Capitalism and its Future:

Remarks on Regulation, Government, and Governance

Bob Jessop

Pre-copy-edited version: 'Capitalism and its future: remarks on regulation, government,

and governance', Review of International Political Economy, 4 (3), 435-455.

The conference which inspired this collection was explicitly concerned with the direction
of contemporary capitalism. Its final plenary session, to which my own contribution was
presented, addressed the historical place and destiny of capitalism. 1 Surprisingly, few
papers at the conference explored the basic nature of capitalism, its genesis, overall
dynamic, or future. Yet only by examining such issues can one usefully comment on the
historical place, the direction, or destiny of capitalism or draw relevant political
conclusions. Thus I first consider whether capitalism has a distinctive dynamic and, if so,
what this might mean for its future. I argue that it does, indeed, show important
developmental tendencies. However, as these are not linked to any final telos, capitalist
development remains open within very broad limits. Accordingly I do not try to forecast
the long-run future or ultimate destiny of capitalism. Instead I discuss several major
economic changes in contemporary capitalism, consider whether they involve a break in
capitalist development, and suggest some medium-term implications for the national state
and governance mechanisms.

1. What is Capitalism?

Marx found capitalism's distinctive feature as a mode of production in the generalization

of the commodity form to labour-power. Money and commodities were already
presupposed, of course, in market exchange and petty commodity production. But it was
only when the commodity form was imposed on labour-power (often through bloody class
struggles) that the self-valorization of capital became possible. Only then did the sole
source of value acquire a commodity form, economic exploitation acquire its distinctive
capitalist mediation through exchange relations, and the disposition of labour-power fall
directly under the sway of capitalist laws of value. This last result of commodification was
reinforced when labour-power was directly subsumed under capitalist control through
machine-pacing in the factory system. These conditions enabled (but did not guarantee)
the metamorphosis typical of capital -- beginning with money capital, moving through the
stages of productive capital and commercial capital, getting realized as profits in the form
of money, and becoming available for fresh investment. Commodification of labour-power
and its direct subsumption under capitalist control also make labour markets and the
labour process alike sites of class struggle. This fundamentally affects the developmental
dynamic of capitalism.2 For it shapes the forms of economic exploitation, the nature and
stakes of class struggle between capital and labour in the labour process, and the
competition among capitals to secure the most effective valorization of labour-power. It
also magnifies the 'historical and moral' element in the price of labour-power and
increases the scope of struggles over the social as well as private wage. 3

Attempts to valorize capital and contain class struggles in these conditions are the source
of capitalism's dynamism. This should not be mistaken for an endpoint towards which
capitalism is ineluctably drawn (cf. Postone 1993). Even at the most abstract level of
analysis, capitalism demonstrably depends on an unstable balance between its value and
non-value forms, on a changing balance between (re-)commodification and
decommodification. This rules out the eventual commodification of everything. Instead we
find typically uneven waves of commodification, decommodification, and
recommodification as the struggle to extend the value moments of the capital relation
encounters real structural limits as well as increasing resistance and is then seeks to
overcome these again in new ways (cf. Offe 1984). Such structural limits and
contradictions (often expressed ideologically in terms of 'market failure') provide chances
to shift direction in so far as capitalism is constantly oriented, under the pressure of
competition, to new opportunities for profit. Such an orientation is, for Schumpeter, typical
of entrepreneurs. It spurs innovation -- in techniques, production, organization, products,
markets, finance, or other features of economic activity -- in the hope of securing thereby
temporary competitive advantages, generating 'rents' beyond the average level of profit
(Mandel 1970). Successful innovation in turn puts pressure on capitals to adopt the same,
equivalent, or superior innovations. This helps explain the uneven and combined
development of capitalism (see also Harvey 1982). But it also means that there is no pre-
given trajectory to capitalist development.

2. Putting the Capitalist Economy in its Place

Despite the capacity for self-valorization facilitated by generalization of the commodity

form to labour-power, the capitalist economy is not wholly self-contained. Even labour-
power itself, despite its commodification, is largely reproduced outside any immediate

2
capitalist labour process4 -- which means that the sole source of value and its bearers,
the working class, are placed outside as well as inside the logic of capital. In addition, the
capitalist economy is 'structurally coupled' to other systems with their own operational
logics or instrumental rationalities and to the 'lifeworld' formed by various social relations,
identities, interests, and values not otherwise anchored in specific systems. 5 Structural
coupling involves blind co-evolution among co-existing systems and social spheres. Thus
capitalism will co-evolve with other systems and the lifeworld. Changes in its environment
are reflected in changes within capitalism -- but always in mediated forms shaped by its
own instrumental rationality or autonomous operational logic. In turn, economic changes
may well produce changes elsewhere in the systemic and life worlds. These changes will
likewise be mediated by the operational logics of other systems and the communicative
rationalities of the lifeworld. Within this overall blind co-evolution (which always and
necessarily escapes any general or global control), there is some, albeit limited, scope to
try to coordinate capitalist economic development with the operations of other systems
and to anchor it more firmly in the lifeworld. These attempts can take the form of top-down
imperative coordination (centralized planning) or more decentralized forms of
governance. It is the latter, for reasons to be explored below, that are now being
emphasized in economic and political discourses and practices.

It is the combination of strategic coordination and structural coupling and their mediating
role in class struggles and capitalist competition that produces a distinctive configuration
of capitalism in any given conjuncture. This can be analysed in a regulationist manner as
a distinctive 'model of development' (formed by a production paradigm, an accumulation
regime, and a mode of regulation) and can also be linked to specific patterns of 'base-
superstructure' relations and patterns of political domination (see below). In this sense
capitalist development is incomprehensible without referring to its social and institutional
embeddedness (with all that this implies for close linkages between economic and other
activities), to the forms of social as well as economic regularization (or normalization) of
profit-seeking actions in a capitalist economy, and to the ways in which resistance to such
embeddedness and regularization are managed. I will deal first with two aspects of the
embeddedness of capitalism within broader social relations.

