Niall Ferguson, The Cash Nexus: Money and Power in the Modern World, 1700-2000 (New York: Basic Books, 2001), 552 pp., $18.
Liah Greenfeld, The Spirit of Capitalism: Nationalism and Economic Growth (Cambridge: Harvard University Press, 2001), 541 pp., $45.
Kenneth Pomeranz, The Great Divergence: China, Europe and the Making of the Modern World Economy (Princeton: Princeton University Press, 2000), 382 pp., $16.95.
Aside from preventing terrorism, there are two cottage industries in the policy community these days. One aims to develop Third World states-aspiring to remove at least some of the causes of terrorism. The other, somewhat less in the public eye recently, seeks to prevent the decline of major powers, particularly the United States. These two industries are linked by their concern to understand the relationship between economic structures, motives and performance, on the one hand, and political structures, motives and performance on the other. In other words, both are about the nexus between money and power.
As to the first of these industries, no one quite understands what causes states to grow economically, and if we ever knew-judging by existing outcomes-we may well have forgotten. Max Weber claimed Protestantism created an ethic that fostered capitalist development. But that religion could scarcely be responsible for facilitating growth in Japan or China, or even in Catholic southern Germany and Italy. Recoiling from sociological theory, modern economists have turned to more practical explanations. They argue that superior education, property rights, large social coalitions, abundant capital and technology have been the essential conditions leading to growth. They also stress the economic infrastructure of ports, airfields, communications facilities, canals and highways as well as investment funding by banks and governments as important foundations for development.
