Abstract The paper considers how states and markets shape one another at the national and world-system levels and how globalization is transforming that relationship. This process is illustrated through a review of research on liberal, social rights, developmental, and socialist states in the postwar capitalist economy. These state models were reconciled with expanding international markets through a series of controls on trade and capital flows. Globalization has undermined many of these controls so that states must increasingly integrate themselves into local and global networks. States are experimenting with organizational and strategic changes nationally and internationally in order to respond to a networked economy and polity. Neoliberal institutions are the dominant force shaping the relation between states and markets in the contemporary era, but alternative state-society alliances are emerging to contest the hegemony of neoliberalism in shaping globalization.