First, many actors in the capitalist economy routinely monitor opportunities for profit (or
other sources of revenue).6 In pure market conditions, failure to make suitable
adjustments will lead to marginalization or elimination from the market economy. Not all
actors have the same capacities to engage in such monitoring, however, or to exploit any

Page 3
changes. For, despite the neo-liberal rhetoric of the enterprise culture and the opportunity
society, there are, of course, fundamental asymmetries in structural and organizational
power in the capitalist economy. In addition, some economic actors have access to other
resources which enable them to survive in the market despite their inability to match
socially necessary standards of productivity and performance. But it remains the case
that it is through such monitoring and response that the structural coupling of the capitalist
economy to its environment is mediated. For differences in the environment offer different
opportunities for profit. Thus events or circumstances outside the economy (in the
technology, science, political, health, education, legal, or other systems or changing
lifestyles and identities) may induce changes in capitalist development by offering new
opportunities for profit. This redirection may involve innovations in the labour process due
to technical and/or social changes as well as in products, corporate organization,
financing, markets, and so on. Varied opportunities help to explain different national,
regional, or local capitalisms as well as the rise and fall of particular sectors or branches
of production. Thus the American military-industrial complex is linked to its leading roles
in the bipolar nuclear system and imperialist alliances and to the ideological significance
of 'national security' and 'anti-communism' in US politics. Likewise the 'social-industrial
complex' in Nordic economies can be linked to the roles of social democracy and welfare
state expansion (O'Connor 1973; Esping-Andersen 1985). Similarly, Porter (1990) has
related the competitive advantage of UK firms in the world art market (Sothebys,
Christies, etc.) to Britain's early industrialization, imperial role, and wealth-driven decline.
Other examples include: 'long waves' of capitalist development associated with scientific
and technological change; the rise of ecological modernization as part of Germany's
national accumulation strategy in response to the Green movement; and a 'pink pound'
niche market reflecting changes in sexual identities and lifestyles.

Second, the capitalist economy is socially embedded and socially regularized. A detailed
account of embeddedness is impossible here but would need to look at three different
contexts in which economic activities may be embedded and which can serve as sites for
their regularization. These contexts comprise: a) interpersonal relations; b) inter-
organizational relations; and c) the inter-systemic relations among different institutional
orders (for further details, Jessop 1997). Changes in these contexts may be reflected, in
mediated form, in a re-direction of capitalism. Thus secular shifts in the forms and extent
of interpersonal trust and networking, inter-organizational negotiation and positive
coordination of activities, or inter-systemic noise reduction and negative coordination will
impact on capitalism to the extent that it is socially, institutionally, and societally

4
embedded, is guided or governed through such embedded activities, or is simply
structurally coupled to these types of social context. Thus an adequate account of the
capitalist economy and its dynamic should explore how it is actually embedded in a wider
nexus of social relations and institutions; how its evolution is coupled to environing,
embedding institutions; and how the latter assist or hinder the overall reproduction,
regularization, and governance of the economy. This is especially significant at present
because of the changing forms of social embeddedness and their re-articulation as
capitalism becomes increasingly innovation- and information-driven, is more closely
linked to so-called 'post-industrial' processes, and becomes more global in scope (cf. Bell
1975; Kumar 1995; Castells 1996). In short, as social embeddedness changes over time
it produces a path-dependent structural coupling affecting both the economy and its
environments.

3. Capitalist Societalization

Treating capitalism as a complex economic and extra-economic social relation involves a

totalizing perspective. This does not mean that the totality of social relations consists in
nothing more than interconnected, all-pervasive moments of the economy in its inclusive
sense. For all social relations are polyvalent, can be articulated into different institutional
orders, and have varying centrality to economic performance. In turn this permits
alternative 'totalizing' perspectives. This poses an interesting issue about Marxism's
relevance to the analysis of contemporary societies. Is Marxism just one perspective
among many or is it the master perspective? I suggest that it can be both. On the one
hand, the critique of Marxist political economy offers a paradigm for examining the
development of the capitalist economy in its broadest sense. In this sense it could co-
exist with totalizing perspectives on the social embeddedness and regularization of other
institutional orders. On the other hand, at least for critical realism, capitalism could also
prove the dominant object of analysis in so far as capital accumulation has become the
dominant principle of societalization (generator of society effects)7 in a given social order.
In this sense, the relevance and power of Marxism as a theoretical approach depends on
how far contemporary societies can plausibly be described as essentially capitalist
societies and all their institutions as primarily capitalist institutions.8 If the capitalist
economy is simply one institutional order among others (as argued by, for example,
Giddens or Mann), the Marxist critique of political economy can at best provide one
disciplinary perspective among others -- although one less fetishistic, perhaps, about
institutional and (hence) disciplinary boundaries than other perspectives. However, if

Page 5
accumulation has become the dominant principle of societal organization to the extent
that it shapes the operation of all institutional orders more powerfully than they shape it,
then Marxism has the potential to be the master perspective (cf. Albritton 1995, Postone
1993).

In this latter regard I differ from orthodox historical materialism because I see no reason
why, even where capital is capable of self-valorization, it has to become the dominant
principle of societalization. Accumulation can occur where most of the key inputs into
capitalist production take the form of (perhaps fictitious) commodities; there is effective
control over labour-power within the labour-process; the environment is sufficiently stable
to enable capitals to orient their activities to opportunities for profit; and profits can be
realized. None of this requires that the whole of society be subsumed under the
commodity form and subordinated to market forces -- and, indeed, as noted above,
capitalism would be impossible if this were the case. But it does permit significant variation
in the extent to which 'market forces' (and the institutional logic of profit seeking) penetrate
the social.

