International Political Economy: Susan Strange

This essay will discuss the importance of state and non-state actors in the realms of the international political economy (IPE). In this context, I will explain whether I agree with Susan Strange’s statement of “non-state actors being now more significant than states themselves”. In order to do so, I will briefly look at Susan Strange’s underlying arguments focussing, however, on power shifts in general. A succinct definition of what non-state actors are will also be included in this analysis as well as some examples which illustrate changes that have taken place in the world economy. Finally, I will give a conclusive statement as to whether I consider the state to play a less crucial role in today’s globalising world. However, I can already mention at this point that I believe that the increasing interconnectedness has had a strong impact on its actors. Notwithstanding, I am convinced that the state is still a vital player whose position is merely being reorganised.

Susan Strange argues in her book “The Erosion of the State” that the state’s power has been eroded for example in the following key areas: Firstly, in the finance sector, states no longer have the power to control their own currencies. Secondly, in the welfare sector, states can no longer provide welfare as the burden of additional costs in form of employers’ contributions discourages multinational corporations from investing in the economy.¹

As we can already deduce from this brief overview, it all boils down to trade and, most importantly, to competitiveness – and thus to the international economy (the “IE” in IPE) which seems to be taking over the state (the “P” for “political” in IPE). Yet is it really justifiable to replace “IPE” with “IpE” and which organisations represent those seemingly powerful non-state actors?

Non-state actors - as opposed to states which are represented by their governments, authorities, etc. - come in different shapes, sizes and colours: International or supranational organisations (such as the United Nations or the Word Trade Organization), transnational organisations (TNOs) such as transnational or multinational corporations (TNCs or MNCs) and environmental groups or simply the civil society which shows an increasing interest in world affairs yet a decreasing interest in local affairs. Non-state actors also comprise illegal organisations such as the mafia, terrorist groups, guerrillas and liberation movements. For example, The South-West African People’s Organization (SWAPO) received widespread external support for their fight against the South African apartheid regime: they gained diplomatic status, money, and weapons supplies.² Generally speaking, clear shifts are noticeable from “government” to “governance”. However, I would not see the actors as antagonists but rather as actors, which depend on each other although their interests may sometimes be conflicting.³ This interaction takes place under the prevailing system of liberalism, which, according to Strange, poses wealth - hence, economic success - over freedom, security and justice.⁴

This brings us to two examples which give the impression as if states had at least partially lost their power in a globalised world economy: The financial sector and multinational corporations.

Global capital markets - particularly in the sectors of portfolio capital and derivatives - have originated some earthquakes in the world’s economic system during recent years.

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¹ Strange, Susan, The Erosion of the State, Current History, November 1997

² Willetts, Peter, Transnational actors and international organizations in global politics, Baylis, John and Smith, Steve (eds.), The Globalization of world politics, 2001, Oxford University Press, London

³ (Author unknown), Review of International Political Economy, vol. 9:2, summer 2002

⁴ Strange, Susan, States and Market, 1994, Pinter, London