Ch. 26, "The
Declining Authority of
Susan Strange, pp. 228-334
(excerpted from Strange, in The
Retreat of the State, Cambridge,
State sovereignty is under
Impersonal forces of world markets are now
more powerful than the states to whom ultimate
political authority over society and economy is
supposed to belong
Authority is shifting from states to other
institutions, both above and below the state – to
international organizations and to local and
regional bodies
State sovereignty
"A state (more commonly called "gov’t" in the USA) is the
sovereign authority in a specified territory, with the right
to use force both to maintain internal order and to defend
its territory against aggression. Sovereignty, in turn,
implies that the state is the ultimate authority in its
territory, exercising legal jurisdiction over its citizens and
the groups and organizations they form in the conduct of
daily life. The sovereign state is not subject to any
higher authority – no state has the right to expect
compliance from any other state, and no allencompassing world state has emerged with authority
overall all national states.“ (Lechner & Boli, p. 219)
The state-market balance of
power has shifted to the market
"Where states were once the masters of
markets, now it the markets which, on
many crucial issues, are the masters over
the government of states" (229)
The reversal of the state-market balance
of power has created three key paradoxes
#I: State power is declining while gov’t
intervention in daily lives of citizens
seems to be growing
less and less of daily life seems immune from the
activities & decisions of gov’t bureaucracies
various gov’t agencies have been created to deal with matters
such as inspections, permits, planning, employment services
states seem less effective on basic matters that
markets, left to themselves, have been unable to
security against violence, stable money for trade & investment, a
clear system of law & means to enforce it, a sufficiency of public
goods (drains, water supplies, infrastructure for transport &
communication – and, in today’s US, public education)
# 2: While gov’ts of established states are
losing real authority, more & more societies
want to establish their own states
Includes ethnic groups repressed within
ex-USSR and hundreds of minorities and
aboriginal peoples throughout world
 But once statehood is achieved, new
states have little real control over society
or economy; autonomy seems superficial
#3: "Asian state" has stayed strong
while N.A./Eur. states have weakened
This is a product of exceptional circumstances –
geostrategic position during Cold War and
related exemption from norms of open liberal
Exceptionalism of Asian state during Cold War
will continue to erode
 Here,
we can say Strange’s 1996 prediction proved
correct, as deregulation soon spread through the
region and, according to Stiglitz et al., precipitated the
“Asian financial crisis” of 1997
The Neglected Factor: Technology
The pace of technological change has
rapidly accelerated
Technology has undermined one of the
primary reasons for the existence of the
state – its capacity to repel attack
The Second Neglect - Finance
Capital cost of most technological innovations is
creates barriers to economic growth for poorer states, promoting
alliances with TNCs, which then may chip away at state authority
Technology costs in production structure
increase salience of money in int’l political
Scholars have neglected political aspects of
credit creation & changes to global financial
They esp neglect the role of markets (as compared with other
governments) as suppliers of credit
Politics, Power and Legitimacy
There’s growing asymmetry among allegedly
sovereign states in the authority they exercise
over the economy
The authority of all states, large & small, strong
& weak, has been eroded as a result of
technological & financial change and
accelerated integration of national economies
into a single global market economy
Some fundamental responsibilities of the state
in a market economy are being abandoned

Ch. 26, "The Declining Authority of States"