It is in this context that I have previously distinguished between 'economic determination'

within the capitalist economy (i.e., the iron law that 'wealth must be produced before it
can be distributed' or, in Marxist terms, that value must be produced before it can be
realized) and the notions of economic domination and economic hegemony, which denote
the power of different forces in the economy and wider society. Whereas economic
domination refers to the structural and organizational power of capital to secure
compliance from other institutional orders with its own reproduction-rgulation
requirements, economic hegemony exists where a given accumulation strategy is the
basis for an institutionalized compromise for co-ordinating, governing, or guiding activities
within and across different institutional orders around the pursuit of a particular capitalist
economic trajectory (Jessop 1982). Nothing in the economic logic of accumulation
requires that ideological and political struggles must subsume other institutional orders
and their logics under the principle of capital accumulation and/or colonize the 'lifeworld'.
One should always examine the historically specific conditions under which capital
accumulation tends to become the structurally dominant process (or even hegemonic
principle) throughout the wider society.

There are at least four interrelated ways in which this can occur. First, commodity relations
can be extended into spheres not currently subject to the logic of accumulation. This can

6
be seen in the commodification of political, educational, health, scientific, and many other
activities so that they are primarily and directly oriented to opportunities for profit. Second,
domains or activities that are primarily non-commercial can be distorted through the
development of a secondary economic coding. This occurs when the choice among non-
commercial activities in different institutional spheres is determined by calculations
regarding whether it is profitable or unprofitable to apply the relevant primary code. Thus
neo-liberal educational, health, scientific, and other 'reforms' encourage decision-makers
to consider the financial impact of their operations on the individual, organizational, and
institutional levels. They are now more prone to ask whether it is 'profitable' to make
judgments on educational, medical, or scientific grounds according to their presumed
primary codes. Such commercial distortions are reflected in careerism and the subversion
of professional integrity; the influence of market proxies in non-commercial organizations;
and the subordination of diverse institutions to the (perceived, alleged) imperatives of a
strong and healthy (internationally competitive) economy.

Third, the superior dynamism and reach of a globalizing capitalist economy may cause
more problems substantively for other systems than other systems cause for it. In other
words, in the multilateral process of structural coupling of systems, other systems adjust
more to the logic of capital than capitalism is obliged to incur costs or losses in adjusting
to their respective logics. Among reasons for this asymmetrical interdependence among
institutional orders one could include the capacity of the capitalist economy to escape the
constraints and controls of other systems. This can occur through its own internal
operations in time (discounting, insurance, risk management, futures, etc.) and space
(capital flight, relocation, extra-territoriality, etc.) or through attempts to subvert these
systems through personal corruption or colonization by the commodity form. And, fourth,
there may be a successful hegemonic project which establishes capital accumulation as
the dominant principle of societalization.

These tendencies are not generated by a telos. Each has its own roots and may even
partly or wholly counteract the others. The first tendency is rooted in a search for new
sources of valorization; the second is rooted in attempts to impose the economizing,
profit-seeking logic of accumulation on other systems; the third is rooted in the logic of
structural coupling; and the fourth is rooted in struggles for hegemony and/or asymmetric
interactions between capitalism and other orders. Where these tendencies are mutually
reinforcing one has the basis for what Gramsci calls an 'historical bloc', i.e., 'the necessary
reciprocity between structure and superstructure' (1971: 366; see also below). And in

Page 7
such circumstances we can talk of capitalist society or the dominance of capitalist
societalization.

Approaching capitalist societalization in these terms also enables one to identify possible
sources of resistance to capitalist dominance or hegemony. Each tendency has its own
limits and can generate its own form of resistance. First, in so far as the valorization has
become the primary code in different domains, there can be class struggles proper. These
occur both within the capitalist economy in its narrow sense -- the primary field of the
economic class struggle between capital and labour -- and in various extra-economic
contexts which facilitate capitalist exploitation. In addition, there are limits beyond which
commodification can be pushed before 'market failures' threaten the reproduction of
capital in general. Second, where another code remains primary, the imposition of
profitability as a secondary code may be resisted. This is where conflicts occur between
(a) the bearers of different codes and programmes which are not immediately expressed
in terms of profit-and-loss and (b) those directly concerned with exchange-values and
profits. Institutional orders and social relations outside the immediate logic of valorization
typically have their own values and norms, bases of social inclusion or exclusion, their
own forms of structured conflict, etc.. This tendency is also structurally limited by market
failures of different kinds. And, regarding the third and fourth tendencies, there can be
struggles around the dominant principle of societalization. These take the form of
hegemonic struggles and counter-struggles over common sense, world views, etc., which
posit accumulation as the necessary condition for accomplishing other social goals. Such
struggles take us well beyond the 'system world' to include the 'lifeworld' or civil society.
With its wide range of identities, values, and interests this is a possible source of
resistance to (as well as a site for) bourgeois hegemony.

It is only through a very elastic and imprecise use of the concept that all these forms of
resistance can be reduced to 'class struggle' alone. I prefer to restrict the latter term to
struggles to establish, maintain, or restore the conditions for self-valorization within the
capitalist economy understood in its inclusive sense. This certainly covers far more than
trade unionist struggles over wages and working conditions. It also includes struggles
over aspects of the economic and social modes of economic regulation (such as the
money form, modes of competition, economic and social policy regimes, or international
economic regimes). Moreover, even in this broad (but not all-embracing) context, we can
usefully distinguish between the explicit 'class consciousness' and the actual impact of
different struggles. This distinction matters because the polyvalence of struggles means

8
their provisional outcomes can often be recuperated or subverted. Thus the class
relevance of struggles is never give once-and-for-always but is both fought for and played
out over time and space. There is certainly no univocal correspondence between the
declared class belonging and the actual class impact of particular social movements. Nor,
equally obviously, can class interests or impact be derived from abstract positions in the
capital relation. Their calculation requires a strategic-relational analysis of specific
conjunctures -- including the extent to which accumulation is the dominant principle of
societalization.

