States and Markets in an Era of Globalization

States and Markets in an Era of Globalization Annual Review of Sociology, Volume 26 Seán Ó Riain, Department of Sociology, University of California, Davis, CA 95616. E-mail: [email protected] Draft: Please do not cite without author’s consent Key words: neo-liberalism, welfare states, development, capitalism, socialism Running Head: States, Markets and Globalization Send correspondence to: Seán Ó Riain, University of California, Department of Sociology, One Shields Avenue, Davis, CA 95616. Tel.: (530)752-3182 Fax: (530) 752-0783 E-mail: [email protected] Perspectives on States and Markets Globalization is transforming the relationship between states and markets. Even as some authors predict the demise of the state in the face of increasingly global markets, others focus on the role states play in constructing markets themselves and making sustainable market interactions possible. As the times change so do our theories, generating new concepts which can be used to better understand the previous period. This paper undertakes such a project. I argue that state, market and society are embedded in each other and constructed by their interactions with one another1. The paper briefly reviews world-systems and comparative political economy analyses of the relation between states and markets. This review provides the framework for a discussion of the variety of models of state-market interaction in the postwar ‘Golden Age’ of capitalism. Finally I review the challenges which globalization poses to these models and consider contemporary experiments with state-market relations in a transformed international order. In the era after World War II a particular set of relations between state, society and market was institutionalized internationally, creating a system of relatively stable national economies organized through an international order of ‘embedded liberalism’ 1Although the focus of the paper is on the relationship between states and markets this inevitably leads us to a discussion of how these two modes of social organization intersect with the organization of society at large. ‘Society’ is of course a broad and ambiguous term. Here I use it in two senses. It refers to social groups which become actors relevant to the shaping of states and markets under particular circumstances, e.g., the role of the working class in mobilizing for welfare state expansion. However, I also use it to refer to the pattern of social interaction beyond the realm of the administrative efforts of the state (and corporate hierarchies) and the exchange relations of the market - that is in the more Polanyian sense of the associational life of society. An attention to ‘society’ is demanded by recent trends within economic sociology which focus on the social basis of market activity and within political sociology toward the analysis of ‘states-in-society’. 2 (Ruggie 1982). These economies were tied together through a negotiated regime of multilateral trade but buffered from the full effects of these international markets by institutions limiting trade and capital flows. A diversity of national models of statemarket interaction co-existed uneasily within these institutions even as international markets gradually expanded in scope. The globalization of the economy has consisted in large part of the weakening and even destruction of these institutional buffers between national economies and global markets. States find themselves trying to respond to pressures from local societies and global markets simultaneously without the breathing room previously offered by controls on transnational trade, finance and production. These developments pose significant challenges to our current understanding of the relation between states and markets. Within the tradition of comparative political economy, research on states and markets has focused on variations between different configurations of states and markets (Evans & Stephens 1988; Berger & Dore 1996; Boyer & Drache 1996). The >old paradigm= of comparative political economy research analyzed states and markets as self-contained separate entities battling in a zero-sum game for their share of a finite economic space (Block 1994). State administration, the associational life of society and market exchange were seen as relatively distinct forms of social relations which compete as the dominant forms of social action. Where the territorial dimension of state-market relations was considered at all, the assumption was that they operated largely within a defined national economic space. The question became one of >how much= state intervention in the national economy was advisable. While research in this tradition provided a great deal of insight into the sources of diversity in national models of capitalism it was 3 weaker in analyzing how states and markets shaped each other, both within the national economy and internationally. World-systems theory explicitly addresses these weaknesses as it emphasizes the ways in which states and markets shape one another at the level of the world-system. States and markets are inextricably intertwined at the level of the world-system in three distinct but related ways. Firstly, states are integrated into markets through the hierarchical structure of international trade and production (Wallerstein 1974, 1989). Secondly, states compete with one another to attract mobile capital and ‘core’ states struggle over the power to organize the global economy (Arrighi 1994). Furthermore state and market expand in a symbiotic relationship: “Each bout of corporate and state expansion seems to have followed the same general course. A wave of technological change enabled an expansion in corporate size and control, stimulating popular demands for compensatory regulation on a corresponding governmental scale . . . Each round has lead to an expanded state chasing after an expanding corporate size.” (Chase-Dunn & Grimes 1995: 402). Third, models of state-market interaction may diffuse through the world-system through the interaction of states and particularly through the influence of transnational organizational actors. In particular, the ‘world society’ perspective argues that a ‘Western