the nation-state phase of capitalism, characterized by national circuits of production ("autocentric accumulation") linked to the larger system by international market and financial flows, national states enjoyed a varying but significant degree of autonomy to intervene in the phase of distribution and surpluses could be diverted through nation-state institutions. Dominant and subordinate classes struggled against each other over the social surplus through such institutions and fought to utilize national states to capture shares of the surplus. As a result, to evoke Karl Polanyi's classical analysis, a "double movement" took place late last century. As capitalism developed the unregulated market unleashed its fury on the social bonds and institutions that allowed for individual survival and social reproduction. The social upheaval that ensued forced a measure of social regulation on the system that curtailed some of the most deleterious effects of capitalism. This "double movement" was possible because capital, facing territorial, institutional and other limits bound up with the nation-state system, faced a series of constraints that forced it to reach an historic compromise with working and popular classes. These classes could place redistributive demands on national states and set some constraints on the power of capital (these possibilities also contributed to the split in the world socialist movement and the rise of social democracy). Popular classes could achieve this because national states had the ability to capture and redirect surpluses through interventionist mechanisms. The outcome of world class struggles in this period were Keynesian or "New Deal" states and Fordist production in the cores of the world economy and diverse multiclass developmentalist states and populist projects in the periphery ("peripheral Fordism), what Lipietz and others have called the "Fordist class compromise."

In each of these cases, subordinate classes mediated their relation to capital through the nation-state. Capitalist classes developed within the protective cocoon of nation-states and developed interests in opposition to rival national capitals. These states expressed the coalitions of classes and groups that were incorporated into the historic blocs of nation-states. There was nothing transhistoric, or predetermined, about this process of class formation worldwide. It is now being superseded by globalization. The global decentralization and fragmentation of the production process redefines the accumulation of capital, and classes, in relation to the nation-state. What is occurring is a process of transnational class formation, in which the mediating element of national states has been modified. Social groups, both dominant and subordinate, have been globalizing through the structures, institutions, and phenomenology of a nation-state world, the atavistic historical infrastructure upon which capitalism is building a new transnational institutionality. As national productive structures now become transnationally integrated, world classes whose organic development took place through the nation-state are experiencing supra-national integration with "national" classes of other countries. Global class formation has involved the accelerated division of the world into a global bourgeoisie and a global proletariat, and has brought changes in the relationship between dominant and subordinate classes.

By making it structurally impossible for individual nations to sustain independent, or even autonomous, economies, political systems, and social structures, globalization reconfigures world social forces in a very dramatic way. Specifically, by redefining the phase of distribution in the accumulation of capital in relation to nation-states the global economy fragments national cohesion around processes of social reproduction and shifts the site of reproduction from the nation-state to transnational space. The consequent liberation of transnational capital from the constraints and commitments placed on it by the social forces in the nation-state phase of capitalism has dramatically altered the balance of forces among classes and social groups in each nation of the world and at a global level towards the transnational capitalist class and its agents. If the earlier history of capitalism the nation-state was a necessary condition for the development of the system, the institutional and spatial constraints of the nation-state became fetters to accumulation in the latter decades of the 20th century. Indeed, the restraints on accumulation imposed by popular classes worldwide in the nation-state phase of capitalism was what drove capital to transnationalization in the first instance. This is crucial because many accounts of globalization attribute the process to technological innovation. However, technological change is the effect of social forces in struggle, which is causal to historical change. The nation-state went from being a particular historical form that made possible the development of capitalism to one that fettered its further development.

Let me elaborate:

The declining ability of the nation-state to intervene in the process of capital accumulation and to determine economic policies reflects the newfound power that transnational capital acquired over nation-states and popular classes. Different classes and groups contest (national) state power but real power in the global system is shifting to a transnational space that is not subject to "national" control. This structural power of transnational capital over the direct power of national states has been utilized to instill discipline or to undermine policies that may emanate from these states when they are captured by popular classes or by national fractions of local dominant groups, as popular forces that won state power in Haiti, Nicaragua, South Africa, and elsewhere in the 1970s-1990s discovered. This appears as an institutional contradiction between the structural power of transnational capital and the direct power of states. Some critics of globalization for whom the capitalist system per se is not the source of the social contradictions they analyze, only its current global stage, see the contradiction in globalization as between national states and global agents. But this is a structural contradiction internal to an evolving capitalist system, at whose core are class relations, as the inner essence of a condition whose outward manifestation is an institutional contradiction. One set of social relations reflects a more fundamental set of social relations. On the surface, the structural power of capital over the direct power of states is enhanced many times over by globalization. In its essence, the relative power of exploiting classes over the exploited classes has been enhanced many times over, at least in this momentary historic juncture.

