I am not trying to score any points here, especially on issues who read what, but to move the discussion beyond semantics. You certainly agree that the role of the state government expanded multiple-fold since the times of the Bearded Ones. So whatever the had to say about the state was necessarily limited to what they saw in the 19th century, which is very different from the problems we face in the 21st century. What I get form the Bearded Ones is not description of 19th century economic and political institutions in Prussia or England - but a certain style of thinking and approach to economic problems.
The key value of that approach is not the particular conclusions the Bearded Ones reach, but the style of political discourse they propose, which includes inter alia the following popular precepts: (i) do not reinvent the wheel, especially in the areas where capitalism is fulfilling its historic mission; (ii) keep the eyes on the prize - the name of the game is control of the economy and the state government, not cultural expressions and escapism to utopia; (iii) fight your enemy with his arguments rather than your own (which I believe is the classical meaning of the concept of dialectics) - using your opponent's arguments to defeat him and to prove your point. I think these lessons of Marxism have been largely lost among the contemporary left, which prefers cultural wars and identity politics.
Going back to the issue of "state" - it is quite conceivable that the state as a particular form of territorial governance - based on sovereign rights backed up by military power - will vanish at some point, being subsumed under other forms of governance. You do not need the Bearded Ones to grasp that - every decent book on human history will tell you that the formation of modern state is mainly the long and convoluted process of gradual subsumption of local authority to that commanding larger territorial units. There is no reason to believe that this process has stopped in the 20th century.
But the decline of the nation-state as a sovereign unit of territorial governance does NOT mean the disappearance of universal (i.e. world-wide) governance i.e. regress to some form of tribalism. There might be some local instances of such regress (cf. Eastern Europe or Africa) - but they are transitory outcomes of historical accidents (destruction of a particular form of authority with the help of outside forces) rather than general trends. So the bottom line is that whether the US wing nuts like it or not, we will have world governance in one form or another - most like within our life time.
It seems to me that the question what kind of world governance it is going to be is a far more important issue than making semantic arguments over the definition of state or fighting cultural wars. So far, the left seems to be outflanked by the neo-liberals in proposing the alternatives for that world governance. For the neo-libs it is the omniscient market - the guarantor of personal freedom, creativity and efficient utilization of resources. This vision has a lot of popular pull, but so far the left has failed to offer an equally attractive alternative, and seems to be pre-occupied with cultural wars and moral indignation over inhumanity of the markets.
Back in the old country they had a folk saying "dogs bark, the caravan moves ahead." In the glorious days of state socialism, that was even turned into a political cartoon in which dogs labeled "Radio Free Europe" and "Voice of America" were barking at the "caravan" of trucks and construction vehicles building a new socialist future. Now fast forward to the 21st century, and I feel like the tables have turned around and the left has been reduced to a pack of dogs barking (i.e. making semantic arguments, scandalizing the public, and kvetching) at the caravan of neoliberalism spreading the wisdom of the markets around the world. That is quite depressing. I think we can do better than that if we just stop re-inventing the wheel and take from capitalists what the do right, keep the eyes on the prize instead of on cultural wars and phony cultural identities, and try to defeat the enemy and convince the public with their arguments instead of our own.
Wojtek