liberal democratic’ model of the organization of the liberal state and the free market are diffused across the nations of the world (Meyer 1980, Meyer et al 1997). Furthermore, Meyer et al argue that “globalization certainly poses new problems for states, but it also strengthens the worldcultural principle that nation-states are the primary actors charged with identifying and managing those problems on behalf of their societies” (1997: 157). This theory then suggests a process of largely consensual adoption of common cultural and 4 institutional forms (e.g., state-market relations) in a world of nations which is increasingly under the influence of a world society of stateless organizations and professionals (Meyer et al 1997). As such, it is almost directly contradictory to Wallersteinian world-systems theory. World-systems theories provide an analysis of some of the elements lacking in comparative political economy studies. However, while world systems theory is valuable in orienting research toward system level processes, the theory is much weaker in explaining the mechanisms at work within subunits of the system. Within this broader structure of state-market relations at the world-system level there are a variety of possible domestic arrangements, arrangements which themselves play a critical role in shaping the world-system. Consequently the theory also tends to be over-deterministic and weak in identifying openings for political mobilization or alternative economic strategies. Research in world-systems and comparative political economy appear to provide complementary insights into how states and markets construct the international economic order and into the diversity of national models of state-market interaction within that international order. However, until recently, there has been relatively little dialogue between exponents of each tradition. This lack of dialogue lead Evans and Stephens to call for an ‘interactive vision’ in political economy which aims “to explicate the political and social structural factors that enable individual countries to transform [international] ties to their benefit, while simultaneously analyzing the way in which the changing structures at the international level facilitate or limit possibilities for transformation” (Evans & Stephens 1988: 757). 5 This ‘interactive vision’, combining national and world-system factors, was well suited to the era of embedded liberalism where domestic and international arenas interacted but were buffered from one another. However, as those institutional buffers have been weakened by globalization we need a new ‘integrative vision’. This vision will see local, national and global processes as shaped by each other but also as intertwined on a continuous basis. State-market interactions and regimes will be built not between the local and global but out of the local and the global. Under embedded liberalism, states could maintain a ‘janus-faced’ posture, dealing relatively separately with negotiating international markets with other states and with balancing domestic social and political pressures. Now that the buffering institutions of embedded liberalism have been weakened, states are increasingly faced with the integration of domestic and international policy (Ruggie, 1995) and with negotiating the multiple connections of local society to transnational markets. Contemporary approaches in political economy emphasize not the relative weight of state, market and society but the ways in which they shape each other (Block 1994, Evans 1997). Building on this research, I argue that the spheres of state, market and society are shaped by each other and cannot exist in isolation from the others. Each sphere is multiply embedded within the others. However, the relations between them are inevitably tense, due to the inherent dilemmas of reconciling market, society and state in a capitalist economy. Paths of economic development are determined by the variety of ways in which these tensions are reconciled through combinations of state, market and society. How these three spheres shape one another historically and form institutionalized sets of connections with one another becomes the central determinant of an economy=s fate under globalization. This is a dynamic and path dependent process, calling for detailed historical analysis of the mutual shaping of market, state 6 and society at the local, national and transnational levels. This emphasis on path dependence, contingency and political possibilities marks this perspective off from the more totalizing narratives of world systems theory. However, its attention to the integration of local, national and global processes goes beyond the classic ‘states and markets’ studies. State-building, market reconstruction and the constitution of society are interdependent social processes therefore which occur simultaneously at the local, national and transnational level. An understanding of the concrete organization of the world-system at any historical juncture requires not only an understanding of world-system processes, but also of the specific ways in which state-market models interact at each of these levels. The rest of this paper provides a broad outline of the way in which this occurred in the post World War II ‘Golden Age’ of capitalism and how that particular compromise is currently being re-organized.. States and Markets under Embedded Liberalism The historical compromise of ‘embedded liberalism’ was sustained by a number of buffering mechanisms which ensured that states could effectively use national economic policy to promote domestic stability, in the process sustaining support for an expanding global liberal order. In the area of trade, multilateral negotiations focused on the issue of discrimination in tariffs while retaining support for the concept of tariffs themselves. In the area of monetary policy, governments were permitted to maintain capital controls and the focus of multilateral negotiations was maintaining balance of payments equilibrium in conjunction with full employment (Ruggie 1982). To these buffers in the areas of trade and finance we might add the relatively national organization of industrial capital and the relatively