Public Finance

Conventional wisdom has long claimed that economic change is the prime mover of political change, whether in the age of industry or the Internet. In our own time Paul Kennedy has claimed that economics provided the key to international power, while Francis Fukuyama and others have argued that capitalism doomed socialism and ensured the victory of democracy. Small wonder politicians are obsessed with the economy: the Clinton campaign motto -- "It's the economy stupid" -- sums up a central tenet of modern life.

But is it the economy? Ferguson thinks it is high time we re-examined the link -- the "nexus", to use Thomas Carlyle's term -- between economics and politics, in the aftermath not only of the failure of socialism but also of the apparent triumph of American-style capitalism. His central argument is that the conflicting impulses of sex, violence, and power are together more powerful than money. In particular, political events and institutions have often dominated economic development.

A bold synthesis of political history and modern economic theory, Cash Nexus will transform the landscape of modern history and draw challenging and unsettling conclusions about the prospects of both capitalism and democracy.

The book is comprehensive in scope: topics include public goods, market failure, the role of government, public choice and political business cycles, public expenditure growth, structural adjustment and taxation.

In addition, the book raises issues that are neglected in traditional texts on the public sector, such as poverty alleviation, tax administration and the operation of the VAT in developing countries. The text is written in a style that is accessible to policy makers, practising economists and students interested in the role of government and the political economy of decision making.