States and new markets: the novelty problem in the IPE of finance

Finance has changed, and the study of finance needs to change with it. Previously marginal actors—hedge funds, index providers, tech firms, etc.—have become lynchpins in the global financial system. Likewise, the traditional subjects of international political economy (IPE)—states, international organizations, banks, central banks, etc.—are engaging in once-peripheral spheres. Yet, these novel trends have been largely ignored in mainstream political science and international relations venues for IPE scholarship. We demonstrate this through a discussion of two trends—the rise of shadow banking and central bank involvement in climate change—and an analysis of publications in top international relations and political science journals. While previous commentaries identify a methodological and epistemological divide in IPE, our results suggest an empirical one. We then construct a practical framework to remedy this problem by returning to the work of Susan Strange. Strange’s approach embodied a radical ontology, a focus on structures and their interaction, and an analytical eclecticism that provided keen insights into the politics of finance. We argue that these principles, often embraced in Review of International Political Economy, should be applied more broadly by IR scholars to better contribute to debates on emerging political economic issues.