limited labour migration during 7 this period. In the critical areas of trade, finance, production and labour supply, there were significant institutional buffers between the global expansion of markets and capital and the instruments available to governments to intervene domestically. The liberal international order was ‘embedded’ in national economies which sustained support for it by mediating its effects. States play a critical role in constructing markets by guaranteeing their rules of operation but also by creating new market actors and shaping their strategies. However, they must balance this activity with the need to maintain support from the society which they claim to represent, placing the state at the heart of the process of managing the tensions between market and society. Society too is caught between supporting state efforts to promote growth and living standards through the market while simultaneously turning to the state for protection against the market (Polanyi 1944). Marxist theorists suggested in the 1970s that these tensions were insurmountable (Offe 1984, Habermas 1976). However, the tensions have been reconciled historically in a variety of institutionalized national models of capitalism, underpinned by different state-society alliances (Scharpf 1999, Evans et al 1985). Four distinct models of such state-market interaction have dominated the history of the postwar world-system: the liberal states of the Anglo-American spheres of influence, the social rights states2 of parts of the industrialized west, the developmental states of East Asia and the socialist states of Eastern Europe and China in particular. The fact that these models are embedded within an international liberal order is reflected in the market 2‘Social Rights States’ refers to the states which are typically labeled ‘welfare states’. I follow Block’s (1994) term in this paper due to its identification of the critical feature of those states - the extension and broadening of social rights in the market - rather than directing attention to just one, albeit crucial, part of this process - the expansion of the welfare state. 8 orientation of each, with the exception of the socialist states. In liberal regimes, states promote the domination of markets over society. In social rights states, state and society form an alliance to limit the range of market strategies to ‘high road’ (high skill, high wage, extensive social protection) strategies. In developmental states, which seek to stake a place for themselves in the international liberal order, the state aggressively mobilizes society to participate in the market and state and society coordinate market strategies. Socialist regimes differ in their position outside the embedded liberalism compromise and in their ability and desire to subsume market and society within the operations of the state. I examine each one in turn in order to examine the range of state-market interactions within this particular institutionalized organization of the world-system. In each case the key features of each model, its international and domestic conditions, and the critical dilemmas it faces are outlined. Liberal States and Hegemonic Power The project of the liberal state is state promotion of markets into every sphere of society and even ultimately into the state itself. The irony is that the state is required to secure the conditions of reproduction of the market - laissez faire is inevitably and continuously planned (Polanyi 1944, Block 1996). In a world order where a hegemon exists, such as in the case of Britain in the late 19th century or the US after World War II, then an international economic regime based around free trade is likely to emerge as a liberal world order is consistent with the interests of the hegemonic power (Arrighi 1994, Ruggie 1982). The ‘liberal’ welfare states of the industrialized west consist of the United Kingdom, the United States and the countries to which the model has ‘diffused’ 15 relations more formalized but is also likely to put pressure on state and business to engage in long-term collaborative planning (Schneider 1997). The situation of labor is typically less benign in developmental states however as trust between business and the state is often consolidated by the repression of labour (Deyo 1989). Evans (1995) cautions that even the most successful and bureaucratically endowed states may run into problems. The developmental state promotes local firms and encourages them to compete globally. In becoming global firms however their alliances with the state are undermined as they become more and more closely aligned with the interests of their international partners. The Asian development project’s basis in the domestic alliance between state and capital was undermined as Asian firms internationalized, became more integrated into international financial markets and ran into the massive debt crisis of the 1990s as Asian and US capitalist institutions clashed, undermining the high debt financing of the Asian corporations (Wade 1998a,b,c,d, Wade & Veneroso1998, Biggart 1998). The delicate balance of state-society synergy in the East Asian developmental states is under threat from the disengagement of society from the state to form new, and potentially disastrous, alliances with international market actors. Socialist States Clearly the most ambitious attempt on the part of a state apparatus to shape market and society was the efforts of the ‘state socialist’ states of Eastern Europe and some parts of Asia to build an alternative model of socio-economic development, both nationally and contesting with the liberal order at the level of the world-system. Where the theory of socialism had predicted that revolutionary attempts to overthrow capitalism would emerge in the developed nations, famously this has not been the case. Although the avowed goal of socialism was the dominion of society over state and 16 market, in practice the socialist project turned into the effort of the state to subsume society and the market within itself. The mobilization of society by the state apparatus, controlled by the new class of experts (Konrad & Szelenyi 1979), has been the basis of economic development. While ostensibly