CHAPTER 2
INTERDEPENDECE AND STRUCTUAL POWER LITERATURE REVIEW
2.1 Interdependence Literature
Interdependence, the mutual dependence between nations resulting from international transactions, was brought to the forefront of international political economy literature by Keohane and Nye in their 1977 book, Power and Interdependence. Keohane and Nye were reacting to a rapidly changing political and technological environment in which international relations seemed increasingly complicated, and the business of nations increasingly intertwined. At the time, academicians were torn between two dominant perspectives regarding interdependence and the evolving nature of global politics. Modernists who proposed advancements in travel and telecommunications technology were creating a “world without borders,” clashed with traditionalists who insisted upon the continuity of the nation-state and the permanence of military interdependence. Keohane and Nye created a new analytical framework of interdependence, one that more thoroughly evaluated the multidimensional economic, social, political, and ecological interdependence through models (Keohane and Nye 1977, p.4). Keohane and Nye refer to interdependence as situations characterized by reciprocal, although not always equivalent, effects among countries or among actors in different countries (Keohane and Nye 1977, p.5). Two main questions guided their work. The first being, what were/are the major features of world politics when interdependence, particularly economic interdependence, is extensive? (Keohane and Nye 1977, p.5) And the second, why and how do international regimes change? It is important to note that while these are the two major questions outlined in the book Keohane and Nye the umbrella question beneath they operate beneath, is simply the age-old question of politics “who gets what?”
It is undeniable that our world has become increasingly interconnected since the end of the Second World War, and that the international transactions between nations – flows of money, goods, people, and messages across state boundaries – have brought about complex relationships between nations large and small (Keohane and Nye 1977, p.8). Keohane and Nye aptly distinguish between interconnectedness and interdependence, stipulating that interdependence relationships depend on constraints and associated costs, while interconnectedness refers to transactions without significant costs. For example, they argue a country that relies on oil imports from another nation will be more dependent on a continual flow of oil than one importing luxury goods. These discrepancies in value influence Keohane’s and Nye’s rejection of the modernist assumption of mutual benefit. By expanding the bounds of interdependent relationships beyond situations of mutual benefit, Keohane and Nye suggest that interdependent relationships will always require costs (since interdependence restricts autonomy) yet do not always specify a priori whether the benefits of the relationship will exceed its costs (Keohane and Nye 1977, p.8). Furthermore, they throw away the assumption that measures to increase the joint gain from a relationship are exempt from distributional conflict.
Keohane and Nye propose that interdependent relationships are most often asymmetrical and that it is these asymmetries that provide the politics of interdependence; the situations and conflicts that arise when less dependent actors leverage their relationships as bargaining power. Keohane and Nye argue that global politics is not the difference between a “zero-sum” (where one side’s gain is the other side’s loss) and “non-zero-sum” game. States and actors do not always act rationally in situations of economic and ecological interdependence; cooperating in certain situations while competing in others, even if large net benefits could be expected from cooperation. (Keohane and Nye 1977, p.8).
Interdependence, much like structural power, is intricately connected to definitions of power. Keohane and Nye look beyond the traditionalist view that military strength is the dominant form of power in the international arena and that states with the most military power control global affairs. As we know well in contemporary politics, and Keohane and Nye observed in the 1970s, the resources that produce power capabilities are much more complex than military might. The proposition that military and economic power were not the sole determinants in state behavior was a radical challenge to the fundamental principles of traditional and structural realism, and an analytical shift in understandings of power (Keohane and Nye 1977, p.9). When Keohane and Nye suggest that asymmetric interdependence can be a source of power, they refer to power as “control over outcomes, or the potential to affect outcomes.” The less dependent actor in an interdependent relationship has significant political resources because changes in the relationship, which could be leveraged or imitated by the less dependent actor, will be less costly to that actor than its partners. Keohane and Nye make two key distinctions regarding the role of power in interdependence: the difference between vulnerability and sensitivity. Sensitivity in interdependent relationships refers to an actor’s liability to ensue costly effects imposed from outside factors before policies are altered to change the situation. Vulnerability, on the other hand, is defined as an actor’s liability to suffer costs externally even after policies are altered (Keohane and Nye 1977, p.11). In other terms, an actor is less sensitive if they can reasonably respond to outside effects quickly, and with relatively little costs, and less vulnerable if they can alter policies or find reliable alternatives. The concepts of sensitivity and vulnerability expand beyond military capabilities and are further explored in discussions of complex interdependence.
