What Makes the World Go Round?

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

by Niall Ferguson
Basic Books, 552 pp., $30.00


In 1987 the historian Paul Kennedy published a controversial book called The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000. Its message was that the United States was suffering from imperial “overstretch.” Its economy was no longer large or dynamic enough to support its strategic commitments. It had to accept a lesser role in a “multipolar” world. This message was embedded in a grand historical-geopolitical narrative. Kennedy discerned a long-run correlation between economic and military power. This gave rise to a historic pattern of “rise and fall,” in which successive dominant powers were drained of economic vitality by the cost of fending off their challengers.

Kennedy was exceptionally unlucky in his timing. Four years after his book’s publication, the bipolar world had vanished, as he predicted. But this was because the Soviet Union, not the United States, had crashed. In the post-Communist world, the United States remains undisputed “top dog.” It has a power and authority, unique in history, to shape the political and economic organization of the planet. How it approaches this task will largely determine what our new century will be like.

This is the background to Niall Ferguson’s new book. At one level it is a belated response to Kennedy: today, the US, in Ferguson’s view, suffers not from “overstretch” but “understretch”—its economic resources are more than sufficient for global responsibilities, but rather than use its power constructively, America under President Bush has committed itself to an illusory quest for security behind a celestial Maginot line. Ferguson sees this as the symptom of “a deep-rooted insularity which is the very reverse of what the world needs from its wealthiest power.” He writes: “Far from retreating like some giant snail behind an electronic shell, the United States should be devoting a larger percentage of its vast resources to making the world safe for capitalism and democracy,” if necessary by imposing democracy on “rogue states” by force. Unfortunately, “the leaders of the one state with the economic resources to make the world a better place lack the guts to do it.”

At another level, Ferguson’s book is a historical exploration of the sources of Kennedy’s “mistake.” Like most historians of his generation, Kennedy is an economic determinist. He believes that economic change is the motor of history. But history, Ferguson argues, gives no warrant for this assertion. On the contrary, the central conclusion of The Cash Nexus is that “money does not make the world go round.” Rather, it has been political events—above all, wars—that have shaped the institutions of modern economic life. Sex, violence, and power are “individually or together capable of over-riding money.”

Ferguson is one of the most technically accomplished historians writing today. His intelligence, energy, imagination, and trenchancy are his own; but he is also the product of a revolution in the writing of history, based on good language training, word processors, computerized databases, lavish research grants, and teams of research assistants. These aids have…

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