The remaining sites of resistance to capitalism are less suited to a simple class analysis.
They often involve conflicts over the very principle of accumulation rather than over
different class interests within capitalism. This concerns both the extension of the logic of
capital to other spheres and the struggle to establish bourgeois hegemony over society
as a whole. These struggles often involve popular movements organized around issues
of social exclusion and marginalization and/or 'elite' social movements concerned to re-
align diverse institutional orders, identities, and interests (on 'elite' social movements, see
Sklair, this issue). In this context 'civil society' becomes a significant (albeit still imaginary)
stake in many different struggles. It is the site both of colonizing struggles to integrate it
more effectively into the service of specific institutional orders (e.g., through
commodification, juridification, scientization, the emergence of the 'learning society',
politicization, militarization, etc.) and also of struggles to resist and roll back such
colonization attempts in defense of identities and interests that lie outside and/or cross-
cut them (e.g., class, gender, race, nation, stage in the life-course, citizenship, human
rights, or the environment). In this sense, then, popular or elite movements organised
around extra-economic institutional orders, with their own modes of domination and
exclusion and their own politics of identity and difference, have no necessary class
belonging. But they still have a conjuncturally-determined -- thus hard to calculate and
always provisional -- class relevance. The opposite problem occurs as non-class
movements (such as feminism or anti-racist movements) seek to calculate the strategic
or tactical value of alliances with class-based movements. All such struggles involve
serious strategic dilemmas -- especially over the relative weight of different bases of
mobilization within broad coalitions and the risks of political fragmentation when there are
many such bases and no attempts to build lasting coalitions (cf. Poulantzas 1978).

The struggle to establish accumulation as a dominant/hegemonic principle of

societalization typically extends well beyond class struggles, even broadly understood. It

Page 9
is no accident that Gramsci, a Marxist pioneer in this field, put so much emphasis on
intellectuals' role in hegemonic struggles and linked it to the re-ordering of common
sense. He also considered this issue in its structural and strategic moments -- referring
to the historical bloc and the hegemonic (or power) bloc respectively. Thus Gramsci
employed the notion of 'historical bloc' to solve the Marxian problem of the reciprocal
relationship between the economic 'base' and its politico-ideological 'superstructure'. In
particular he noted a significant 'ethico-political' moment to the historical bloc -- arguing
that values, norms, vision, discourses, linguistic forms, popular beliefs, etc., have a major
role in regularizing specific productive forces and relations of production. Only thus, he
writes, does the economic structure cease to be an external, constraining force and
become a source of initiative and subjective freedom (Gramsci 1971: 366-7). In this spirit,
an historical bloc can be defined as an historically constituted and socially reproduced
correspondence between the economic base and the politico-ideological superstructures
of a social formation. Conversely, Gramsci introduced the idea of 'hegemonic bloc' in
discussing class alliances and/or national-popular forces as mobilized in support of a
particular hegemonic project. Thus it refers to the historical unity, not of structures (as in
the case of the historical bloc), but of social forces (which he analysed in terms of the
ruling classes, supporting classes, mass movements, and intellectuals). An hegemonic
bloc is a durable alliance of class forces organized by a class (or class fraction) which
can exercise political, intellectual, and moral leadership over the dominant classes and
popular masses. Its unity 'results from the organic relations between State or political
society and "civil society"' (Gramsci 1971: 52). Even allowing for Gramsci's emphasis on
the long-term and general orientation of capitalist hegemony, it is nonetheless important
to concede that hegemony can be based on other principles of societalization than
accumulation (e.g., the primacy of national security, theocracy, nationalism,
democratization, etc.) and either subsume or oppose accumulation.

4. The Future Direction of Capitalism

I have sketched some basic theoretical elements for discussing capitalism's future
direction. It should be evident by now that I regard this as an open future rather than as
being driven by a pregiven telos towards some final destination (whether triumph or
collapse). This openness extends the scope and stakes of struggles over capitalism's
relationship to its institutional environment and to the lifeworld (Laclau and Mouffe 1985).
But, as Wood has emphasised in response to the post-Marxist reading of this conclusion,
this does not imply a wholly arbitrary, random co-variation of elements (1986). The

10
complexities of institutional interdependencies, the path-dependent phenomenon of
structural coupling, and the increasing opacity of contemporary social relations all point
to the difficulty as well as necessity of investigating possible constraints on the future
direction of capitalism.

My comments here are limited to the possible reorganization of the mode of

societalization linked to Atlantic Fordism. Simply put, the former had three interrelated
elements: a mode of economic growth based on the dominance of mass production
oriented to relatively closed national markets, a political regime based on the Keynesian
welfare national state, and a 'civil society' based on the (patriarchally-inflected) principles
of a universal national citizenship and social inclusion. All three pillars of Atlantic Fordism
are now undergoing major structural reorganization and strategic reorientation: the mode
of growth is being reorganized around the dominance of flexible production oriented to
open markets, the political regime around a 'hollowed out' Schumpeterian workfare
regime, and 'civil society' is decomposing under various challenges (see section 6). It is
impossible here to fully deal with all these changes -- especially regarding their regional,
national, or subnational variations. Moreover, as Mann shows in his paper, the wider one's
perspective (at least on the future of the nation-state), the greater this variation. Thus my
arguments should not be generalized beyond the erstwhile Atlantic Fordist domain and
should be made more nuanced even for the latter.

