Both globalism and internationalism imply some sort of limits on national sovereignty. The main source on this topic is Stephen Krasner’s book Sovereignty: Organised Hypocrisy. Krasner distinguishes four different concepts of sovereignty. International legal sovereignty is the acceptance of a given state as a member of the international community, and is, in most cases, relatively uncontroversial. Westphalian sovereignty is based on the principle that one sovereign state should not interfere in the domestic arrangements of another (supposedly, this was the principle underlying the Peace of Westphalia, which ended the Thirty Years War in 1648). Interdependence sovereignty is the capacity and willingness to control flows of people, goods and capital into and out of a country. Domestic sovereignty is the capacity of a state to choose and implement policies within its territory.
During the 1980s and early 1990s, the emerging literature on globalization focused primarily on the apparent erosion of interdependence sovereignty and Westphalian sovereignty. Much of this literature was primarily concerned to criticize ‘realist’ models of international politics in which the Westphalian notion of the state as a unitary actor are taken as axiomatic.
During the 1990s, a neoliberal account of globalization came to the fore. The starting point of the neoliberal account of globalization is the observation that states have abandoned or lost much of the interdependence sovereignty they possessed for most of the 20th century. It is then argued that this loss of interdependence sovereignty entails a loss of domestic economic sovereignty, so that states are constrained by the pressures of international capital markets to follow the neoliberal policy agenda of deregulation, privatization and small government, regardless of the wishes of their domestic electorates
A similar view is implicit, though not always clearly argued, in postmodernist and ‘Third Way’ accounts of globalization, notably that of Giddens 1999. In addition, left-wing writers such as Panitch and Strange, while deploring convergence on a neoliberal policy agenda, broadly accept the claim that such convergence is the result of technologically-driven developments in the world economy.
The most effective criticism of the factual validity of the neoliberal story of the end of domestic economic sovereignty has come from writers with a social-democratic viewpoint. The crucial observation is that globalization is not fundamentally new, but is, in large measure, a reversion to the economic institutions of the 19th century. The experience of the late 19th century casts doubt on claims that the loss of interdependence sovereignty implies the erosion of Westphalian sovereignty. The claim that the loss of interdependence sovereignty entails the adoption of neoliberal domestic policies is similarly problematic.