ABSTRACT
This chapter builds on Chapter 6 by showing more precisely how the economic power of the nation-state declined over the last 30–40 years. During this period the influence of western states over currency values, interest rates, the general level of employment, the general price level and public and private debt levels, waned significantly. Because the political legitimacy of the democratic state has long depended on its capacity to protect its citizens and businesses from the vagaries of the capitalist market and/or to assist them in market competition, a declining ability to do this severely threatens that legitimacy. The only effective response to this ‘legitimacy crisis’ lies in trans-national cooperation among states, especially in the area of taxation. This is shown by the Global Financial Crisis (GFC) of 2008–9. Understood initially as a global or trans-national phenomenon, it was soon reframed in nationalistic ways that occluded those roots and led to a standardised set of national policy-prescriptions. All these prescriptions made some sense nationalistically, but all were seriously question-begging when looked at from the point of global welfare.