The newfound relative power of global capital over global labor is becoming fixed in a new global capital-labor relation, what some have called the global casualization or informalization of labor, or diverse contingent categories, involving alternative systems of labor control associated with post-Fordist "flexible accumulation." These systems rest in my view, in part, on the disjuncture between nation-state institutionality and capital's new transnational space. They include subcontracting and contract labor, outsourcing, part-time and temp work, informal work, home-work, the revival of patriarchal, "sweatshop," and other oppressive production relations. "Downward leveling", deunionization, "ad hoc" and "just-in-time" labor supply, the superexploitation of immigrant communities as a counterpart to capital export, the lengthening of the working day, the rise of a new global "underclass" of supernumeraries or "redundants" subject to new forms of social control and even to genocide, new gendered and racialized hierarchies among labor, are well known trends associated with the restructuring of the labor-capital relation taking place under globalization and point to the rise of a global proletariate stratified less along national than along social lines in a transnational environment.

These new relations have been broadly discussed in the globalization literature. What interests us here is the larger social and political context in which they are embedded, and the extent to which states and nation-states continue to mediate these contexts. State practices and the very structure of states are negotiated and renegotiated in specific historic periods through changes in the balance of social forces as capitalism develops and classes struggle. The current epoch is not the first time that capital has broken free of reciprocities with labor expressed in state practices. This happened in the late nineteenth century as the epoch of competitive capitalism was coming to an end and monopoly capital was emerging. Capital began to abandon earlier reciprocities with labor from the 1970s and on precisely because the process of globalization has allowed to it break free of nation-state constraints. These new labor patterns are facilitated by globalization in a dual sense: first, capital has exercised its power over labor through new patterns of flexible accumulation made possible by enabling "third wave" technologies, the elimination of spatial barriers to accumulation, and the control over space these changes bring; second, globalization itself involves the culmination of the primitive accumulation of capital worldwide, a process in which millions have been wrenched from the means of production, proletarianized, and thrown into a global labor market that transnational capital has been able to shape. In this new capital-labor relation, labor is increasingly only a naked commodity, no longer embedded in relations of reciprocity rooted in social and political communities that have historically been institutionalized in nation-states. The notion of responsibility, however minimal, that governments have for their citizens or that employers have towards their employees is dissolved in the face of this new class relation. In this age of savage capitalism unleashed from social constraints there is a veritable rollback on the "historical" or "moral" element in wage labor, driven by a culture of competitive individualism at whose fringe is a resurrected Social Darwinism in which collective norms and values have all but disappeared.

The dissolution of the "welfarist" or Keynesian "class compromise" rests on the power acquired by transnational capital over labor which is objectively transnational but whose power is constrained and whose subjective consciousness is distorted by the continued existence of the system of nation-states. Here we see how the continued existence of the nation-state serves numerous interests of the transnational capitalist class. For instance, central to capitalism is securing a politically and economically suitable labor supply, and at the core of all class societies is the control over labor and disposal of the products of labor. Under capitalist globalization, the linkage between securing labor and territoriality is changing, and national labor pools are merging into a single global labor pool that services global capitalism. The global labor supply is, in the main, no longer coerced (subject to extra-economic compulsion) due to the ability of the universalized market to exercise strictly economic discipline, but its movement is juridically controlled. Here, national borders plays a vital function. Nation-states are about the configuration of space, what sociologist David McMichael has called "population containment zones." But their containment function applies to labor and not to capital. Globally mobile capital is not regulated by centralized national political authorities but labor is. The inter-state system thus acts as a condition for the structural power of globally-mobile transnational capital over labor which is transnational in its actual content and character, but is subjected to different institutional arrangements and to the direct control of national states. National boundaries are not barriers to transnational migration but are mechanisms functional for the supply of labor on a global scale and for the reproduction of the system.

How then is the newfound relative power of global capital over global labor related to our analysis of the transnationalization of the state? Out of the emerging transnational institutionality the new class relations of global capitalism and the social practices specific to it are becoming congealed and institutionalized. For instance, when the IMF or the WB condition financing on enactment of new labor codes to make workers more "flexible," or on the rollback of a state sponsored "social wage" they are producing this new class relation. But more importantly, the types of practices of national states that became generalized in the late 20th century - deregulation, fiscal conservatism, monetarism, tax regressivity, austerity, etc. - produce this relation. The shift in the 1980s from firm to state financed research and development and from the state as a provider of social subsidies to a subsidizer of private business, state withdrawn from social reproduction through deregulation/re-regulation (from "rigidity" to "flexibility"), the privatization of collective needs, the lifting of rules and regulations that hinder market forces, all resulted in an increase in state services to, and subsidization of, capital, and underscored the increased role of the state in facilitating private capital accumulation. With this comes a shift in income and in power from labor to capital. These outcomes generate the broader social and political conditions under which the new capital-labor relation is forged.