incompatible with the capitalist multilateralism of embedded liberalism, state socialism ultimately made its peace with this world order. As the Cold war became institutionalized and the US and USSR carved out their own spheres of influence, the spectre of communism became a legitimating element of the embedded liberalism compromise. Furthermore, the socialist states themselves used market-like mechanisms to coordinate their international relations, increasing their exports to the world market and their imports from capitalist countries and making deals to host transnational investment (Chase-Dunn 1982, 1989: 85). How state socialist economies actually worked was a mystery to sociologists and other western social scientists for many years. This was despite the fact that until the 1970s the socialist economies had growth rates comparable to other countries at their level of development and much superior levels of literacy, infant mortality and other measures of social welfare (Szelenyi 1994, Kornai 1989). It was only in the 1980s that studies began to go beyond the ‘totalitarianism’ and ‘modernization’ perspectives (Stark & Nee 1989). Kornai’s (1980, 1990) major contribution in developing his theory of the economic logic of the plan was to analyze the logic of state socialism as an institutional formation in its own right. He argued that a plan driven system ran into chronic problems of shortage while a market driven system was threatened by problems of demand. Burawoy and Lukacs, in their study of firms in Hungary, developed this insight by showing that significant elements of market and social coordination existed 17 within the planning system. In contrast to capitalism, where large firms sought to control uncertainty in the market economy by developing significant elements of corporate planning, socialist firms were subject to the plan externally but relied heavily on market-like mechanisms to deal flexibly with the chronic problems of shortages and make the necessary work process adjustments (Burawoy & Lukacs 1992). Indeed, more generally, socialism was the ‘mirror image’ of capitalism (Stark 1986). Where society turned to the state to ameliorate the inequalities of the market under capitalism, it turned to the market to compensate for the inequalities associated with the socialist redistributive state (Szelenyi 1978). Similar to capitalism, however, is the importance of social networks and personal ties in mobilizing and allocating resources, ties which may be so important that some authors have suggested a transition in postsocialist economies not so much from ‘plan to market’ but from ‘plans to clans’ (Stark & Bruszt 1998). Socialist states vary a great deal in how these alternative forms of coordination have been combined with planning (Szelenyi 1994). Nonetheless, it was not until after the crises of 1989 that market and society were able to challenge and displace the state as the central organizing principle of the now post-socialist economies. The state system collapsed under the weight of its own inability to deal with the informational complexities of intensive growth in the information age (Castells 1997) and the growing gap between ideology and reality (Burawoy & Lukacs 1992). Authors disagree profoundly, however, on the legacy of socialism and its implications for transitions from socialism. Burawoy argues that in Russia the collapse of the socialist state has resulted in the ‘involution’ of society with the destruction of the existing infrastructure of social cooperation and flight from production and accumulation into a 18 degenerate merchant capitalism and usury (Burawoy 1997, Burawoy & Krotov 1992). Others are more optimistic, arguing that the socialist legacy leaves resources for the transition as well as obstacles, resources which are primarily located in the social relations of the populations of these economies themselves (Stark & Bruszt 1998). Eyal et al (1998) argue that the cultural bourgeoisie of Eastern European post-socialist countries are promoting a ‘capitalism without capitalists’, creating market spaces before the capitalists are created to fill those spaces. Stark and Bruszt’s research suggests that these capitalists are in the process of being created, economically around new ‘recombinant’ forms of property (Stark 1996) and politically through new ‘deliberative associations’ (Stark & Bruszt 1998). New actors and institutional arenas are being formed which blur the boundaries between public and private and are deeply embedded in associational networks. Society is to provide the solution to the problems of market transition. Others, however, argue that the involution of society makes this impossible and that a strong state role is required to create a market which does not decimate the society but results in accumulation. Burawoy (1997) points to China as the example of a coherent party-state which has promoted successful industrial transformation while retaining central political control, in contrast to the collapse of the Russian state and the rise of crime and usury to fill the vacuum. Oi (1998) argues that the state in China has not been undermined by its creation of an entrepreneurial class, as theorists of ‘market transition’ suggest (Nee 1989). To a certain extent, the differences between these authors relate to their choice of cases, Russia and China having controlled society much more closely historically while the Central European nations were left with a more vigorous associational life upon the collapse of socialism. Nonetheless there are critical theoretical differences, reflected in Amsden et al’s (1994) vigorous argument for a ‘developmental state’ strategy for 19 Eastern Europe. These differences might be fruitfully addressed through an increased attention to the conditions for ‘state-society synergy’ (Evans 1997) in contexts where both state and society are weak. States, Markets and Globalization In each model of state-market interaction we see that a particular alliance between state and society shaped participation in markets in a different way. Social rights states strengthened society to promote a ‘high road’ of economic development within the market. Developmental states mobilize society to