By Bob Hancké, LSE

Since the late 1980s a conventional and convenient argument in economic policy-making has been that globalisation in its many forms, but especially financially and commercially, constrains governments in their ability to adopt policies that protect citizens and workers. Left-wing observers lament the incapacity of governments to directly secure and influence the life chances of their citizens, while right-wing observers consider this a good thing on the whole – viz Greenspan, who declared in 2008 that Obama or McCain didn’t matter because globalisation had reduced the margins for governments anyway.

While the argument has come under a lot of fire both, empirically and politically, it reappears regularly under a different guise. In a recent piece in the Guardian, Economics Editor Larry Elliott suggests that the role of the nation-state, even in this highly interdependent world, is still substantial – a matter of political choice rather than constraints.

These arguments are extremely useful for the debates on the left, where they are often forgotten. New Labour did run a redistributive policy, relying on high growth, taxes and a reorganized welfare state. Most small open economies (still) have a large welfare state, relatively high employment protection and very organized labour markets where unions play an important role and workers receive sophisticated training. After all, the nation state still provides room for manoeuvre. But the left needs make use of it – else others will.