But now we need to specify further the relationship of national states to the TNS. Capital acquires its newfound power vis-a-vis (as expressed within) national states. The transnational bourgeoisie exercises its class power through the dense network of supranational institutions and relationships that increasingly bypass formal states, and in conjunction, through the utilization of national governments as territorially-bound juridical units (the inter-state system), which are transformed into transmission belts and filtering devices. But national states are also transformed into proactive instruments for advancing the agenda of global capitalism. This assertion that transnational social forces impose their structural power over nations and the simultaneous assertion that states, captured by transnational fractions, are proactive agents of the globalization process, only appear as contradictory if one abandons dialectics for the Weberian dualist construct of states and markets and the national-global dualism. Governments are undertaking restructuring and serve the needs of transnational capital not simply because they are "powerless" in the face of globalization, but because a particular historical constellation of social forces now exists that presents an organic social base for this global restructuring of capitalism. Hence it is not that nation-states become irrelevant or powerless vis-a-vis transnational capital and its global institutions. Rather, power as the ability to issue commands and have them obeyed, or more precisely, the ability to shape social structures, shifts from social groups and classes with interests in national accumulation to those whose interests lie in new global circuits of accumulation. These latter groups realize their power and institutionalize it in emerging TNS apparatuses that include supra-national organizations and also existing states of nation-states that are captured and reorganized by transnational groups and become, conceptually, part of an emergent TNS apparatus.

The contradictory logics of national and global accumulation are at work in this process. Class fractionation is occurring along a new national/transnational axis with the rise of transnational corporate and political elites. The interests of one group lies in national accumulation, including the whole set of traditional national regulatory and protectionist mechanisms, and the other in an expanding global economy based on worldwide market liberalization. The struggle between descendant national fractions of dominant groups and ascendant transnational fractions has often been the backdrop to surface political dynamics and ideological processes in the late 20th century. These two fractions have been vying for control of local state apparatuses since the 1970s. Transnational fractions of local elites have ascended politically in countries around the world, clashing in their bid for hegemony with nationally-based class fractions. In the 1970s and the 1980s incipient transnationalized fractions set out to eclipse national fractions in the core capitalist countries of the North and to capture the "commanding heights" of state policymaking. From the 1980s into the 1990s, these fractions became ascendant in the South and began to vie for, and in many countries, to capture, state apparatuses. They increasingly captured local states or key ministries and bureaucracies in the policymaking apparatus. They utilized national state apparatuses to advance globalization and established formal and informal liaison mechanisms between the national state structures and TNS apparatuses. Numerous supranational mechanisms, such as free trade negotiations, in turn, tie each national state to others in transnationalized networks. These emergent institutional configurations need to be studied.

Diverse nationally-based social forces in struggle produce different national state configurations that make for complex and multidimensional political dynamics and international relations. But, gradually, transnational blocs have become hegemonic in the 1980s and 1990s within nation-states. From the state, transnationalized fractions are thoroughly transforming the vast majority of countries in the world, ranging from Sweden and New Zealand, to India, Brazil, Mexico, Chile, South Africa, and the United States. Moreover, transnational fractions in the North have utilized the superior structural and direct power that core national states exercise in the global system not to advance "national interests" in rivalry with other nation-states, but to mold transnational structures. Hence, national states do not disappear or even diminish in importance and may still be powerful entities. But these states are captured by transnational social forces that internalize the authority structures of global capitalism. Far from the "global" and "national" as mutually-exclusive fields, the global is incarnated in local social structures and processes. The disciplinary power of the global capitalism shifts actual policy-making power within national states to the global capitalist bloc, which is represented by local social forces tied to the global economy. The new managers of the neo-liberal national states, from Clinton and Blair, to Cardoso and Mbeki, from Mohathir to Zedillo, are part of part a new global ruling class and represent some of the more charismatic executive functionaries of a TNS.

By the 1990s the transnational capitalist class had become the hegemonic class fraction globally. This denationalized bourgeoisie is class conscious, and conscious of its transnationality. At its apex is a managerial elite that controls the levers of global policymaking and exercises transnational state power through the multilayered configuration of the TNS. But this transnational bourgeoisie is not a unified group. "The same conditions, the same contradiction, the same interests necessarily called forth on the whole similar customs everywhere," noted Marx and Engels in discussing the formation of new class groups. "But separate individuals form a class only insofar as they have to carry on a common battle against another class; otherwise they are on hostile terms with each other as competitors." Fierce competition among oligopolist clusters, conflicting pressures, and differences over the tactics and strategy of maintaining class domination and addressing the crises and contradictions of global capitalism make any real internal unity in global ruling class impossible. In sum, the capturing of local states by agents of global capitalism resolves the institutional contradiction discussed above between transnational capital and national states, that is, local state practices are increasingly harmonized with global capitalism. But this only intensifies the underlying class contradictions. Before discussing these contradictions, let us reconstruct in brief the emergence of a TNS in the latter decades of the 20th century.

Under the political-military canopy of U.S. imperialism, national capitals began a new period of internationalization and external integration in the post-WWII period. Escalating international economic activity unfolded within the institutional framework of the nation-state system and the cross-border regulation of "international regimes," in particular, the Bretton Woods system. As multinational corporations extended their reach around the world they sought to evade the central bank controls associated with the Bretton Woods system by depositing their capital in foreign currency markets. Economic internationalization thus brought the massive spread of dollars and other core country currencies around the world. Eurodollar deposits ballooned from just $3 billion in 1960 to $75 billion in 1970 - prompting the Nixon administration to abandon the gold standard in 1971 - and then climbed to over $1 trillion in 1984. The collapse of the Bretton Woods system of fixed currency exchange and national economic regulation via capital controls was the first step in the liberation of embryonic transnational capital from the institutional constraints of the nation-state system. It signalled the beginning of the transition to the globalization epoch and also the waning of US supremacy. Liquid capital became accumulated in offshore capital markets established by nascent transnational banks seeking to evade the regulatory powers of national states. In the 1970s the transnational banks began to recycle this liquid capital through massive loans to Third World governments.