participate in the market but are threatened by the increased strength of society. Socialist states veer between state and society as alternative roads to the market, or face a bleak future if they cannot take either path (as in Russia). These dilemmas are themselves intensified by the crisis of ‘embedded liberalism’ itself in recent years. The institutional buffers which shielded these state-society alliances from the international liberal order are being eroded, creating a new and uncertain terrain upon which new alliances are being tentatively forged. World trade has expanded rapidly as a proportion of world income since at least the 1970s. More significantly, since the 1980s the value of world trade has been surpassed by the value of internal transnational corporate transactions as transnational industrial capital has become increasingly globalized (Ruggie 1995). Both of these are dwarved by the enormous volume of international financial transactions, affecting both government’s ability to control their own fiscal and monetary policy and making much more significant the ‘market for corporate governance’. Finally, migration has once again become a significant feature of advanced industrial economies, creating 20 significant political problems for many states (for a review of these empirical trends and some of their implications see Held et al 1999). While this period of globalization may be similar in quantitative terms to the late 1800s (Bairoch 1996, Hirst & Thompson 1994) it is qualitatively different in a number of ways. The connections between nations and localities are deeper and more instantaneous. The world-system itself has developed in quite a different manner in the intervening century, so that the current period of internationalization is occurring upon a very different institutional terrain. Furthermore, all of these intensified patterns of globalization occur alongside transformations in social structure (particularly around gender relations and family structures) and in social organization (the decentralization of bureaucratic organizations and the application of the new information technologies). It has also brought with it a rapid increase in withinand between-country inequality (Korzeniewicz & Moran 1997). Globalization after Embedded Liberalism Neither is this process of globalization an external, ‘natural’ force which is undermining embedded liberalism from without. Rather, it is an outcome of the latent tensions within the postwar compromise which were hidden under an apparently stable order for thirty to forty years. For some these trends are manifested in the market, through weakening capital accumulation and dwindling profitability. Some argue that this is a result of the increased strength of labour and the welfare state which eroded corporate profits - here the social rights state runs into its inherent limits (Boyer 1990, Bowles et al 1990). For others, however, the crisis of profitability is a function of the global over-competition between the leading exemplars of each state model above - the liberal state of the US, the social rights state of Germany and the 21 developmental state of Japan (R. Brenner 1998). Others are less concerned with a crisis within the market itself and in fact see markets as increasingly hegemonic over states and society due to their increasingly global organization. Global competition and trade pressurizes societies and states. Rodrik (1997), reviewing the economics literature, finds that unskilled workers are likely to experience increased labor market insecurity in the face of free trade, that national systems of social security are indeed threatened by trade liberalization and that nations may have legitimate reasons to limit trade. While much commentary has focused on competition from the developmental states, Rodrik points out that there is also increased low cost competition from among the industrialized economies (Sassen 1988). Increasing global mobility of capital gave corporations increased power to demand concessions from states and societies (Harrison & Bluestone 1988). Gereffi and Korzeniewicz (1994) and Harrison (1994) combined these analyses to argue that market processes were increasingly organized on a transnational basis, with trade, production, labour and finance organized through global commodity chains within an increasingly integrated global economy. Market, state and society are in a hierarchical relationship with markets organized transnationally while states remain stuck at the national level and society remains relatively fixed at the local level. The crisis is not of the market but of society and the state (and social rights states in particular). For world-systems theorists a crisis of the liberal hegemonic state lies behind these outward manifestations. They see the inability of the hegemon to organize capital accumulation on a world scale as a typical and recurrent feature of ‘hegemonic cycles’. The current crisis is brought on by interstate and inter-enterprise competition and by social conflicts which are associated with the emergence of new configurations of 22 power. Ultimately they expect to see a new hegemonic power emerge to regulate a more deeply globalized economy (Arrighi & Silver 1999:29) . Although these are broad generalizations, the world-systems theorists do point us toward a recognition of the crisis of the institutions reconciling international and domestic economies and social orders. The current era of globalization is one in which the relationship between state, market and society - and potentially a new institutionalized compromise between them - is being intensely contested . The structural changes outlined above pose a formidable set of challenges for states hoping to successfully remake state-society alliances and to reconstruct market actors, strategies and environments. This is of course likely to be a period of transition and relative chaos to be followed by a newly institutionalized, increasingly globalized international economic order. However, it is the politics of this transition which will determine in large part some of the key elements of that new order. State Experimentalism Some authors have argued that these changes have diminished