ABSTRACT
The transnationalisation of financial markets raises several key issues concerning the relationships between technology, globalisation and public policy. The inherent flexibility of finance, as well as its central role in other economic processes, is dramatically increased by technological innovation in products and processes, making financial capital-the most mobile form of capital-an increasingly autonomous factor both in the dynamic of globalisation itself and in the erosion of state power. Technological change in financial services is thus the main independent variable in their globalisation-by reducing transaction costs and dramatically increasing the price sensitivity of financial markets across borders, while at the same time making possible a range of economies of scale. These developments have knock-on effects throughout the domestic and international economies. They in turn make obsolescent the governance structures which have characterised economic policy in modern nation-states, undermining the capacity of the state to produce public goods. At the same time, globalised financial markets interact with rapidly changing interest-group structures and divided state structures, especially through ‘regulatory arbitrage.’ Without the development of transnational regimes capable of regulating global financial markets, the structural basis of the national state itself is being undermined, and Polanyi’s ‘Great Transformation’ is over.