Four sets of economic changes have had a major impact on the dynamic of Atlantic
Fordism. These are: the rise of new core technologies (which, though partly driven by
changes beyond the capitalist economy, have been increasingly subordinated to the logic
of accumulation); the shift from a Fordist to a post-Fordist paradigm for industrial (and
service) organization (a paradigm shift that should not be confused with the successful
realization of any such transition); growing internationalization, transnationalization, and
globalization (a trend which partly returns the world economy, as Hirst and Thompson
(1995) note, to the levels of interdependence prevailing around 1913 but which
nonetheless has a qualitatively quite different significance); and, linked to this third trend
both as its mediation and as a partial counter-tendency, the rise of regional and local
economies as key sites in the pursuit of international systemic competitiveness. To these
four trends one may also add the competitive threat allegedly posed by East Asian
economies; and the increased salience of transnational ecological problems. Singly and
together these factors have allegedly undermined the borders of the national state,
thereby rendering it anachronistic, and exposed all national economies to an intensified

Page 11
and increasingly inescapable global competition that exerts downward pressure on
production costs and a supposedly 'unproductive' public sector.

These changes can be linked to the crisis of the postwar mode of growth in the economic
space occupied by Atlantic Fordism, its associated regional policies and growth pole
strategies, and its characteristic mixed economy of welfare and social redistribution. As
Wood (this collection) notes, it is hard to discern a marked discontinuity in the organization
of the capitalist economy during the 1970s to 1990s (cf. Jessop 1982). However, whilst
the continuities are most obvious in capital-labour relations within the labour process,
there are serious difficulties regarding the emergence of a new and stable accumulation
regime as well as important discontinuities in modes of regulation and capitalism's
articulation with the wider societal formation. I cannot consider the labour process or the
problematic status of accumulation regimes here. Instead I will focus on one important
aspect of changing modes of economic regulation: the restructuring of the relationship
between the political and economic spheres.

The Keynesian welfare state (or KWS) characteristic of Atlantic Fordism had both
economic and social policy aspects. Economically it aimed to secure full employment in
relatively closed national economies mainly through demand-side management and
regulation of collective bargaining; socially it aimed to generalize norms of mass
consumption so that all its citizens shared the fruits of economic growth (and so
contributed to effective domestic demand) and to promote forms of collective
consumption that supported a Fordist growth dynamic. Whilst the macro-economic role
was mainly determined and implemented at national level, local states assumed an
increasingly important role in infrastructural and social policy. Whilst local economic
conditions obviously affected how local government saw its economic role, the KWS
social policy role was almost universal. The emerging 'Schumpeterian workfare state' (or,
better, regime) involves quite different activities. Thus, economically, it attempts to
promote flexibility and permanent innovation in open economies by intervening on the
supply-side and tries to strengthen as far as possible the structural competitiveness of
the relevant economic spaces. With growing internationalization and resulting competitive
pressures, public spending is also subject to general downward pressure. But states at
all levels are also subject to growing pressure to subordinate social policy to the needs of
labour market flexibility and the demands of structural competitiveness.

12
These changes cannot be reduced to effects of a crisis of Fordism. Geo-political factors
have also played a key role (as Mann and Shaw emphasise): such factors include the
end of the Cold War, the approach of the Pacific Century, and the rise of so-called 'tribal'
identities. The Soviet communist collapse has replaced the struggle between capitalism
and communism as competing world systems by often intense struggles between
competing versions of capitalism. Thus military competition between major national states
declines in favour of civilian economic and technological issues; and security is redefined
in terms of environmental risks, sustainable development, the narcotics trade, and
transnational migration. These shifts are reflected in the reorientation of foreign policy
towards technological, economic, and ecological issues and the increased salience of
foreign affairs in many fields of domestic policy. Such changes help to explain the rise of
the 'competition' state at supranational (e.g., European) and national levels. Moreover,
for reasons suggested in the dominant geo-economic narratives about the changing
forms of competition and the importance of structural competitiveness, these changes
also require a more active, supply-side oriented role for regional and local states. This
trend is reinforced by reinvigorated 'tribal' identities which are oriented to regional rather
than national identities. Furthermore, once the sovereign national state's traditional role
in defense is downgraded, many of its other functions may also be displaced to other
political levels. In short, the 'region state' (Ohmae 1991) and/or 'transnational territory'
(Sassen 1994) have become more important for many purposes than the national state
(cf. Horsman and Marshall 1994; Kennedy 1993; Luttwak 1990).

5. Changes in the State

Structural coupling means that political changes cannot just be derived from changes in
the economy and, conversely, that economic changes are shaped in part by those in the
political system. This complicates predictions about the future of the nation-state. Since
other contributions discuss this, however, it is certainly worth addressing this issue here.
Let me first advance three inter-related propositions about trends in the articulation of the
economic and political in the next period of capitalism (for more extended treatment, see
Jessop 1995). These three trends have many different causes and cannot be ascribed
exclusively to the crisis of Fordism or the alleged transition to post-Fordism. Nor should
one treat each of these trends as singular causal mechanisms in their own right and
thereby neglect their essentially descriptive, synthetic, and generalized character. Nor do
they entail any unidirectional movement or multilateral convergence across all national
regimes; instead, they can take different empirical forms.

Page 13
First, there is a general trend towards the de-nationalization of the state (or, better,
statehood). This structural trend is reflected empirically in the 'hollowing out' of the
national state apparatus with old and new state capacities being reorganized territorially
and functionally on subnational, national, supra-national, and trans-local levels. There is
a continuing movement of state power upwards, downwards, and sideways as attempts
are made by state managers on different territorial scales to enhance their respective
operational autonomies and strategic capacities. One aspect of this is the loss of the de
jure sovereignty of national states in certain respects as rule- and/or decision-making
powers are transferred upwards to supranational bodies and the resulting rules and
decisions bind national states. This trend is most apparent in the European Union but
also affects NAFTA and other intergovernmental regional blocs (cf. Mann, this collection).
Another aspect is devolution of authority to subordinate levels of territorial organization
and the development of transnational but inter-local policy-making. However, countering
this trend is the survival of the national state as the principal factor of social cohesion in
societies and its associated role in promoting social redistribution.