the role of the state, weakening it to the point where it is essentially bypassed by the formation of a global system and transnational social structure (Sklair 1991, Robinson 1998, Mittelman 1997). Others rightly argue that the intensification of global processes has actually made the role of the state more important as an effective state becomes critical to promoting competitiveness within a global economy. However, this increased state role is limited to promoting economic competition and accumulation - even as the state becomes an increasingly critical enterprise association its role as a civil association 23 diminishes (Cerny 1995). Cerny argues that all states are now faced with the imperatives of global competition, causing a convergence around the model of the ‘competition state’ (Cerny 1995). Certainly this resonates with aspects of the experience of recent years as states, both within and across national boundaries, compete to offer the greatest incentives and concessions to attract mobile investment. However, this goes too far. Both the structure of the global economy and the space for local and national diversity are more varied and offer more opportunities than the concept of the ‘competition state’ allows. There remain a variety of ways of connecting to the global economy, with significantly different implications for local and national populations (Gereffi 1994). It may be increasingly difficult to operate outside the reach of the market economy or in isolation from transnational capital but we are also beginning to better understand the huge variety of ways in which such market activities can be organized - up to and including market socialism (Roemer 1991). Clearly the specificity of national models of the economy is threatened by the challenges to the buffers which supported those models. However, there remain ‘specific assets’ which are of necessity tied to local places and can be a basis for persistent diversity in the global economy. These include the importance of local cultural differences in shaping economic systems (Biggart & Guillen 1999, Orru et al 1997). They also include the specific social relations of trust and effective communication which are developed through proximate social relations (Piore & Sabel 1984, Storper 1997). Even the most diasporic or virtual community develops its own rules, resources and boundaries (Wellman et al 1996). Nonetheless, the governance of the economy has been transformed and states are 24 scrambling to learn the lessons of the new environment. Economic life and political governance has been ‘rescaled’ as the national level has become destabilized both from above by globalization and below by the increasing salience of regional economies. In this situation, the ‘glocal’ state aims to promote capital accumulation by linking the local to the global and creating a location ideal for accumulation within a global set of connections (N. Brenner 1998, 1999). The organizational structure and strategy of these glocal states are only now beginning to be explored. The state which connects a wide range of local networks to a diverse set of global actors and networks must itself be more decentralized and flexible than states which presided over a centrally negotiated national development coalition (Ó Riain 1999). Although it is transformed to deal with the new circumstances, the national state still plays a critical role in shaping markets by mediating these connections between the local and the global and influencing how local specific assets are mobilized within the range of opportunities available in the global economy. Castells (1997) argues that the state is increasingly moving towards a position as a network state, embedded in a variety of levels and types of governance institution. Ansell’s research on regional development in Europe “suggests that the ‘network state’ can operate as a liaison or broker in creating networks and empowering non-state actors, especially when state actors occupy a central role in these networks” (1999: 35). Network centrality is critical to this new state - isolation from the local or the global spells disaster. However, there remain a variety of ways of organizing these networks. The models of state-marketsociety interaction under embedded liberalism remain useful as conceptual organizing frameworks in considering the possibilities for the future. What might each of these models look like in such a networked economy and polity? Efforts to subsume society and the market within the state are increasingly difficult to 31 issues); consumer/labour networks organizing boycott oriented campaigns such as those against NIKE; and, transnational labour organizing (Evans 2000).These transnational political networks have emerged from society as a Polanyian protection against the ravages of global markets and face huge odds. However, they may come to effectively catalyze local, national and transnational political action in constructing an alternative to the neo-liberal version of globalization (Evans, 2000). Even more speculative at this point is how these social movements might connect to states to create new state-society alliances out of the local and the global. A sociological approach to states and markets must be sensitive to the structuring of their relationships in the world-system but must also retain the tools for analyzing the variability of those relations within the system. Without the tools to analyze this variability, sociology’s contribution to strategic and political consideration of developing and potential combinations of state, market and society will be weakened. This paper has briefly drawn together research in sociology which is increasingly adopting an ‘integrative vision’ of the international political economy. Such an integrative vision holds out the promise of making sense of the transnationally networked economy, polity and society which are being built on the institutional legacies of embedded liberalism. It may also prove to be a tool combating the extreme pessimism and optimism which characterize debates on globalization by helping to identify the political possibilities within the current era. 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