Keohane and Nye’s theory of complex interdependence has been referenced, reconstructed, and frequently critiqued by the new wave of interdependency scholars. However, it is important foundational base and a central component of the neoliberal perspective, and therefore is deserving of an introductory discussion. Keohane and Nye articulate three main characteristics of complex interdependence: 1) state policy goals are not arranged in stable hierarchies, but are subject to trade-offs, 2) the existence of multiple channels of contact among societies expands the range of policy instruments, limiting the capacity of foreign officers to tightly control governments’ foreign relations; and 3) military force is largely irrelevant (Keohane and Nye 1987, p. 738). Table 2.1 in Power and Interdependence lists five sets of political processes expected to differ under conditions of complex interdependence. Those are: goals of actors, instruments of state policy, agenda formation, linkages of issues, and the role of international organizations (Keohane and Nye 1977, p. 37). A significant aspect of complex interdependence is its combination of two opposing views, integrating both elements of power politics and economic liberalism. Keohane and Nye argue that states are not as sovereign nor unitary as realists believe. This observation leads to one of the most principal contributions of Power and Interdependence which is its systematic attempt to analyze the process now known as globalization.
The subjects and puzzles presented in Power and Interdependence have shaped our perceptions of “globalization, international trade, regime formation and change, non-state actors as well as the nature of power and military force in the global realm” (Walker 2013, p. 148). However, like any foundational text, its principles have been re-evaluated throughout the decades. Some critics of the neoliberal view of interdependence suggest that military significance cannot be underplayed as a causal factor or deciding tool in international relations (Rana 2015, p. 297). Others point to a lack of analysis of the underlying structures dominating world politics (Farrell & Newman 2019). It is important to note that more recent scholarship is reacting to a new world. This “new school” analyzes the realities of globalization. The world has changed dramatically since the 1970s. Even in the years following the 2003 U.S. invasion of Iraq, world trade, currency flows, foreign direct investment (FDI), and other methods of economic globalization have grown at extraordinary rates. Furthermore, today’s emerging global powers (China, India) have deep and complex commercial interconnections with the U.S. and Europe, unlike the superpowers of the second half of the last century (Newman and Posner 2010, p. 590). Globalization, combined with the third, and proposed fourth industrial revolution (Industry 3.0 and 4.0) have created complex global networks and changed modern understandings of power and interdependence.
In 1999, a few decades after the publication of Power and Interdependence, columnist Thomas Friedman declared the end of the Cold War geopolitical system. He argued the world had “gone from a system built around walls to a system increasingly built around networks.” He suggested an era of harmony was soon approaching, and states’ main worries would be how to manage market force rather than entanglements with one another. Recent interdependence literature often has sinister tone towards globalization and the dissolution of state jurisdictional boundaries. With markets and networks escaping from confinement, those who wield regulatory and other forms of power (whether that be sensitivity/vulnerability) over those structures play a significant role in the global hierarchy. In 2019, Farrell and Newman describe this new terrain:
Instead of liberating governments and businesses, globalization entangled them. As digital networks, financial flows, and supply chains stretched across the globe, states—especially the United States—started treating them as webs in which to trap one another. Today, the U.S. National Security Agency lurks [2] at the heart of the Internet, listening in on all kinds of communications. The U.S. Department of the Treasury uses the international financial system to punish rogue states and errant financial institutions. In service of its trade war with China, Washington has tied down massive firms and entire national economies by targeting vulnerable points in global supply chains. Other countries are in on the game, too: Japan has used its control over key industrial chemicals to hold South Korea’s electronics industry for ransom, and Beijing might eventually be able to infiltrate the world’s 5G communications system through its access to the Chinese telecommunications giant Huawei (Farrell and Newman 2019, p.1)
Globalization, rather than liberating governments and businesses, proved to be a new source of vulnerability, competition, and control. Recent interdependence literature accepts that globalization coupled with technological advancement have brought about complex networks from which countries cannot easily escape. Farrell and Newman (2019) go as far as suggesting globalization makes the Cold War seem simple. Today’s global economic networks have increased security consequences, not only because they are creating interdependencies between states that were previously relatively autonomous, but also because the financial, information, and trade networks linking multiple nations are so complex that policy makers often cannot fully comprehend them, which increases the risk of ill-informed decisions leading to dangerous conflicts (Farrell and Newman 2019, p.1).