This trend should not be mistaken, pace Shaw (this collection), for the rise of a 'global
state' -- at least if the concept of state is to retain its core meaning of the territorialization
of a centralized political authority and a 'global state' is thus equivalent to a single 'world
state'. Instead this trend represents a re-articulation of different levels of the territorial
organization of power within the global political system. It is by no means limited to a loss
of authority to supranational bodies or a reinvigorated and relatively unchallenged
American super-state with capacities to project its power on a global scale. It also involves
the delegation of authority to subordinate levels of territorial organization and/or the
development of so-called 'intermestic'9 (or interlocal but trans-nationalized) policy-making
regimes. In addition, as I note below, state power has become less important in key
respects in contemporary capitalism -- as governance has become more important.
Moreover, even were a world state to exist, it would be prey to a tension between the
juridico-political claim to unicity (sovereignty) and the reality of plurality (particularistic
competition among other states for influence in its counsels). It is for this reason that inter-
state politics on a global scale is marked by the international hegemony of a national state
which seeks to develop a hegemonic political strategy for the global system -- with that
hegemony armoured, of course, by various forms of coercion and resting on a complex
articulation of governmental powers and other forms of governance.

14
Second, there is a trend towards the de-statization of the political system. This is
reflected in a shift from government to governance on various territorial scales and across
various functional domains. There is a movement from the central role of official state
apparatus in securing state-sponsored economic and social projects and political
hegemony towards an emphasis on partnerships between governmental, para-
governmental, and non-governmental organizations in which the state apparatus is often
only first among equals. This involves the complex art of steering multiple agencies,
institutions, and systems which are both operationally autonomous from one another and
structurally coupled through various forms of reciprocal interdependence. Governments
have always relied on other agencies to aid them in realizing state objectives or projecting
state power beyond the formal state apparatus. But this reliance has been re-ordered and
increased. The relative weight of governance has increased on all levels -- including not
only at the supra-national and local or regional levels but also in the trans-territorial and
inter-local fields. Nonetheless this can enhance their capacity to project state power and
achieve state objectives by mobilizing knowledge and power resources from influential
non-governmental partners or stakeholders.

Countering the shift towards governance is government's increased role in meta-

governance. Political authorities (at national and other levels) are more involved in
organizing the self-organization of partnerships, networks, and governance regimes.
They provide the ground rules for governance; ensure the compatibility of different
governance mechanisms and regimes; deploy a relative monopoly of organizational
intelligence and information with which to shape cognitive expectations; act as a 'court of
appeal' for disputes arising within and over governance; seek to re-balance power
differentials by strengthening weaker forces or systems in the interests of system
integration and/or social cohesion; try to modify the self-understanding of identities,
strategic capacities, and interests of individual and collective actors in different strategic
contexts and hence alter their implications for preferred strategies and tactics; and also
assume political responsibility in the event of governance failure. This emerging meta-
governance role means that the forms of networking, negotiation, noise reduction, and
negative coordination characteristic of governance take place 'in the shadow of hierarchy'
(cf. Scharpf 1994: 40; Hodgson 1988: 220-228).

Third, there is a dual trend towards the internationalization of policy regimes. The
international context of domestic state action has extended to include a widening range
of extra-territorial or transnational factors and processes; and it has become more

Page 15
significant strategically for domestic policy. The key players in policy regimes have also
expanded to include foreign agents and institutions as sources of policy ideas, policy
design, and implementation (cf. Gourevitch 1978; Doern, Pal and Tomlin 1996). This
trend is reflected in economic and social policies as the state becomes more concerned
with 'international competitiveness' in the widest sense (cf. my earlier comments on
Schumpeterian workfarism). Neo-liberalism is the most obvious and vocal manifestation
of this trend; but its long-term social impact is also proving the most disastrous. Somewhat
ambiguously countering yet reinforcing this trend is a growing 'interiorization' of
international constraints as the latter become integrated into the policy paradigms and
cognitive models of domestic policy-makers (on interiorization, see, for example,
Poulantzas 1975).

These three changes do not exclude a continuing and central political role for the national
state. But it is a role which is redefined as a result of the more general re-articulation of
the local, regional, national, and supra-national levels of economic and political
organization. Unless or until supra-national political organization acquires not only
governmental powers but also some measure of popular-democratic legitimacy, the
national state will remain a key political factor as the highest instance of bourgeois
democratic political accountability. How it plays this role will depend on the changing
institutional matrix and shifts in the balance of forces as globalization, triadization,
regionalization, and the resurgence of local governance proceed apace. As noted above,
perhaps the most important role for the national state in this context is that of meta-
governance, i.e., coordinating different forms of governance and ensuring a minimal
coherence among them. In this sense Shaw is right to claim (this collection) that the
national state core to governance will not go away. But this core will be less governmental
and more oriented to issues of meta-governance. But one should note that there is no
point at which any final meta-governance instance can be established to cooordinate
myriad subordinate forms of governance -- this would re-introduce the principle of
sovereignty or hierarchy which growing social complexity and globalization now rule out.