Newly liberated global financial markets began to determine currency values, to destabilize national finances, and to undermine the national macro-economic management of the earlier Keynesian regime of capitalism. By the early 1990s some $1 trillion in various currencies was being traded daily, all beyond the control of national governments. The dramatic loss of currency control by governments meant that state managers could no longer regulate the value of their national currency. The power to influence state economic policymaking passed from these state managers to currency traders, portfolio investors, and transnational bankers - precisely, the representatives of transnational finance capital - by virtue of their ability to move funds around the world. Offshore capital markets grew from $315 billion in 1973 to over $2 trillion in 1982, and by the end of the 1970s, trade in currencies was more than 11 times greater than the value of world commodity trade. And because this global movement of liquidity created unpredictable conditions of profitability, transnational corporations reduced their risks by diversifying their operations around the world, thus accelerating the entire globalization process and the political pressures for a TNS apparatus.

What was taking place structurally were long-term movements in the world capitalist system - the rise of the global economy and the emergence of transnational finance capital as the hegemonic fraction of capital on a world scale, as money capital became the regulator of new global circuits of production rather than investment capital. As Stephen Gill has argued, the international economic turmoil that began in the early 1970s was not, in fact, reflective of the breakdown of world capitalism, as some believed at the time. Rather, it was precisely the rough bumps of the emergence of transnational capital, concentrated in transnational financial capital. Transnational capital needed an entirely new global political and economic environment, one in which it would no longer be hampered by nation-states or democracy. The Keynesian welfare and developmentalist states had to be dismantled and national controls over the free movement of globally-mobile capital lifted. The new production relations of flexible accumulation had to be imposed around the world. Public sectors and non-market community spheres had to be opened up to profit making and privatized (what Marx termed the "alienation of the state").

As transnational corporate and political elites emerged on the world scene in the 1980s as the agent of these changes they made explicit claims to building and managing a global economy through restructured multilateral and national institutions. This transnational bourgeoisie became politically organized. The formation in the mid-1970s of the Trilateral Commission, which brought together transnationalized fractions of the business, political, and intellectual elite in North America, Europe, and Japan, was one marker in its politicization. Others were: the creation of the Group of 7 forum at the governmental level, which began institutionalizing collective management of the global economy by corporate and political elites from core nation-states; the creation of the OECD, formed as a supranational institution by the 24 largest industrialized countries to observe and coordinate their national economies; and the creation of the World Economic Forum, which brought together the top representatives of transnational corporations and global political elites. Studies on building a global economy and transnational management structures flowed out of think tanks, university centers, and policy planning institutes in core countries. This increasingly organized global elite articulated a coherent program of global economic and political restructuring centered around market liberalization - the so-called "Washington consensus" - and set out to convert the world into a single unified field for global capitalism. It pushed for greater uniformity and standardization in the codes and rules of the global market - a process similar to the construction of national markets in the 19th century but now replicated in the new global space. The G-7 in 1982 designated the IMF and the World Bank as the central authorities for exercising the collective power of the capitalist national states over international financial negotiations. At the Cancun Summit in Mexico in 1982, the core capitalist states, led by the United States, launched the era of global neo-liberalism as part of this process and began imposing structural adjustment programs on the Third World and the then-Second World, as I discuss in the next section. Transnational elites promoted international economic integration processes, including the NAFTA, the EU, and the APEC, among others. They created new sets of institutions and forums, such as the WTO, the Multilateral Agreement on Investment (MAI), and so on. In this process, the existing supranational institutions, such as the Bretton Woods and the UN institutions, were not bypassed but instrumentalized and transformed.

For instance, during the 1980s, the composition of loans to the former Third World changed dramatically. In 1981, 42 percent of net loans came from commercial banks and 37 percent from multilateral agencies. By 1988, private banks supplied only 6 percent and the multilaterals 88 percent of net loans. In effect, the Bretton Woods institutions loaned public funds to national states to repay the private banks, and then utilized the resultant financial power centralized in their hands to acquire control over economic management and political authority that comes with it. For its part, the World Bank shifted in the 1980s from project loans to policy loans aimed at restructuring local economies and integrating them into the global economy. The reformed Bretton Woods institutions took the reigns in organizing global economic restructuring, especially through neo-liberal programs (see below). Similarly, the UN conference system helped achieve consensus on reshaping the world political and economic order, while UN agencies such as the United Nations Development Program (UNDP) and the UN Conference on Trade and Development (UNCTAD) began to promote the transnational elite agenda of economic liberalization. The UNDP's frequently cited annual Human Development Report, for instance, while highly critical of global inequalities, is explicit in calling for more globalization and liberalization as the remedy. Speaking before the World Economic Forum in 1998, UN Secretary General Kofi Annan explained how the UN seeks to establish the international security and regulatory environment, and the social, political and ideological conditions, for global markets to flourish:

The Uruguay Round of world trade negotiations that began in 1986 in Punte del Este, Uruguay under the auspices of the GATT, established a sweeping new set of world trade rules to regulate the new global economy based on: 1) freedom of investment and capital movements; 2) the liberalization of services, including banks; 3) intellectual property rights; 4) a free movement of goods. The free movement of goods ("free trade") meant largely freedom of intra-firm trade, which accounts for up to two-thirds of world trade and which itself is a commercial expression of globalization production. On the conclusion of the Uruguay Round the GATT created the WTO, in 1995, to supervise this new "free trade" regime. Although its powers are far from absolute, the WTO is perhaps the archetypical transnational institution of the new era. The WTO assumes unprecedented powers to enforce the GATT "free trade" provisions. It has independent jurisdiction, its rules and rulings are binding on all members, and has the power to sanction, to overrule state and local powers, and to override national regulatory powers. The theoretical import here is that the WTO is the first supranational institution with a coercive capacity not embedded in any particular nation-state but rather directly in the transnational corporate and political elite community.

The proposed MAI would extend this capacity. Negotiations over the MAI grew out of the Uruguay Round and have been sponsored by the OECD. The proposed agreement amounts to a "charter of rights" for transnational capital. It would give transnational corporations near-absolute freedom from national state legal and political restrictions on cross-border investment and bind national as well as local governments right down to the municipal level to its provisions. The MAI is, in the words of Joseph Roberts, "an agreement among the world's largest corporate investors to achieve a common and user friendly global legal system of the sort cartels sought for individual industries. The GATT liberalizations, the creation of the WTO and the MAI negotiations were backed by a powerful and well-organized lobby of transnational corporations (TNCs). The TNCs have increasingly come to operate openly as organized political as well as economic entities, a throwback to the old chartered trading companies of the mercantile era that were vested by imperial powers with sovereign authority over colonial domains. Historically, newly strengthened ruling classes can quickly constrict state autonomy as they make more intensive use of the state in times of major capitalist restructuring. But the TNS appears to represent capital and nothing else; the fusion of the state and capital would seem to be unprecedented under globalization, suggesting the need to rethink the meaning of state autonomy and review existing theories of the state.

The GATT's global rules have generated tensions with national blocs in their competition with transnational blocs and the policies they promote (e.g., over farm policies) and evince the national/transnational class tensions discussed earlier. As the ups and downs in farm policy in the 1980s made clear, national blocs from core countries such as the United States and the EU member states, were able to use their more powerful national states to advance their interests intentionally. This confused many observers, who saw it as a sign that nation-state and North-South competition rather than globalization remained at the core of world political dynamics. As the 1990s progressed the transnational bloc was able to impose its agenda of agricultural commodity liberalization, which makes global sourcing possible. (In turn, the collapse of agricultural sectors in the former Third World accelerated the proletarianization process bound up with globalization.)

By the late 1990s the TNS as an institution attempting to impose its authority on a fluid and spatially open process of capital accumulation was assuming some powers and historic functions that the nation states had lost in organizing collective action to facilitate and reproduce this process in the global economy. The creation of a capitalist superstructure which carries out at the transnational level functions indispensable for the reproduction of capital, especially those that national states are unable to perform, is not to say that a TNS has fully become consolidated as a fully functioning political, administrative, and regulatory structure. There is no clear chain of command and division of labor within the TNS apparatus, or anything resembling, at this time, the type of internal coherence of national states, given the embryonic stage of this process. Nonetheless, the TNS has developed mechanisms to assume a growing number of functions traditionally associated with the national state.

What are some of these functions and how did the TNS begin to assume them? One is compensation for market failure. Here we have IMF bailouts of Mexico, Southeast Asia, Brazil, etc. Another is money creation. The creation of EU currency showed that this can be transnational. A third is legal guarantees of property rights and market contracts. The WTO would suggest that this may be supranationally enforced. Yet another is the provision of public goods (social and physical infrastructure). The social policies, investment decisions and resource mobilization determining infrastructure are increasingly set supranationally and then executing through national states. In a similar vein, fiscal intervention, credit creation, tax redistribution, and even control over capital and labor allocations are increasingly activities designed in the supranational policy arena for execution by national states. And although police surveillance and military power has remained largely at the nation-state level, the TNS has increasingly developed military mechanisms. For example, the United Nations has assumed an expanded role in global policing. It was involved in "preventative diplomacy" or "peacekeeping" in 28 conflicts in 1994, compared with 5 in 1988, involving 73,393 military personnel, compared with 9,570 in 1988. Despite this expanded TNS activity, there are numerous functions that the TNS has not been able to assume, such as reigning in on speculation and excesses that so characterize the frenzied "casino capitalism" of the global economy. Identifying the functions of the TNS does not imply functional analysis so long as the conditions under which these functions are unfulfilled are specified and problematized, as I do later on.

