The Cash Nexus: Money and Power in the Modern World, 1700-2000

576 Pages·2001·2.92 MB·English

by  Niall Ferguson

B E S T S E L L I NG A U T H OR OF THE PITY OF WAR
NI AL
E R G U S ON
ONEY AND
POWER IN THE
MODERN WORLD,
1700-2000
A SH
x us
$30.00 US
$44.95 CAN
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 econo­
my in politics. Economic change has seemed to he
the prime mover of political change whether in the
age of industry or the Internet. The Clinton cam­
paign 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 perspec­
tive, 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 decid­
ed 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 dom­
inated 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 democratiza­
tion of parliamentary institutions in the twentieth
century has not always been conducive to econom­
ic stability and a bigger tax base. 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
(continued on back flap)
(continued from front flap)
prosperity; but we should spend more, not less, on
the democratic process. Financial globalization in
the absence of imperial rule may prove too unsta­
ble 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 mod­
ern economic theory, The Cash Nexus has chal­
lenging 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.
NIALL FERGUSON is Professor of Political
and Financial History at the University of Oxford
and Visiting Professor of Economics at the Stern
School of Business, New York University. He is
the author of Paper and Iron, The House of
Rothschilds, and Basic's own The Pity of War and
Virtual History. He writes regularly for the Times
Literary Supplement and is a prolific commentator
on contemporary politics. He is currently at work
on a major new history of the Saxe-Coburg House
of royalty.
Jacket design: Tom Stvan; author photograph: Marc Atkins
2/01
The Cash Nexus
ALSO BY NIALL FERGUSON
The Pity of War
Virtual History: Alternatives and Counterfactuals (editor)
The House of Rothschild
Paper and Iron: Hamburg Business and German Politics in the Era
of Inflation, iH^j-i^zj
N I A LL F E R G U S ON
The Cash Nexus
MONEY AND POWER IN THE
MODERN WORLD, I7OO-20OO
BBASIC
BOOKS
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Copyright © 2001 by Niall Ferguson
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A Cataloging-in-Publication record for this book is available from the Library of Congress.
ISBN 0-465-02325-8
01 02 03 / 10 9 8 7 6 5 4 3 2 1
For Mary and May

In these complicated times . . . Cash Payment is the sole nexus between
man and man . . . Cash Payment the sole nexus; and there are so many
things which cas will not pay! Cash is a great miracle; yet it has not all
power in Heaven, nor even on Earth. . . .
THOMAS CARLYLE, Chartism (1840)
The Gospel of Mammonism . . . has also its corresponding heaven. For
there is one Reality among so many Phantasms; about one thing we are
entirely in earnest: The making of money. . . . We have profoundly for­
gotten everywhere that Cash-payment is not the sole relation of human
beings.
THOMAS CARLYLE, Past and Present (1843)
The bourgeoisie ... has left remaining no other nexus between man and
man than naked self-interest, than callous 'cash payment'.
MARX AND ENGELS, The Communist Manifesto (1848)
We are told by men of science that all the venture of mariners on the sea,
all that counter-marching tribes and races that confounds all history wiht
its dust and rumour, sprang from nothing more abstruse than the laws
of supply and demand, and a certain natural instinct for cheap rations.
To any one thinking deeply, this will seem a dull and pitiful explanation.
ROBERT LOUIS STEVENSON, "Will o' the Mill" (1978)