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From Barnes & NobleThe Barnes & Noble Review
If our contemporary political climate could be summed up as "It's the economy, stupid," then Al Gore would have been elected president in 2000 and Margaret Thatcher would have lost her election in 1983. Yet, surprisingly, neither of these events came to pass. In this erudite, challengingly dense book, British historian Niall Ferguson shows how economics influence, rather than determine, Western history.
With the pugnacious, bullying prose of a man bent on undercutting conventional wisdom, Ferguson draws an admirably lucid picture of how economics fostered the Western nation-state. Beginning in the late 1700s, when the British government sold bonds to fund imperial expansion, Ferguson maps the ways politics and economics have interacted. In contrast to Paul Kennedy's The Rise and Fall of the Great Powers, The Cash Nexus paints a portrait of a world in which four modern institutions -- tax bureaucracy, representative government, national debt, and a central bank -- evolved during times of war.
Somewhat surprisingly, The Cash Nexus emerges as a patriotic volume, one that asserts that the four institutions found their optimum usage during Great Britain's Glorious Revolution. At that time, Ferguson argues, Britain had a professional tax-gathering bureaucracy instead of private "tax-farmers"; Parliament increased the state's tax-levying ability; national debt paved the way for successful wars by accommodating sudden inflation; and a central bank oversaw the debt. While other European nations experimented with some or all four of these institutions, only the British achieved the right balance.
Although the United States has established a similar model in the 20th century, Ferguson believes Americans have squandered their potential. He holds the U.S. especially guilty of imperial "under-stretch," arguing that America needs to intervene more often and consistently, using its muscle and money to promote its view of the world. What is preventing the U.S. from doing this? As Ferguson notes in a chilling analysis of the Kosovo conflict: "What the war over Kosovo revealed...is that American power is not inhibited by the costs of military intervention, but by public opinion." Ferguson argues that the United States should embrace the imperial policy Britain once practiced. Far from "retreating like some giant snail behind an electronic shell...the proper role of an imperial America is to establish [capitalism and democracy] where they are lacking, if necessary -- as in Germany and Japan in 1945 -- by military force."
If The Cash Nexus suffers because of its intricate graphs and tortuously complex language, it does offer Ferguson's bellicose opinions with verve and rigor. Unlike many contemporary thinkers, he shuns the globalization bandwagon. This intellectual independence is what makes The Cash Nexus such a stubborn, prickly, rewarding book. (John Freeman)
John Freeman lives in New York City.