We are entering a period of turbulent, systemic change in the organization of the world economic and political order--a period comparable to the transition from the feudal to the modern era in the 16th and 17th centuries. As Hobsbawm observes, the late 20th century world economy appears temporally confused, involving a "curious combination of the technology of the late twentieth century, the free trade of the 19th and the rebirth of the sort of interstitial centres characteristic of world trade in the Middle Ages."(1)
I have argued elsewhere that globalization represents a systemic transformation of the world economy that will result in new structures and new modes of functioning.(2) Globalization entails two interrelated, technologically driven phenomena. First, dramatic increases in the cost, risk and complexity of technology in many industries render even the largest national markets too small to serve as meaningful economic units. Second, and more important here, the emerging global world economy is electronic, integrated through information systems and technology rather than organizational hierarchies.
We are in the midst of what Cerney and others have called the third industrial revolution, "characterized by the intensive application of information and communications technology, flexible production systems and organizational structures, market segmentation and globalization."(3) The digital revolution has "dematerialized" manufacturing and commerce; all firms, regardless of sector, have become information processors.(4)
One result of the information revolution is the "deintegration" of the large, vertically integrated "Fordist" firms which organize a significant portion of international economic transactions within their administrative hierarchies.(5) In their place, a complex system of networks and alliances is emerging in which information technology facilitates the integration and coordination of geographically dispersed operations. An international system of production is being replaced by a complex web of interlaced global electronic networks.(6)
The scale and complexity of technology and the emergence of electronically integrated global networks render geographic borders and, more fundamentally, the basic construct of territorial sovereignty problematic. A critical issue raised by globalization is the lack of meaning of geographically rooted jurisdiction when markets are constructed in electronic space. There is a basic disconnect between geographic space and cyberspace.
THE NEOMEDIEVAL ANALOGY
The Peace of Westphalia (1648) is taken conventionally as marking the end of medieval universalism and the origin of the modern state system. The medieval to modern transition entailed the territorialization of politics, the replacement of overlapping, vertical hierarchies by horizontal, geographically defined sovereign states.(7)
The modern state system is organized in terms of territorial sovereignty: the division of the globe's surface into fixed, mutually exclusive, geographically defined jurisdictions enclosed by discrete and meaningful borders.(8) Nation states and national markets are defined spatially. Geographic jurisdiction implies that each state's laws, rules and regulations apply within its territory--within the space encompassed by its borders.(9)
As Carr noted many years ago, it is difficult for contemporaries to even imagine a world in which political power is organized on a basis other than territory.(10) Geographically rooted, sovereign nation states and the international state system, however, are relatively recent creations which comprise but one of a number of historical modes of organizing political activity.(11)
Furthermore, the current state system may well be unique, a product of a very specific historical context. Agnew reminds us that "the spatial scope of political organization has not been set for all time in a particular mode. …