The idea that money makes the world go round is a seductive one. From class conflict to the "feel good" factor from Karl Marx to Bill Clinton, few of us would deny the importance of the economy in politics. Economic change has seemed to be the prime mover of political change whether in the age of industry or the Internet. The Clinton campaign motto in 1992—"It's the economy, stupid"—sums up a central assumption of modern life.
In The Cash Nexus, Oxford historian Niall Ferguson challenges this assumption by offering a radical new history of the relationship between economics and politics. Setting contemporary issues in a three hundred year historical perspective, he brilliantly redefines the "cash nexus"—the pivotal link from money to power.
Throughout modern history, Ferguson argues, the way states have managed their money has been crucial to their survival and success. It has been finance as much as firepower that has decided the fates of nations in the supreme test of war. And war itself has been the principal engine of financial innovation. Our lives today are still dominated by the institutions of the warfare state: income tax, parliaments, national debts, central banks and even stock markets. This is the "square of power" on which the great Western empires have been based.
Yet the evolution of these institutions over three centuries has been anything but a one-way street. There is no universally optimal equilibrium in the balance between taxing and borrowing, and sometimes a high debt burden can be a source of strength rather than weakness. The democratization of parliamentary institutions in the twentieth century has not always been conducive to economic stability and a bigger tax based. Sometimes the square of power can collapse into tax revolts, defaults, inflations or financial panics.
Ferguson arrives at provocative conclusions. Domestic political power may have more to do with campaign finance than with pre-election prosperity; but we should spend more, not less, on the democratic process. Financial globalization in the absence of imperial rule may prove too unstable to last; compared with past superpowers, the united States is neglecting its international responsibilities. Stock market bubbles and exchange rate crises may just be harbingers of a deeper crisis that could roll back the advance of democracy and capitalism.
A bold synthesis of political history and modern economic theory, The Cash Nexushas challenging and unsettling implications for the future of both capitalism and democracy. Its challenge to the United States to make more political use of its unmatched economic resources is bound to spark heated debate.
- Table of Contents
Contents
- Introduction
- Section One: Spending and Taxing
- 1. The Rise and Fall of the Warfare State
- 2. "e;Hateful Taxes"
- 3. The Commons and the Castle: Representation and Administration
- Section Two: Promises to Pay
- 4. Mountains of the Moon: Public Debates
- 5. The Money Printers: Default and Debasement
- 6. Of Interest
- Section Three: Economic Politics
- 7. Dead Weights and Tax-eaters: The Social History of Finance
- 8. The Silverbridge System: Electoral Economics
- Section Four: Global Power
- 9. Masters and Plankton: Financial Globalization
- 10. Bubbles and Busts: Stock Markets in the Long Run
- 11. Golden Fetter, Paper Chains: International Monetary Regimes
- 12. The American Wave: Democracy's Flow and Ebb
- 13. Fractured Unities
- 14. Understretch: The Limits of Economic Power
