States and Markets

Strange identifies four primary structures through which power is exercised in the global political economy: security, production, finance, and knowledge [citation:3][citation:5]. These are not separate domains but interlocking frameworks that jointly determine the range of outcomes available to states, firms, and individuals. The model is central because it shifts analysis away from relational power—who can coerce whom—toward the deeper question of who shapes the rules of the game. Strange argues that a state or firm may be weak in relational terms yet wield significant structural power by setting the terms others must follow [citation:4].

Hegemonic stability theorists argued that a dominant power is necessary to sustain an open world economy, and that American decline threatened the liberal order. Strange rejected this, arguing in her article 'The Persistent Myth of Lost Hegemon' that the United States retained structural power even as its relational power waned [citation:4]. The US continued to set rules in the four primary structures, particularly finance and knowledge. Her argument in States and Markets extends this: what matters is not a hegemon's ability to impose outcomes, but its capacity to define the frameworks within which others must operate [citation:4].

Structural power is the ability to shape the frameworks and rules of the global political economy, rather than merely to influence outcomes within a given framework. Strange contrasts it with relational power, which is the capacity of one actor to get another to do something it would not otherwise do [citation:4]. Structural power is exercised through the four primary structures: security (who provides protection and at what price), production (what is made, where, and by whom), finance (who controls credit and its allocation), and knowledge (who defines what counts as authoritative information). Possession of structural power allows an actor to set the terms of exchange for others.

Strange argues that international trade cannot be understood in isolation, as liberal theory assumes. It is a secondary structure, whose dynamics are determined by the four primary structures—particularly production and finance [citation:4]. She critiques comparative advantage theory for treating trade as a simple exchange of goods while ignoring unequal participation and power asymmetries. She notes that trade patterns reflect the purchasing power of the relatively rich and powerful, that rules of exchange favour more industrialized countries, and that transnational firms increasingly internalize trade across political frontiers [citation:14]. Trade, in short, is a moving picture shaped by deeper structural forces.

Strange later admitted that her emphasis on the primacy of the state in relation to markets was a mistake. In The Retreat of the State (1996), she offered a mea culpa, suggesting that 'Markets and Authorities' would have been a more accurate title for her 1988 book [citation:6]. While States and Markets developed the concept of structural power, it remained anchored in a state-centric vision, as critics have noted [citation:15]. Her later work insisted that power resides not in states per se but in historically constituted global structures where the domestic/international divide dissolves and non-state actors play significant roles.

Strange argues that every society must combine four basic values: wealth, security, freedom, and justice. Different societies combine these in different proportions, and the resulting mix reflects the priorities embedded in their structural arrangements [citation:1]. She compares these values to chemical elements—hydrogen, oxygen, carbon, and nitrogen—which combine in different proportions to produce quite different compounds. This framework allows her to avoid pure economic rationality and to treat political and economic choices as inseparable. The four primary structures of power are the mechanisms through which societies produce and distribute these values [citation:1].