States and Markets: An Introduction to International Political Economy, 2nd Ed.

In this book, the late Susan Strange composes a model for the analysis of international political economy which is still an essential and exemplary read today. General human context Basic values which mankind seeks to provide through social organization are wealth, security, freedom and justice. Definition International political economy concerns the social, political and economic arrangements affecting the global system of production, exchange and distribution and the mix of values reflected therein. Model Power in a political economy is mainly structural, not relational. It is the power to decide how things shall be done, to shape frameworks within which States relate to each other, to people or to corporate enterprises. There are four primary sources of structural power (control): security, production, credit and knowledge. There are also secondary power structures: transport, trading, energy supply, welfare and development. Who has the power? Those who can offer or deny security; those who manage the creation of wealth by production; those who create credit to allow or deny other people to spend today and pay back tomorrow; those who (mis)manage the currency in which credit is denominated; those who have knowledge (advanced technology) which provides military superiority and dominance in other power structures. Three schools of thought about international trade For the realist (mercantilists) the most important value is security, the survival of the State and its foundation which is social cohesion. For the pluralists (liberal, neo-classical) the most important factor is wealth creation in order to make States and corporations more powerful. Wealth should be created by economic efficiencies through a free market system. For the structuralists (Marxists) the most important factor is justice. It is a moral imperative to abolish all kinds of colonialism and under-development. Analysis Susan Strange's analysis is based on the world economy of the 1980s. It is however astonishingly actual, indeed. She sees that economic measures stop at the frontier of the States. There is no international integration. In the meantime, however, the European monetary has been partly realized. The global financial system lacks leadership. Control of debt, credit and banks are deficient. Currency exchange rates are instable and lack credibility. Her criticism of the reigning world power is extremely harsh: the structural power the U.S. has acquired has been misused in the service of narrow interests. This misuse of power has sheltered the U.S. taxpayer and consumer in the short run, but there is a serious risk of weakening both the system and the structural hegemony of the U.S. in the long run. For Susan Strange, it may still not be too late to reverse the process. Is it? Since then, the U.S. has stopped to produce (N. Klein), except weapons (G.Vidal). It continues to print paper money in order to finance not winnable wars (J. Stiglitz). The Chinese market is