One of the biggest changes brought about by globalization is the decreasing relevance of geographic boundaries. Markets and networks expand well beyond the jurisdiction of any one state. Newman and Posner (2010) explore how changing jurisdictional boundaries effect and interdependent relationships. Newman and Posner revisit the question: when does cross-border economic interdependence become a source of power? Their approach attempts to answer this question by synthesizing market size, market scope, and jurisdictional boundaries to produce a model that decouples geography with authority. Their analysis uses three variables: relative mobility (the idea that an actor’s ability to change and or succeed in markets relies on individual characteristics combined with parameters set by political authorities), changing jurisdictional boundaries (the notion that boundaries of jurisdictions are not congruent with state lines, illustrated through regional trade networks and governance networks), and a combination of the latter variables with market scope.
Alongside providing four models of global interdependencies, Newman and Posner also introduce the concept of regulatory power. Regulatory power refers to the “potential of authorities and corporations based in one jurisdiction to influence the decisions and arrangements made in another” (Farrell and Newman 2019, p. 594). Regulatory power is introduced as ‘structural’ variable, meaning it has the potential to shape patterns between units across many different instances of a phenomenon and is not necessarily determinative of outcomes in one specific case (Farrell and Newman 2019, p. 595). Motivated by the desire to integrate a then relatively neglected concept in interdependence and power, jurisdictional authority, Newman and Posner’s work marks a shift in conceptions of market influence and an increased focus on the international regulatory environment.
2.2 The New Interdependence Approach:
The new school of interdependence, emerging in the 2010’s, shares a complex relationship with literature of its past. In many ways, new approaches to interdependence, like that of Farrell and Newman (2016) are reviving interdependence traditions while pushing back against some of the many theories that erupted in the wake of globalization i.e. structural realism, Open Economy Politics and rational institutionalism. This new approach to interdependence operates on base assumptions entirely different from previous IPE literature. First, the focus of this new literature shifts from determining economic underpinnings towards articulating economic and institutional transformations. Secondly, rather than viewing globalization as an exogenous shock, Farrell and Newman (2016) propose globalization is an endogenous process. By viewing globalization as an endogenous process, new interdependence breaks free of statecentric models and focuses more deeply on changing jurisdictions and the consequences global interactions can have on domestic institutions and policies. New interdependence views institutions as points of contention rather than “rules of the game.” Lastly, what is novel about new interdependence is that it stresses the importance of specific types of power asymmetries and dispels the myth that countries with large market size will always dominate in power disputes, rather it is regulators who enjoy power resources that will be in an advantaged position to shape rules in others’ jurisdictions (Farrell and Newman 2016, p. 725).
Using international accounting regulations and surveillance as case studies, Farrell and Newman articulate a framework for new a new approach to interdependence analysis (Farrell and Newman 2015). This theory is then developed more thoroughly in their 2016 piece, “The New Interdependence Approach: Theoretical Development and Empirical Demonstration.” Farrell and Newman’s “New Interdependence Approach” (NIA) focuses on how political processes shape two outcomes: the rules and principles that govern behavior of global market actors and domestic institutions. The NIA claims interdependence leads to three key analytic concepts: rule overlap, opportunity structures, and asymmetrical power.
Rule overlap is the idea that globalization and the interpenetration of markets create situations in which multiple authorities (e.g., state regulators, private actors, and international institutions) each have their own set of requirements. In situations of overlapping authority, global regimes clash with each other, and have consequences for private actors. The consequences of overlapping jurisdictional authority can be both positive negative for actors in the global market. On one hand, overlapping authorities open some across to punishment as they may violate the rules of some jurisdictions and not others, yet on the other, this creates new routes for actors to play off the arbitrage opportunities between different rule systems (Farrell and Newman 2016, p. 722).
