A fresh examination of how a government's revenue - whether natural resource rents, taxes, credit, or grants - affects the likelihood of liberal democracy or state failure.

James E. Mahon Jr shows that although a goal of Western foreign policy is to produce internal political change in troublesome countries, there are clear limitations to pious rhetoric and armed intervention. The West's central idea, the fiscal contract, posits that those who provide resources to a state desire, and have historically sometimes obtained, institutionalized promises of consent and personal rights.

Building on a literature that links this process to the rise of the liberal state in the West, he argues that power lies in providing resources at critical times and that bargains producing rights (rather than narrow privileges) depend on the prior organization of resource-providers. Turning to loans and aid, he explores the relevance of this model to important policy issues.

This book will be of strong interest to students and scholars of political economy.