Twenty to 30 years from now, the world will find itself significantly different from what it was. History has set the stage for a rapid transition to new forms of more responsive governance. The challenge will be how quickly nation-states can develop into market-states to provide competition to virtual-states. The problem will be most difficult for large “melting-pot” countries since virtual-states can quickly cleave them into competitive subgroups at the first sign of weakness. Size becomes a liability and not an asset. The advent of global economic and physical super-infrastructure is in the process of transforming terrorism, guerrilla warfare, and the nation-state. Utilizing Philip Bobbitt’s work, “The Shield of Achilles," this article makes a historical detailed case that the bureaucratic nation-state is in an inevitable transition to a more competitive form called the market-state. A market-state is built to withstand and prosper despite the pressures of globalization. The impetus for the creation of the market-state is the loss of the core legitimacy of the nation-state, its ability to provide for the welfare of its people. This welfare is both too expensive and too cumbersome to administer within a hyper-competitive global economic system. All the major nation-states, from China to the United States to the countries comprising the European Union (EU), are in varying phases of this transition. The emerging global super-infrastructure also has a major impact on the role of non-state groups. Non-state groups will gain considerable power as they transition to virtual-states. Virtual-states are the realized adaptive response of older organizational structures to the new global platform. 12 footnotes