6. Excursus on Civil Society

As well as changes in the state in its integral sense, three trends can be discerned in the
re-shaping of civil society. First, just as there is a de-nationalization of statehood, civil
society is being 'de-nationalized'. This is reflected in the growth of a post-national
cosmopolitanism, 'tribalism' (i.e., the rediscovery or invention of primordial, affectual

16
identities at the expense both of liberal individualism and of civic loyalty to an 'imagined'
national community), and the growth of diverse social movements which operate across
national boundaries. Second, due partly to the crisis of the Keynesian welfare national
state, partly to market-driven and/or state-sponsored commodification of 'civil society',
and partly to the rise of new forms of public-private governance arrangements,10 several
changes have occurred in the principles and practices of civil society considered as a
(residual) social sphere. These include: rejection of the Atlantic Fordist commitment to
class-based egalitarianism (and its associated redistributive politics); increased concern
with empowerment (in the sense of ensuring life-time access to the benefits of different
institutional orders);11 a resulting politicization of a wide range of institutional orders;
growth in identity politics and the politics of difference (with their emphases on respect,
authenticity, and autonomy); and the expansion of the so-called 'third' sector (which
operates beyond pure markets and the bureaucratic state). And, third, and least certainly,
whilst national citizenship is still important in many established national states, there is an
emergent (albeit still weak) emphasis on (transnational) human rights which can be
invoked even where an individual is not a citizen in a given state and/or that state resists
such enforcement by external agencies. The problem with this last trend, it need hardly
be said, is that it is still national states which are mainly responsible for enforcing human
rights and, in many cases, for infringing them.

7. Concluding Remarks

I have attempted three tasks in this brief contribution. The first is to pose once again the
key question of the nature of capitalism, its overall dynamic, and its possible future(s). In
emphasizing the self-organizing capacities of the capitalist economy in its inclusive sense
(reflected above all in the self-valorization of capital as it metamorphoses through different
moments in the circuit of capital), I have highlighted one distinctive feature of the capitalist
mode of production and related it to the commodification of labour-power. These features
give capitalism its distinctive dynamic and also give a certain form-determination to class
struggle and competition in the capital relation. At the same time I have emphasized that
capitalism is not a self-contained system but is structurally coupled to its environment.
This serves both to keep the future of the capitalist economy open (whilst nonetheless
making its trajectory non-arbitrary and path-dependent) and to create various interfaces
between the developmental logic of capital and its class struggle, on the one hand, and,
on the other hand, the instrumental and communicative rationalities of its environing

Page 17
institutional orders and lifeworld together with their distinctive forms of struggle and
resistance.

In this context, my second task was to argue that the openness of capitalist developed
excluded any prognostications about its ultimate destiny. This can be deduced neither
from the laws of motion of capital (which are at best tendential) nor from any historical
guarantee about the eventual victory of workers in the class struggle. In particular I have
emphasized the capacity of capital to monitor changes in its environment (social as well
as natural) and exploit perceived opportunities for profit. Within quite broad limits tied to
the requirements for the reproduction of capital in general and to its path-dependent
development and hence relative fixity in specific locations, this permits the continuing self-
transformation of capitalism in response to structural changes and/or social struggles. But
capitalism's openness to its environment is also an additional source of influence over its
development for forces seeking to limit the free play of market forces and/or the power of
capital. In this sense the interface(s) between the capitalist economy in its inclusive sense
and its environing institutional orders and the lifeworld becomes a crucial site for class
and class-relevant struggles. These can involve a wide range of forces (not simply class
forces) and a wide range of sites and sources of resistance (not reducible to the capital-
labour relation alone). Indeed, as I have argued all too briefly, a number of changes often
fallaciously equated with the shift from modernity to post-modernity have increased the
complexities of such struggles in recent years. For the moment, however, I will simply
conclude that such complexities rule out any simple forecasts about the future of
capitalism.

My third task was to make some medium-term predictions about the relationship between
the economic and the political in contemporary capitalism. Here I have tried to break with
the simple distinction between market and state and to consider the overall articulation of
the capitalist economy in its inclusive sense and a political order resting on 'government
and governance'. In this context I have presented some suggestions about recent
changes in the economic space of Atlantic Fordism and their implications for the future of
national states. In particular, whilst indicating the crisis of the Keynesian welfare national
state characteristic of Atlantic Fordism, the 'hollowing out' or de-nationalization of state
authority, the partial de-statization of politics, and the internationalization of policy
regimes, I have also argued for a continuing (if still provisional) role for the national state
both as the primary instance of meta-governance and as the primary (if more residual)
instance of social cohesion in class-divided (and otherwise divided) social formations.

18
These changes may be closely grounded in recent economic changes in contemporary
capitalism but they have other, extra-economic, causes too. But, whatever the causal
mechanisms behind these changes, they have profound implications for the nature of
struggles over the future of capitalism.

For capital, as Marx himself emphasized, is not a thing. It is first and foremost a social
relation. Moreover, as various theorists have noted, some of the most basic contradictions
in the capital relation itself are deeply and inescapably rooted in its dependence on an
unstable balance between its economic and extra-economic forms (cf. Offe 1984; Jessop
1982; Polanyi 1957). This inherent limitation to the self-reproduction of capital as a social
relation ensures its instability, regardless of resistance or class struggle. The latter
nonetheless affect how these instabilities are expressed and also govern how far the
capital relation is ever successfully reproduced. This process is always unstable,
conflictual and contradictory -- posing in turn what are always conjunctural questions
about its possible governance or regularization. The changes in economic and political
organization discussed above will therefore have a major impact on the capacity of
different forces to contest the current 'ecological dominance' of the capitalist economy, its
penetration into extra-economic systems and the lifeworld, and its continued capacity for
self-valorization.

Endnotes

References

Albritton, R. (1995) 'A Critique of Regulation Theory', in R. Albritton and T.T. Sekine, eds,
A Japanese approach to political economy: Unoist variations, London: Macmillan,
201-225.
Bell, D. (1975) The Post-Industrial Society, New York: Basic Books.
Castells, M. (1996) The Rise of the network society, Oxford: Blackwell.
Doern, G.B., Pal, L.A., and Tomlin, B.W., eds (1996) Border Crossings: the
Internationalization of Canadian Public Policy, Don Mills: Oxford University Press.
Duchacek, I.D., Latouche, D., and Stevenson, G., eds (1988) Perforated sovereignties
and international relations: trans-sovereign contacts of subnational governments,
New York: Greenwood Press.