In sum, it is out of this process that a TNS apparatus began to emerge, not as something planned as such, but as the political consequences of the social practice and class action of the transnational capitalist class in this historic juncture, and as an apparatus that is not replacing but emerging out of the pre-globalization infrastructure of world capitalism. We can get a glimpse in this way how the TNS exerts a determining influence on class formation around the world. The relationship between capitalist development and the state is mutually determining rather than unidirectional. The recursive influence of the TNS on global class formation is precisely what we would expect from an historical materialist theoretical understanding of the state as an element of political mediation between social forces and productive structures that serves to reproduce or transform class and group relations. But this snapshot of the rise of a TNS is not complete. We need to examine as well the transformation of the national state since this is an integral part of the rise of a TNS.

As the transnational ruling bloc emerged in the 1980s and 1990s it carried out a "passive revolution" in the Gramscian sense, involving modifications made from above in global social and economic structure through the agency of TNS apparatuses. Alongside the process of creating a supranational apparatus, this ruling bloc set about to penetrate and restructure national states. As capital became liberated from the nation-state, and along with it, the types of rigidities associated with Fordist-Keynesian accumulation and their drag on profits, the social structures of accumulation negotiated between capital, labor, and diverse subaltern classes began to disintegrate. In the United States and other core countries this spelled the end of the Fordist era. In the second world, it spelled the rise of transnationalized fractions among aspiring elites who began to liaison with the global bourgeoisie and articulate a project for full (re)integration into world capitalism. In the Third World, the nationalist bourgeoisie, petty-bourgeois, and revolutionary regimes became displaced by transnationalized fractions of local elites as multi-class developmentalist projects unravelled.

In the aggressive pursuit of its project the transnational capitalist class has conducted prolonged ideological campaigns aimed at legitimating the dismantling of welfare and developmental states and at disseminating the global capitalist ideology of consumerism and individualism. It has forged opportune alliances, in some cases with forces of the Right and the Far Right, and the subaltern classes organized into right-wing populism. The was the case with the conservative forces in the U.S. Republican party identified with Ronald Reagan in the early 1980s, behind whose right-wing populist rhetoric were powerful representatives of transnational capital. In other cases, it has entered into coalitions with left-of-center and progressive, and even leftist, forces that have provided a legitimacy for austerity and economic restructuring, or that have been able to exercise a social control function, that the transnational capitalist class and its local agents could never have achieved. This may be the case, for instance, with the African National Congress in South Africa, with socialists and communists in Europe, and former revolutionary movements in Central America.

If the accumulation of money capital outside of the nation-state system was one important aspect in the process of economic globalization, it was also a key mechanism in the incorporation of countries, especially peripheral ones, into the transnationalization process, and more generally, in the transformation of welfare and developmentalist into neo-liberal states. The debt crisis of the 1980s imposed the power and authority of global capitalism within the very structure and functioning of Third World national states. Debt led to the reinsertion of countries and regions around the world into a reorganized global economy. The massive infusion of recycled liquid capital into the Third World in the 1970s, linked to the concentration of economic power in transnational finance capital, had profound effects on existing groups and class constellations in the periphery. The need to earn foreign exchange to pay back the debt (the structural power of transnational capital over debtor states along with the direct pressures of core national states enforced payback) forced nations to restructure their economies in favor of exports in accordance with the changing structure of world market demand. Over an extended period, debt contraction and subsequent reservicing had the consequence of strengthening those sectors with external linkage, redistribution quotas of accumulated political and economic power towards new fractions linked to transnational capital. At a certain point in this process the debtor nation is unable to maintain fiscal solvency and turns to the supranational economic institutions for assistance which is made conditional on the adoption of a structural adjustment or "neo-liberal" program. The neo-liberal program was designed in the 1970s and 1980s by the international financial agencies and the think tanks of the newly organized transnational bourgeoisie. This program calls for the elimination of state intervention in the economy and the regulation of individual nation-states over the activities of capital in their territories. It seeks to achieve the conditions in each country and region of the world for the mobility, free operation, and expansion of capital. The adjustment programs become the major mechanism of adjusting local economies to the global economy. Between 1978 and 1992 more than 70 countries undertook 566 stabilization and structural adjustment programs imposed by the IMF and the World Bank. What took place through these programs was a massive restructuring of the productive apparatus in these countries, and the reintegration into the global capitalism of vast zones of the former Third World, under the tutelage of the emergent TNS.