The NIA is characterized by the idea that collective actors working for, or below, the level of nation-state increasingly participate directly in global politics. Overlapping jurisdictions and the need to resolve the problems associated with them create new opportunities for collective actors beneath the level of “unitary nation-state” to make a mark on global politics. Farrell and Newman use the term “opportunity structures” to articulate the ways in which some actors can jointly engage in political processes and transform domestic institutions and global rules. Farrell and Newman’s 2015 article applies this theory to show how European security officials, frustrated with blockages in their domestic political system, negotiated with U.S. officials to create a new “transnational layer of trans-Atlantic institutions that partly subverted European privacy rules that the security officials proposed” (Farrell and Newman 2016, p. 723). Farrell and Newman site Tana Johnson’s (2016) research regarding the relationship between international organizations, NGOs, and civil groups to show how informal clubs of state and international regulators can also offer opportunities of influence to non-state actors. Overall, because political contestation takes place in overlapping venues, opportunity structures arise that are not necessarily controlled by national governments.
Lastly, the final theme in the NIA is that the combination of rule overlap and opportunity structures results in asymmetric power distributions. The key focus of the NIA is how the combination of rule overlaps and opportunity structures provide certain actors a unique opportunity to reshape domestic institutions (Farrell and Newman 2016, p. 725). Other IR approaches identify the importance of power asymmetries. The NIA claims to be different in the specific kids of asymmetries it identifies. Rather than assume states with the largest market size will “win” regulatory disputes, the NIA focuses on specific collective actors rather than states and incorporates differences in their power resources. The idea that collective actors are not equally empowered by the world that trade built helped the authors articulate three key empirical propositions for further study:
Interdependence induced rule overlap creates uncertainty that destabilizes collective actor commitments to existing market rules.
National regulators facing rule overlap will seek to externalize their rule set as to minimize uncertainty pressures.
Collective actors dissatisfied with their domestic policy status quo may seek out transnational alliances with other collective actors (Farrell and Newman 2016, p. 726).
Although claiming to be a revival of more traditional interdependence theory (i.e., Keohane and Nye), the NIA is distinct from traditional interdependence in few, but important ways. Foremost, earlier literature focused on interdependence as the source of asymmetric power; those nations or actors with less dependencies have significant leverage over more dependent nations (giving way to concepts like sensitivity and vulnerability). The NIA is much more structural in nature. Rather than focusing on the interdependencies themselves, its zeros in on the political channels, institutional changes, and the networks they create as sources of power. It is less about the ability to mitigate costs and damages (that would assume institutions as a fixed concept) and more so the ability to rewrite or influence the rules of the game (institutions as malleable).
However, the changes brought about by recent surges in populism and nationalism have interesting implications for the NIA; an analytical system which hinges upon international cooperation. The authors suggest that the NIA is most applicable in situations of high levels of interdependence, such as: product and process regulation, environment and climate policy, consumer safety, and financial regulation and investment (Farrell and Newman 2016, p. 725). They do not anticipate the NIA to be applicable in situations of high market competition. Rather, NIA is more useful in middle zones: areas of activity between those that are “not so heavily marketized as to undermine politics, and those that are not politically over-determined as to render outside opinions irrelevant.” This point will be of particular interest in this paper’s discussion of US-China policy, as many dimensions of international relations between the two nations is framed as a matter of security. There is growing reason to think that international cooperation may not be the best force to analyze in this era of protectionism and shifting global power structures. In this next section, I observe how these ideas have changed even throughout the past half-decade.
New-New Interdependence: Protectionism and Weaponization
More recently, scholarship has been concerned with the degrees to which international networks can be leveraged or ‘weaponized’ by privileged actors. The rise of nationalism, populism, and protectionism has brought new attention to how global networks have both entrapped and advantaged nations. The first step in understanding these processes is deconstructing the term ‘network.’ Farrell and Newman in Weaponized Interdependence (2019) make two central assumptions about networks. First, they understand networks in a sociological sense, meaning they shape what actors can or cannot do. In the long term, networks are subject to change, however in the short to medium term, “they are self-reinforcing and resistant to efforts to disrupt them” (Farrell and Newman 2019, p. 49). Second, Farrell and Newman reject the liberal claim that networks lead to fragmentation, diffused power relations, and ready cooperation – rather they lead to “specific, tangible, and enduring configuration of power imbalance” (Farrell and Newman 2019, p. 49).
