This article attempts to shed some light on the nature of advanced capitalism with particular reference to the crisis of the state, which ahs traditionally played a central role in the process of capital accumulation. Attention is focused on four crucial interacting relationships – namely those between the state and the expansion of capital; those between national economic management and international economic interdependence; those between states with varying configurations of power; and those between the different and, at times, contradictory functions of the state.

Increasing economic interdependence enhances the economic and political functions of the state while at the same time diminishing the efficacy of its intervention. The state’s predicament has become all the more acute in the wake of competing claims on its limited resources and the in-built tension between its productive and legitimising functions.