The relationship of the nation state and capitalist economy in the age of globalization

In the age of globalization, modern nation states and the free market are not separated from each other, they rather form an entity on the world market. Moreover, the specific role of the nation state is changing. This opposes the view of many anti-globalization activists who tend to view the regulating power of the nation states as the opposite (and sometimes the cure) to problems caused by neoliberalism and globalization.

In a modern capitalist society, the economy (or the "relations of productions") is basically made up of two spheres: On the one hand, goods are being produced. On the other hand, these goods are traded on the free market. Both cannot exist without the other, thus they have to always be analyzed together.
From a capitalist point of view, the role of the nation state is to provide the necessary preconditions for a successful production. The state enables (and forces) its citizens to be a part of the economy by educating them to pick a job while also providing some social security. Without the characteristics of a nation state, such as a government, a bureaucracy and a legal system, there would hardly be any production.
The sphere of the free market does not rely as heavy on the nation state, but still needs some institutional support to be able to function. The nation state must for example provide an infrastructure and some judicial accountability to ensure smooth transactions.
While this seems like a relatively one-sided deal that favors the economy, the nation state also needs the economy to ensure its very existence. The benefits from a capitalist economy provide the material basis for the nation state. Without the wealth accumulated by the economy, there would be no taxes and the state as a whole would fail.

With the rise of globalization in the 1970s, the role of the nation state in International Relations began to change. The growing influence of economic forces transformed the way in which politicians made decisions. They started to think about foreign matters in a more commercial way. Political thinking did not disappear, but it started to look a lot more like economic thinking. At the same time, national sovereignty was also undermined by this. Since there was a growing international competition, decisions about labor market policies for example were increasingly depended on the labor markets of other countries. There was a tendency to protect the state's national currency and its "economic territory" alongside the classic state territory.
The national states are not the "victims" of these developments. They made them possible in the first place through policies of deregulation and neoliberalism.

When anti-globalization activists call for a "stronger state" that should regulate commerce and limit the effects of globalization, they do not take into account that the modern nation state itself is organizing and providing the very foundation on which capitalist production and the principles of globalization are based on. Trade regulations and social security systems can moderate the negative effects of free trade - but these are measures undertaken by an institution (the state) that relies on capitalism itself to be able to function. Institutional barriers to the capitalist economy will only go to such an extent that they will not harm free trade. The modern nation state and its capitalist economy are closely intertwined by definition. Globalization is furthering this relationship instead of abolishing it.