The Structure of Finance in the World System
Strange, Susan. “The Structure of Finance in the World System.” In Global Transformation: Challenges to the State System, edited by Yoshikazu Sakamoto, 228-249. Tokyo: United Nations University Press, 1994.
Strange again stresses, as she has done before, that the crucial element of the financial structure is the ability to create credit. This is only one side of the financial structure, however - the other side is the institutional regulation of exchange rates between currencies. Much of the work on the international financial has been compromised by its emphasis on the state due to the fore grounding of the exchange rate part of the structure. Strange then suggests and describes five key changes in the structure: its growth in size; new technologies; the penetration of national financial systems by global financial capital; the increasing competition and declining regulation in credit provision; and the relation between supply and demand. Using a global monetarist perspective Strange sees global inflation linked with the oversupply of credit by banks, stemming from the previous four changes. However, American power in the financial structure still remains, measured by their ability to act unilaterally in the field of global finance.
Reprinted in: Authority and Markets: Susan Strange’s Writings on International Political Economy. Roger Tooze and Christopher May, editors. Basingstoke: Palgrave Macmillan, 2002.
Keywords: Hegemony; Money and Finance; Structural Power, Power