This is a book about the external economic conditions that have shaped the success and failure of democratic states. The book begins from the premise that in the modern world the international economy is central to the problem of maintaining representative democracy as a pressure that can weaken it and a potential opportunity for strengthening it. In conception the book starts from a moment of departure in the world and moves backwards and forwards from that moment. In 1944, reflecting on the inter-war years, the architects of Bretton Woods began from the assumption that representative democracy was not easy to...

For Machiavelli and his heirs, reason of state was prudent politics for princes and republics in competition for territory and power at home and abroad using violence. By the time the first aspects of what were to become modern democratic nation-states were emerging during the late eighteenth and nineteenth centuries, the domestic and external conditions in which the authority and power of any state had to be realised were very different. That change began with the gradual emergence of the modern state when several European monarchs sought to establish a monopoly over legitimate violence, and to exclude external legal intrusion...

Nobody in the summer heat of August 1914 had thought that the First World War was about the future of representative democracy or the nation-state. The Allied powers had not entered the war either to impose democracy on Germany and Austria-Hungary, or to break up their empires. Russia was the most monarchical of all the participant states, and so far as the Allies were concerned with the principle of nation-states, it was to defend the independence of those that were small, like Belgium and Serbia, not to create new ones. But in 1914 the war was a European war. Four...

The end of the Second World War left the United States as the most powerful state in the world with only the Soviet Union as a conceivable competitor. Economically, it had an extraordinary advantage even compared to the one it had enjoyed during the 1920s. Whilst all of the other significant powers were substantially poorer in 1945 than they had been in 1939, the United States was richer. It now accounted for more than half of the world’s manufacturing production, supplied more than a third of the world’s exports, and possessed two-thirds of the world’s gold reserves. Militarily, the United...

By 1973, the class of democracies was smaller than during the first two decades after the Second World War. Whilst communist rule was entrenched in the Soviet Union, eastern Europe, China, North Korea, North Vietnam and Cuba, in most post-colonial states, both those created after 1945 and those dating back to the nineteenth century, democracy had collapsed, leaving only Colombia and Venezuela in Latin America, Botswana in Africa, and India and Sri Lanka in Asia with this form of government.

The histories of Europe and the United States might have predicted that politicians in post-colonial, developing countries would struggle to...

The two post-war episodes of democracy-building rested on very different understandings of its relation to the international economy. In 1919, the peacemakers put virtually no premium on reconstructing the international economy, and drew up retributive economic provisions that in the circumstances of the American withdrawal from Europe after Versailles proved disastrous. As a result, Europe suffered from a dearth of investment capital and the first five years of the peace were bedevilled with currency and trade problems that fuelled temptations to hyperinflation in some states and to deflation in others, neither of which was domestically or externally conducive to democracy...