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The core of exchange theory should be the reciprocal relationship between social structures of inequality & exchange activities which are, therefore, unequal. Social structural factors, above all inequality in power & metapower among actors, are responsible for exchange activity & its outcomes. Exchange activity & its outcomes in turn contribute to the social structuring of power, metapower, & dependence relationships, because they affect resource control, structural position, & the action capabilities of actors in relation to one another through the distribution of payoffs (the terms of exchange) & the structural advantages & disadvantages among the actors involved. International economic exchange in the past & today between the northern & southern parts of the world is, as a rule, unequal exchange, because the countries in the two groups are differentiated systematically on two dimensions: (1) they have unequal productive capabilities to take advantage of potentially positive gains or to prevent & overcome negative outcomes, or they have unequal ability to develop such action capabilities, ie, the ability to restructure themselves or to adapt to changing economic conditions, & (2) as participants in the international exchange system, they have unequal ability to structure the rules & conditions of international exchange so that advantages & disadvantages are more likely to accrue disproportionately to the actors involved. This suggests that full integration into the present international system is not a feasible development strategy, unless the rules of economic exchange are drastically revised in favor of the southern hemisphere. AA.