In contrast to Keohane and Nye’s predictions, Farrell and Newman suggest that networks have evolved into “hub and spoke” systems with important consequences for international power relations. They break down networks into two main component parts: “nodes” and “ties” (Farrell and Newman 2019, p. 50). Nodes represent a specific actor or location within a network; and ties (or edges) act as connections between the nodes, channeling information, resources, and other forms of influence. The patten of nodes and ties create the structures underlying a network. Asymmetric growth associated with globalization has influenced network development, leading to network systems favoring certain actors. Farrell and Newman describe how inequalities arise in networks. A combination of: models of preferential attachment (which suggest that new nodes are slightly more likely to attach to established notes with many ties), network effects (the value of a certain service to its users increases as a function of the number of users already on the platform, leading to convergence on established networks) and leaning-by-doing effects (central nodes in networks can access more information and relationships than other members, allowing them to link preferentially to maintain access of learning processes), all have the potential to generate “rich-get-richer” effects over the short to medium term.. The networks they generate are structural in that they are both resistant to change and have the capacity to lock-in individual actors (Farrell and Newman 2019, p. 51).
Farrell and Newman advance interdependency literature by expanding conceptions of the types of power that may result from economic interdependence. In addition to market size and bilateral economic interactions, asymmetric global economic networks are distinct and consequential sources of power in the international arena. Although today’s economic networks were not constructed as tools of statecraft, rather they were more influenced by capitalistic economic principles, they allow some states to “weaponize interdependence on the level of the network itself” (Farrell and Newman 2019, p. 54). Farrell and Newman identify two forms of weaponization: the “panopticon effect” and the “chokepoint effect” (Farrell and Newman 2019, p. 55). The “panopticon effect” references Jeremy Bentham’s architectural arrangement and refers to the ability to gain critical knowledge from information flows. The panopticon is chosen as a title because this form of power occurs when states that have physical access to or jurisdiction over hub nodes use their position to obtain information passing through those hubs, like how Bentham’s prison is organized. This phenomenon is not unique to the twentieth century, rather it is reminiscent of the first era of globalization when Great Britain leveraged its position as the center of global trade, finance, and insurance to get a unique perspective into the ins-andouts of global flows of strategic goods. As technology has developed, so has the ability of states to obtain information about their rivals. The internet, cell phones, telecommunications technology, and centralized banking systems (i.e., SWIFT) are all examples of technological networks susceptible to this kind of power.
The “chokepoint effect” refers to privileged states’ “capacity to limit and penalize use of hubs by third parties” (e.g., other states or private actors) (Farrell and Newman 2019, p. 55). Because hubs are self-reinforcing and efficient, it is extremely difficult to circumvent them, meaning the states that control hubs have considerable coercive power over those who do not. States can use a range of techniques to achieve chokepoint effects. To start, states may have sole jurisdiction over key hubs, offering them legal authority to regulate market use. This concept plays hand-in-hand with earlier discussions of regulatory power. States require appropriate legal and regulatory institutions if they are to exploit hubs. In cases where hubs are scattered across jurisdictions, states may work together to exploit coercive benefits. Farrell and Newman’s account emphasizes the importance of economic network structures in determining coercive efforts. When there are a limited number of hubs, actors can more easily block or deter access to the entire network. Farrell and Newman’s underlying argument in “Weaponized Interdependence” is that states’ variable ability to employ forms of coercion (panopticon and chokepoint effects) depend on a combination of the structure of the underlying network and the domestic institutions of the states attempting to use them (Farrell and Newman 2019, p. 58). Their empirical analysis of global finance (SWIFT) and the internet demonstrates how key actors weaponize interdependence.
2.3 Structural Power Literature
Early interdependence literature, promoted by Keohane and Nye, was primarily concerned with relationships between nations or actors and the effects of changes in those relationships on international affairs. Keohane and Nye’s approach was relationship-based, focusing primarily on bilateral arrangements. Contributions to the field made by scholars such as Posner, Farrell and Newman expand traditional neoliberal conceptions of interdependence beyond bilateral arrangements to discussion of network and internet structures between multiple nations. In this sense, recent interdependence literature shares characteristics with the field of structural power. Structural power scholars, originating with Susan Strange in the 1980s, were equally dissatisfied with realist explanations of power distributions among states. Much like interdependence, structural power emerged as an alternative to realism and proposed that power in the international arena was more influenced by control of international systems and structures rather than market size or military strength.
