TRANSNATIONAL ECONOMIC PROCESSES 38r pursued elsewhere.For example,the margin within which any Western in- dustrialized state can establish the rate of exchange for its currency is a func- tion of market mechanisms in the international monetary system and the tolerance of other governments.If a government devalues its currency beyond this margin in order to enjoy the trade benefits which accrue to an under- valued currency,it can be certain that foreign governments will retaliate-for example,by devaluing their currencies proportionately or by refusing trade credits-in order to nullify unfair advantage.The margin of autonomy and the limitations put on it are indices of monetary interdependence.By postu- lating that interdependence is always a marginal affair internationally Waltz's analysis avoids the most interesting set of questions.This has to do with the political effects of interdependence on both patterns of international behavior (the functioning of the international monetary system in the example cited) and on domestic politics (the mix of anti-inflationary and growth policies implied by the example). Waltz continues his argument against the utility of the concept of inter- dependence through an elaboration of the classic dichotomy between the state and international society.His argument on interstate interdependence is based on the traditional dictum of statecraft which says that all states are alike in that their leaders must maximize state security.Within the domestic order, however,there is a functional division of labor:"The domestic order is com- posed of heterogeneous elements;the international order is composed of homogeneous units....The international order is characterized by the co- action of like units....Because the units that populate the international arena are the same in type,interdependence among them is low even if those units are of approximately equal size....This last point can be stated as an iron law;high inequality among like units is low interdependence." Classical trade theory would tell us that the logic of Waltz's argument is quite correct.Homogeneous units would find little need for trade-offs based on comparative advantage,and the level of interdependence among them would thus be low.His argument at this point therefore depends on the empirical generalization that international society is composed of like units. But is it?The Rankean assumption that states are alike in that their leaders maximize security seems terribly antiquated to a contemporary observer. Waltz's generalization may,in fact,have held for the powers of classic di- plomacy.These powers were all European,their leaders were educated in simi- lar types of schools,they spoke the same language of diplomacy and under- stood the same signals,and their expectations for change were relatively low. Today the number and type of international actors appear to be historically unparalleled.The international system is composed of some Izo states that 17Ibid,p.207: 1s For a stimulating discussion of changes in the types of international actors and their current diver. sity sce Oran R.Young,"The Actors in World Politics,"in The Analysis of International Politics,ed. James N.Rosenau,B.Vincent Davis,and Maurice A.East (Glencoc,Ill:Free Press,forthcoming)