Specifically, these programs pursue macroeconomic stability as an essential requisite for the activity of transnational capital. This model seeks to harmonize a wide range of fiscal, monetary, industrial, and commercial policies among multiple nations, as a requirement for fully mobile transnational capital to function simultaneously, and often instantaneously, among numerous national borders. In the neo-liberal model, stabilization, or the package of fiscal, monetary, exchange and related measures intended to achieve macroeconomic stability is followed by "structural adjustment": a) liberalization of trade and finances, which opens the economy to the world market; b) deregulation, which removes the state from economic decision making (but not from activities that service capital); c) privatization of formerly public spheres that could hamper capital accumulation if criteria of public interest over private profit is left operative. This model thus generates the overall conditions for the profitable ("efficient") renewal of capital accumulation through new globalized circuits, and along with it, for social reproduction in the age of globalization. Neo-liberalism is in this way the "grease" by which global capitalism tears down all non-market structures. By prying open and making accessible to transnational capital every layer of the social fabric, neo-liberalism helps dissolve the boundaries between the national and the global.

Here we see the nuts and bolts of the transnationalization of the state. Economic restructuring begets political restructuring as power is redistributed in society, and also within the state apparatus itself, towards emergent transnational nuclei of local dominant groups. The adjustment process facilitates a simultaneous contraction in overall demand and a transfer of income and resources from workers and small-scale producers to large producers and bureaucratic personnel tied to transnational capital. Restructuring results in a transfer of state resources from programs supporting working class reproduction to those state agencies connected to the globalization, in which the technical criteria of "efficiency" replaces all social criteria that might contravene the logic of cross-border capital accumulation. It similarly effects a transfer of power from program-oriented ministries (social services, education, labor, etc.) to Central Banks, treasuries and finance and economic ministries, and the foreign ministry. As resources are transferred from the domestic to the external sector, and from these to the world market, transnational pools in each nation are strengthened. These transnationalized fractions became incorporated into the transnational bourgeoisie and set about to capture local states. In fact, it is not uncommon for Central Bank presidents to be appointed by the IMF or the WB. The movement towards Central Bank independence has the purpose of insulating the commanding heights of national state policy making from any public control or accountability, and also, and insulating these organs of the state that tie each national economy to the global economy from other organs of the national state that could come under public pressure. A recent WB report was explicit on this matter. Reforming the state, the report asserted, begins "with a few critical enclaves [that] typically include the ministry of finance, the central bank, and the tax collection agency...[restructuring these organs] can mostly be achieved through executive order...[and should] establish effective macroeconomic management by an insulated technocratic elite."

Local technocratic elites come to operate through the networks of the TNS that bypass the formal channels of government and other social institutions subject to popular influence. Power passes upwards to supranational structures, including financial networks, as this supra-national political integration proceeds. There is a loss of any democratic control by popular classes over policymaking and resource allocation. Decisionmaking and regulatory mechanisms emanating from supranational agencies and from local contingents of the transnational bourgeoisie are superimposed on national-states, which themselves become absorbed into the emergent TNS apparatus. However, while the TNS does impose neo-liberal adjustment programs, the supranational integration of national state apparatuses does not necessarily come from the outside, and is as much the result of strategies pursued by local dominant groups in the process of transnationalization as it is of external imposition that is generally emphasized in the literature (reflecting the national-global dualism). When state managers adjust national economies to the global economy they are doing so not necessarily because they are compelled to by some "external" (extra-national/global) force. This national-global duality is a mystification.

Structural adjustment programs thus help undermine the multi-class political coalitions and social projects that developed in the pre-globalization period, such as the populist projects and the "developmental states" in the Third World (although the core countries, save Great Britain, have not generally adopted IMF programs, the same adjustment pressures emanating from the global economy undermine the Keynesian welfare projects there). New transnational blocs come to replace these multi-class coalitions. For this purpose, WB and IMF structural adjustment programs emphasize "policy dialogue" and "institution building" as a way of organizing coalitions in governments sympathetic and attuned to the restructuring program. Labor and popular classes are expunged by the new dominant bloc from the political coalitions and social projects of the pre-globalization period.

In the 1980s the TNS charted a new model of development. The World Bank in 1980 redefined development, no longer as national economic growth, but as successful "participation in the world market." At the core of the new development model was a wholesale shift from production for domestic markets to production for the world market, signalling the subordination of local circuits of accumulation to new global ones. Later in that decade, the definition was extended to include a policy of broad liberalization. The new development model is based on each country's rearticulation to world markets through the introduction of new economic activities linked to global accumulation, the contraction of domestic markets, the cheapening of labor through casualization and social austerity to make it "competitive," and the opening up of each country's public sectors, protected industries, and natural resources to commercial exploitation. Through this process the neo-liberal states institutionalize locally the new global class relation discussed earlier. The neo-liberal national states of the late twentieth century reflect the new historic correlation of social forces that emerged following the breakup of the capitalist state structures that were shaped by particular class struggles in the period from the 1890s into the 1970s.

