While political economy has dealt with international capitalism since the beginning of the discipline, the concept of global capitalism is of more recent origin. There is a primary difference between the two. International capitalism has been conceptualised in terms of nation-states. The focus was mainly on the way national capitalism, based on competing national economies and working through national companies, operated across borders. Form Smith’s The Wealth of Nations to Keynes’s General Theory space has been conceptualised mainly in political terms: space is a territory over which the state has some kind of political power. By contrast, global capitalism deals with a global economy dominated by globalising corporations. These conceptual changes have been accompanied by some real transfor-

mations of the world economy, impacting on the way production is organised in space. Since the crisis of the so-called ‘Fordist-Keynesian’ era, political, economic and social changes have affected all geographical scales – notably international, national and local – and a new international division of labour has been brought about. Just after the Second World War, it was common to split the world into great areas, the core, the semi-periphery and the periphery (Myrdal 1957; Wallerstein 1979). Nowadays, the world is a more complex and kaleidoscopic structure, involving the fragmentation of many production processes and their geographical relocation. The world economy can be represented as a system of prosperous polarised regional economies, surrounded by hinterland, ancillary communities, prosperous agricultural zones, and underdeveloped areas. At the international level, the last thirty years have been characterised by

an increasing number of integration agreements, with the aim of setting up discriminatory trade liberalisation in order to lower trade barriers against one another vis-à-vis the rest of the world. The main consequence has been to bring about changes to the landscape of contemporary capitalism, by creating spaces where the exchange of goods, services and people is simplified, but also by raising barriers against the excluded countries and/or areas. At a national level, some claim the ‘death of the nation-state’ and the exaltation of the ‘borderless economy’, thus believing that state borders are increasingly permeable and no longer contain those distinctive institutions and practices which used

to characterise them (Ohmae 1995). Others remark that the role of the nation-state is still relevant and important, albeit altered, thus leading to distinct national capitalisms (Weiss 1998). At a local level, the new technological paradigm has led to a more flexible form of production. It is now possible to reduce the scale of production and, at the same time, maintain technological efficiency. More important, the production chain of a single product has increasingly become an international linked sequence of functions in which each stage, most of the time geographically relocated, adds value to final goods or services. The ‘post-Fordism’ era has begun. Some believe that this form of organisation, based on smaller organisational units, is a new characteristic of the current phase of capitalist development (Piore and Sabel 1984). Others remark that less rigid and smaller-scale production methods have always coexisted with mass-production methods, because this is the way capitalism develops (Harrison 1997). The transformations of the world economy have shaped and reshaped the

global map, with major impacts on people and places. Nevertheless, globalisation is a very questionable phenomenon. A ‘globalisation debate’ has been going on for some time, with two sets of opponents: those who consider contemporary globalisation as a real and significant new phenomenon (Ohmae 1995, Dicken 2003) and those who believe that globalisation is just an ideological and mythical construction with marginal explanatory power (Hirst and Thompson 1996, Held and McGrow 2000). In order to understand the current phase of capitalist development it is crucial to see how space is conceptualised. This chapter aims to critically review the current literature dealing with space, with a ‘bottom up’ approach. All current theoretical approaches, related to space and other spatial economic issues, acknowledge to be indebted to previous theoretical traditions. The New Economic Geography refers back to the Weberian agglomeration economies, the industrial district literature to the Marshallian external economies of scale, the Marxist economist geographers to the Marxian historical materialism. The different conceptualisation of space is linked to different ways of

thinking about the economy, which means to different traditions of political economy. I therefore discuss the different approaches in order to test how they are able to deal with the differentiation of the ‘qualities’ of productive resources, techniques, means of production and labour power, as something structural and essential in capitalist accumulation. This internal drive to a differentiation of the methods of production is inevitably rooted in space and deeply affects the local dimension and its history, with the ascent and decline of entire economic regions. The next two sections illustrate how the two main neoclassical currents, stemming from Walras and Marhsall, deal with (or elude) the topic. The fourth section describes the alternative Marxian approach, starting with Harvey’s re-reading and developments. The fifth section sketches a comparative discussion among the various schools and the final section concludes.