In the 1980s, around the same time as Keohane and Nye, Susan Strange noted the difficulties scholars faced in the field of political economy. In her view, the conflict scholars face in IPE boil down to the very nature of economics and politics. While economics is often defined as the study of scarce resources for unlimited wants, politics, in theory, is about providing order and public goods often through government. Scholars of politics tend to assume the maintenance of order is the central, if only, problematique. Strange suggests that the consequence of such diverging foci result in each discipline taking the other for granted. In her principal text, States and Markets, Strange attempts to converge the two disciplines in the context of the global society of her time. Writing in a period of rapid technological and political transformation, Strange reconfigures our understanding of hegemony and state power and puts forth the argument that power is less about “power from resources” and more about “power over structures.” A state or firm’s position in relevant international structures, intentionally or unintentionally, determines its influence in the global sphere. Furthermore, Strange claims that this type of power has shifted in the hands of markets rather than state actors. While Strange’s conclusions are difficult to apply in an analytical and operable framework, her observations are nonetheless important and worthy of discussion.
Strange seeks to answer the same fundamental question as Keohane and Nye: “who gets what?” but turns to structural power for explanation. Structural power, as defined in States and Markets, refers to an actor’s ability to decide how things shall be done, or an actor’s power to shape frameworks within which states relate to each other, relate to individuals, or relate to corporate enterprises. Strange’s conceptions of power are notable because unlike realist accounts, she contends power does not shift between states and markets, or markets and authority, rather it determines the relationship between the two. By saying that power is structural, she moves beyond relational power (the ability of A to do to B what B otherwise might not do) and towards a more multifaceted understanding of the term. Using American power as an example, Strange articulates four sources of structural power: the capacity for the provision of security for oneself and for international actors (security), dominance in the production of goods and services, i.e. the ability to determine the locus, mode and content of wealth-creating activity (production), the ability to offer, withhold, and demand credit in the international finance arena (finance), and lastly, the ability to influence ideas and beliefs and to control through language those who access and communicate that knowledge (knowledge). Those four interlocking structures: security, production, finance, and knowledge provide certain nations powerful advantages in terms of international politics. A key theme emerging with Strange is the idea of both the intended and unintended consequences of power. If power is derived from control of structures, then it is not simply an asset to be brandished at will, it has an inherent value. This is a key distinction from early interdependence literature that stressed bilateral power arrangements and leveraging of shared structures.
Strange expands on American structural power and makes predictions about the future political landscape in her 1988 article “The Future of the American Empire.” In the late 1980s, there was intense debate over the United States and whether its reign was evergreen. Keohane’s publication After Hegemony (1984) proposed that American power was on the decline, and the substitute for American hegemony would be found in international cooperation and the coordination of monetary and fiscal policies. Strange takes the opposite approach arguing that “although there are current weaknesses in the American Empire, they are not irreparable, and they are much less important than its continuing structural power” (Strange 1988, p. 3). Strange’s reasonings shed light on the current debate over rising Chinese power. Strange contents that it is not simply how large or prosperous a nation’s economy is, rather what it specializes in. Strange proposes now what we know to be universal, that it is the information-rich occupations that confer power, much more than the “physical capacity to roll goods off the assembly line” (Strange 1988, p. 5). Manufacturing capacity and the decline of U.S. exports are misleading figures because they are territorial based and are not indicative of the power U.S. executives have. Strange argues:
Worse (manufacturing capacity figures) are irrelevant. What matters is the share of world output – of primary products, minerals and food and the manufactured goods and services – that is under the direction of the executives of US companies. That share can be US-directed even if the enterprise directly responsible is only half owned by an American parent, and even, in some cases of technological dependence, where is it not owned at all but where the license to produce is granted or refused by people in the United States. (Strange 1988, p. 5).
