The financial turbulence which erupted in Asia between 1997 and 1999, then in Russia and Argentina, then in the United States itself in 2002, brought to an end the bubble economy, the dreams of everlasting economic growth and stock markets which rose forever. There has been little agreement, however, over whether these financial storms reflect deeper problems in the coordination of the global capitalist economy, or are in fact unrelated to the real economy, but are primarily to do with the way in which financial markets are organised and regulated - some believing that there has been too much regulation and some too little. The violence of the financial swings has undermined the case for deregulated markets which neo-liberals have been making so forcefully for so long and indeed many see the origin of the financial crises as the result of almost thirty years of deregulation since the collapse of the Bretton Woods system in 1971 and the creation of an open financial system as an integral part of the new global economy.
This question of the origin of financial crises is intimately related to the question of globalisation, and whether or not the trends of the last thirty years have substantially altered the relationship between the state and the economy at regional, national and global levels. In the triumphalist era of American resurgence in the 1990s, the superiority of the Anglo-American model of capitalism was once more proclaimed and the space for alternative forms of capitalism, let alone alternatives to capitalism, was declared vacant. Some of the more enthusiastic proponents of globalisation rushed, in the 1990s, to proclaim that the era of the nation-state was over, and predicted that nation-states would wither away, to be replaced by new non-political forms of economic interdependence (Ohmae 1996). Without the interference of national governments the global economy would become a smoothly self-regulating spontaneous order, and financial crises and economic recessions would become a thing of the past, because frictions, rigidities and political interventions, which caused them would be swept away. If financial crises continued to occur, no political response would be necessary; they would be as natural as tropical storms, and should just be left to burn themselves out.
Globalisation, however, is not a single process proceeding inexorably to a single result, but a bundle of different trends. One tendency of increasing economic connectedness in the global economy is to undermine some of the powers and capacities of existing nation-states. This has the effect of