Page 19
Esping-Andersen, G. (1985) Politics against Markets, Princeton: Princeton University
Press.
Giddens, A. (1990) The consequences of modernity, Cambridge: Polity.
Gourevitch, Peter (1978) 'The second image reversed: the international sources of
domestic politics', International Organisation, 32 (4), 881-912.
Gramsci, A. (1971) Selections from Prison Notebooks, London: Lawrence and Wishart.
Habermas, J. (1987) The Theory of Communicative Action, vol. 2, System and Lifeworld:
A Critique of Functionalist Reason, Boston: Beacon Press.
Habermas, J. (1996) Between Fact and Value, Cambridge: Polity Press.
Harvey, D. (1982) The Limits to Capital, Oxford: Blackwell.
Hirst, P.Q. and Thompson, G. (1995) Globalisation in question: the myths of the
international economy and the possibilities of governance, Cambridge: Polity.
Hodgson, G.M. (1989) Economics and institutions: a Manifesto for a modern Institutional
Economics, Cambridge: Polity.
Horsman, M. and Marshall, A. (1994) After the Nation-State: citizens, tribalism, and the
new world disorder, London: Harper Collins.
Jessop, B. (1982) 'Accumulation Strategies, State Forms, and Hegemonic Projects',
Kapitalistate 10, 89-111.
Jessop, B. (1995) 'Die Zukunft des Nationalstaats: Erosion oder Reorganization?
Grundstzliche berlegungen zu Westeuropa', in F. Deppe and W. Burkhardt, eds.,
Europische Integration und politische Regulierung -- Aspekte, Dimensionen,
Perspektiven, Marburg an der Lahn: FEG Studie Nr. 5, pp 9-48.
Jessop, B. (1997) 'The Governance of Complexity and the Complexity of Governance:
Preliminary Remarks on some Problems and Limits of Economic Guidance', in A.
Amin and J. Hausner, eds., Beyond Markets and Hierarchy: Third Way Approaches
to Transformation, Aldershot: Edward Elgar, 111-147.
Kennedy, P. (1993) Preparing for the Twenty-First Century, New York: Random House.
Kumar, K. (1995) From Post-industrial to post-modern society, Oxford: Blackwell.
Laclau, E. and Mouffe, C. (1985) Hegemony and Socialist Strategy, London: Verso.
Luhmann, N. (1995) Social Systems, Stanford: Stanford University Press.
Luttwak, E. (1990) 'From geopolitics to geo-economics: logic of conflict, grammar of
commerce', National Interest, 20, Summer, 17-23.
Mandel, E. (1970) Late Capitalism, London: New Left Books.
Mann, M. (1985) The Sources of Social Power, vol 1., Cambridge: Cambridge University
Press.
Mann, M. (1996) The global future of the nation-state, Sussex University

20
O'Connor, J. (1973) The Fiscal Crisis of the State, London: St James Press.
Ohmae, K. (1991) The Borderless World, New York: Harper Collins.
Offe, C. (1984) Contradictions of the Welfare State, London: Hutchinson.
Polanyi, M. (1957) The Great Transformation, Boston: Beacon Press.
Porter, M. (1990) The Competitive Advantage of Nations, London: Macmillan.
Postone, M. (1993) Time, labor, and social domination: a reinterpretation of Marx's critical
theory, Cambridge: Cambridge University Press.
Poulantzas, N. (1973) Political Power and Social Classes, London: New Left Books.
Poulantzas, N. (1975) Classes in Contemporary Capitalism, London: Verso.
Poulantzas, N. (1978) State, Power, Socialism, London: Verso.
Sassen, S. (1994) Cities in a world economy, Thousand Oaks: Pine Forge.
Scharpf, F.W. (1994) 'Games real actors could play: positive and negative coordination
in embedded negotiations', Journal of Theoretical Politics, 6 (1), 27-53.
Shaw, M. (1996) The global revolution in the social sciences: the globalization of state
power as a defining issue, Sussex University
Weber, M. (1978) Economy and Society: an outline of interpretive sociology, Berkeley:
University of California Press.
Wood, E.M. (1986) The Retreat from Class: a new "true" socialism, London: Verso.

1
Andrew Chitty and Ash Amin both offered incisive comments on the very first draft. Since the paper is now much
revised, it is vital to record that any and all remaining problems are my responsibility.

2
This can be expressed in terms of 'the value theory of labour' rather than 'the labour theory of value'. Whereas the
latter is a flawed account of the value of labour-power (claiming that it is reducible to the sum of the values of
commodities which enter into its reproduction), the former expresses the impact on capitalist dyanamics of labour-
power's commodification.

3
It is also quite consistent with the regulation approach.

4
In this sense it could be described as a 'fictitious commodity'.

5
In this regard I extend the system world well beyond Habermas's couplet of economy and state to include any self-
organizing system with its own instrumental rationality and also interpret the 'lifeworld' more widely to include
identity politics, etc., regardless of whether committed or not to undistorted communication.

6
Although Weber refers to opportunities for profit, economic calculation can also be directed to other sources of
revenue: wage income, interest, groundrent, etc..

7
Societalization refers to the production of 'society effects' within a specific 'time-space envelope': society effects
have two dimensions -- social cohesion and system (or institutional) integration.

8
In this context one might distinguish the disciplinary perspective of 'integral economics' from issue of whether an
'integral economy' is the dominant principle of societalization.

Page 21
9
'Intermestic' is a term coined by Duchacek to refer to the expanding area of international connections between local
authorities. See Duchacek et al., 1988.

10
There are many other causal mechanisms behind these shifts -- these are the most significant for present purposes.

11
For example, by ensuring jobs, access to legal services, lifetime education, freedom of scientific information,
subsidiarity in politics, etc..

22