David Baboulene is an author, scriptwriter, story consultant and PhD scholar of story theory. His book The Story Book features revolutionary new thinking on what makes stories work. He has written a series of articles in Writing Magazine which have been enormously helpful. Here is some of what he says:
Plot is character, and character is plot, because as soon as a character takes a meaningful action, his action is driving your plot whether you like it or not. Conversely, as soon as an event happens which elicits a meaningful reaction from your character, then his true character is developing in the eyes of the audience whether you like it or not.
Note that it is not the event which reveals a player's character, but his reaction to the event. The action he takes defines his character. Similarly, it is not the event which drives the plot (as you might expect), but the action taken by the character that defines the event, and drives the plot.
[You might have to read that a couple of times before you get your head around it. Here's some more:]
A player's character is defined only by his meaningful actions.
The plot is defined only by the actions taken by the players.
Better still not to think about plot or character as independent at all, because they aren't. Join them together and you get unity through thinking solely about Character Behaviours. Stories are about Character Behaviours. What characters do is who they are and what characters do is what happens.
When your writing has this unity of character and plot, your stories will burst into a third dimension of power that comes from consummating their relationship. And you'll know it and feel it when it happens, and you'll never write without it again.
[Extracts from Writing Magazine June 2011. See also http://www.baboulene.com/]
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