The central political and economic relationship in a capitalist economy is ultimately that between capital and labour, and its regulation poses particularly delicate problems for the state. While, at the beginnings of the labour movement, governments often appeared to act as tools of business interests against labour, such a naked instrumental relationship has not existed in Europe or Italy for decades. Even at the height of the Cold War, the Catholic CISL unions often enjoyed the favour and protection of the Italian state, as they were seen as more moderate than the Communistdominated CGIL. While the internationalization of the advanced industrial economies and the growing popularity of the Anglo-Saxon model of capitalism have led many governments to encroach on unions’ power over the past two decades, this process has been uneven and has never led to a return to the situation before unions were recognized at all. An instrumentalist view of the state’s role must therefore be rejected. Similarly, an attempt to derive the state’s function purely from the economic logic of capitalism would suggest that it should oppose the creation of a counterpower to that of the employer in the workplace. This simple derivationist approach does not fit the facts either.