The U.S.’ structural power is so great that it maintained dominance despite outsourcing manufacturing. In this argument, Strange lays the foundation for discussions regarding jurisdictional and regulatory power. She makes similar observations as the “new school” of interdependence in that she argues it is the U.S.’ non-territorial empire that provides its flourishing economic base and cements its kingpin role. Strange supports her argument through discussions of international finance structures and the centrality of the U.S. dollar as well as the U.S.’ (mostly) open market and flourishing customer base. Furthermore, she proposes that the worldwide reach of U.S.-controlled enterprises means the U.S. has greater capacity to exercise extraterritorial influence than any other country. Strange’s basic pillars of structural power, however inoperable her critics may deem, provide relevant context to China’s recent endeavors in MIC2025, digital currency, and space program.
Structural power has proven to be a difficult concept for IPE scholars. Strange received wide criticism for her lack of an analytical framework for cases of structural power. Writing in the wake of Susan Strange and other prominent authors, Stefano Guzzini strives to clarify the field in his 1993 piece “Structural Power: The Limits of Neorealist Power Analysis.” Guzzini returns to the original rift between realism and neorealism, also explored in interdependence literature. Scholars like Strange, dissatisfied with realism, widened the concept of power to include ideas like structural power. Strange, Keohane, Nye and other international relations scholars aided in the creation of a new discipline – the study of international political economy (IPE). While a legitimate reconfiguration of relevant fields of study, these earlier works have at times fallen short of creating operable theories (“theories explain, concepts do not.”) (Guzzini 1993, p.468). Guzzini argues that structural power theorists have either overextended the concept of power or omitted particular power phenomena and are therefore unable to provide a coherent power analysis. For Guzzini, “power” is referred to solely as an agent concept, and his term “governance” represents effects not due to a particular agent, whether individual or collective.
Guzzini’s central claim about the structural power literature of the 1980s and early 1990s (Strange, Caporaso; Caporaso and Haggard, Gill and Law) is that it has widened the concept of power into three different meanings, namely, institutional power, nonintentional power, and impersonal empowering. None of the definitions can provide a framework for power analysis compatible with neoliberalism (Strange’s work falls under the category of nonintentional power). Guzzini outlines three fallacies illustrate the “impossibility” of limiting power to a single concept at either the agent or the structural level. The first is the fallacy of trying to extend an agent of concept to over all phenomena. By overextending power, it becomes difficult to distinguish between intentional and unintentional action. This ties power to actors, rather than to an effect. Furthermore, Guzzini argues that emphasizing foresight is not a good criterion for measurement because it puts too much emphasis on the viewpoint of those in power rather than those who “have to bear its consequences” (Guzzini 1993, p. 468). The second fallacy he calls impersonal empowering and the anomaly of the “free-rider.” In this argument, Guzzini critiques’ Morris’ idea of passive power. Morris tries to avoid the free rider anomaly (the idea that deducing power from positive effects produces free riders, whose interests are furthered by the system but who “nevertheless are at its mercy”). To avoid this fallacy, Morris suggests passive power as the inability to interfere prevent an outcome from occurring. Guzzini accepts it is important to realize how structural bias affects the formation of power relations but rejects it as a concept of power. The last fallacy is structural reductionism. When one does not sufficiently stress the fundamental agent of power, the concept of power becomes either synonymous with structural constraint (rendering structural power a contradiction) or else it becomes “a rather amorphous all-encompassing concept like social control” (Guzzini 1993, p. 469).
Perhaps the most useful observation from Guzzini for this paper is the idea that structures need not be viewed as constraining, but as enabling or facilitating. (Guzzini 1993, p. 470). Furthermore, since the idea of a perfect market is merely that, structures are inherently dynamic and biased. Guzzini conceives structures in a similar way as some interdependence scholars (Farrell & Newman) in that structures constitute power practices that are continually allocating and reallocating agents to categories that are affected differently by market bias. These themes routinely surface in more contemporary accounts of structural power.
Taken together, interdependence and structural power literature provide useful analytical lenses to view contemporary global relations. As discussed earlier, Made in China 2025 is just one example of how China is making strategic decisions to advance its structural power and capacity to create interdependencies within the global economy. Through the creation of global, networked technology, China is strategically challenging key industries that may result in shifting power relations.