Hence, far from the "end of the nation-state," as a slew of recent studies has proclaimed, we are witness to its transformation into neo-liberal states. These neo-liberal states as component elements of a TNS provided essential services for capital. National governments serve as transmission belts and filtering devices for the imposition of the transnational agenda. In addition, they perform three essential functions: 1) adopt fiscal and monetary policies which assure macro-economic stability; 2) provide the basic infrastructure necessary for global economic activity (air and sea ports, communications networks, educational systems, etc.), and; 3) provide social order, that is, stability, which requires sustaining instruments of direct coercion and ideological apparatuses. When the transnational elite speaks of "governance" it is referring to these functions and the capacity to fulfill them. This is made explicit in the WB's World Development Report for 1997, The State in a Changing World, which points out that the aegis of the national state is central to globalization. In the WB's words, "globalization begins at home". But the functions of the neo-liberal state are contradictory. As globalization proceeds, internal social cohesion declines along with national economic integration. The neo-liberal state retains essential powers to facilitate globalization but it loses the ability to harmonize conflicting social interests within a country, to realize the historic function of sustaining the internal unity of nationally-conceived social formation, and to achieve legitimacy. The result is a dramatic intensification of legitimacy crises, a contradiction internal to the system of global capitalism.

So what is to be done? Smash the TNS and attempt a return to nation-state projects of popular social change? The problem with such propositions is that globalization, although it involves agency as much as structure, is not a project conceived, planned and implemented at the level of intentionality. I think we need to look forward rather than backward. Such historic processes cannot be reverted as such, but they can be influenced, redirected, and transcended. This returns us to my opening affirmation that historical materialism is emancipatory precisely because it reveals the historical specificity of existing forms of social life. Emancipatory projects operate in history. As Marx would have us recall, we do make our own history, but we do not make it just as we please, "but under circumstances directly found, given and transmitted from the past."

It is not inevitable that a new transnational elite will consolidate its economic and political hegemony. A major economic crisis or collapse could stymie the process or push it into unforseen directions. Transnational capital currently enjoys an unprecedented structural power over popular classes worldwide, but this is an historic conjuncture and not a fixed feature of the system. The confidence exuded by the transnational bourgeoisie in the latter decades of the 20th century - with its "end of history" thesis and so on - is giving way to fear of looming crisis as contradictions internal to global capitalism have become increasingly manifest. The world recession of the 1990s exposed the fragility of the world monetary system and caused rising alarm and growing fissures in the inner circles of the global ruling class. As the decade drew to a close a rising chorus of voices from within the global elite called for centralized global financial regulation and numerous proposals were put forward for achieving it, ranging from the creation of a world central bank to the transformation of the IMF into a veritable "lender of last resort." These developments highlight the attempt by the transnational capitalist class to achieve some regulatory order given the inability of an incipient TNS to stabilize the system.

Capitalism has always been a violent and unstable system fraught with contradictions. All of the contradictions germane to the capitalist system are rising to the surface in the new epoch of globalization, in particular, overaccumulation and worldwide social polarization. In the past, these contradictions have led to periodic crises that tend to result each time in a reorganization of the system. Imperialism, for instance, allowed core countries to displace to the colonial world, momentarily, some of the sharpest social antagonisms that capitalism generated, while Keynesian absorption mechanisms such as credit creation postponed overaccumulation crises. But many if not all of capitalism's recurrent crises have been mediated by the nation-state. Under globalization the national-state is less able to address these manifold crises, yet the emergent TNS is similarly ill-equipped to resolve them, especially those of overaccumulation and social polarization. Even if the global financial system can be brought under regulation, the mechanisms simply do not exist for absorption strategies, nor does the system provide a material basis for a project of legitimation.

It is not clear in the new epoch how the contradictions of the system will be played out, but certainly new opportunities for emancipatory projects are on the horizon. To speak of globalization as the culmination of capitalism's extensive enlargement and its accelerated conquest of pre-capitalist spheres is to posit that there are a series of world historic dynamics and of contradictions that are being modified or supplanted by these new circumstances. The system will not be defeated by challenges from outside its logic such as those of the former Soviet bloc countries and Third World liberation movements. Rather, defeat will be from within the global system itself. The contradictions between capitalist and pre-capitalist classes, for instance, are increasingly irrelevant. Resistance to capitalist colonization from without is giving way to resistance to capitalism from within. The universal penetration of capitalism through globalization draws all peoples not only into webs of market relations but also into webs of resistance.

To defend the relevance of Marx and the continuing vitality of historical materialism is not to say all of what Marx had to say is still applicable to the conditions humanity faces in the new millennium. To the contrary, any such proposition becomes dogma, intellectually sterile and politically disenabling. Marx's and Engel's argument that "the proletariat of each country must, of course, first of all settle matters with its own bourgeoisie," is now outdated. "Its own bourgeoisie" is now transnational; each "national" bourgeoisie is as well the bourgeoisie of the proletariate of numerous countries. Popular classes in the age of globalization need to transnationalize their struggles. The mobilization of the transnational bourgeoisie from above can only be countered by a transnational mobilization from below. Working and popular classes whose fulcrum has been the nation state need must transpose to transnational space their mobilization and their capacity to place demands on the system. This means developing the mechanisms - alliances, networks, direct actions and organizations - that will allow for a transnational resistance. It also means developing a transnational socialist ideology and politics, and targeting the TNS as contested terrain.

I would like to thank James R. Maupin, Gioconda Robinson, and Jeffrey Mitchell for their comments on earlier drafts of this essay.