Published by EH.Net (August 2022).

Jonathan Levy. *Ages of American Capitalism:* *A History of the United
States*. New York: Penguin Random House, 2021. xxviii + 908 pp. $40
(hardback), ISBN 978-0812995015.

Reviewed for EH.Net by Stephen W. Campbell, Department of History,
California State Polytechnic University, Pomona.



In this highly ambitious work, historian Jonathan Levy has divided the
history of American capitalism into four distinct ages, each with its own
book of chapters. The first, the Age of Commerce, was characterized by the
expansion of markets across space, the division of labor a la Adam Smith,
and the growth of European empires that tragically exploited Native
Americans and African American slaves. This was followed by the Age of
Capital from roughly the Civil War to the Great Depression in which
industrial investment in new equipment and the burning of fossil fuels
unlocked greater returns in productivity. Book Three, the Age of Control,
witnessed the advent of New Deal capitalism. Labor unions and Big Business
maintained an uneasy truce through a politics of income security, high
wages and taxes, and regulations on risky investments and capital mobility.
Post-1980 America makes up the final book, the Age of Chaos, aptly named
for its volatility, having already seen the inflating and bursting of a
stock bubble in the 1990s and housing bubble prior to 2007. Here, much of
the New Deal order was reversed.

Levy unpacks three interrelated theses throughout this book. Capitalism
cannot be reduced to mere production, market exchange, or the profit
motive, he argues. It is a process. Multiple factors must come together
simultaneously. Investor confidence and its relationship to the credit
system loom large for the author and to that point, in his third thesis,
Levy argues that the history of capitalism is a never-ending conflict
between the short-term propensity to hoard and the long-term inducement to
invest (p xxii). The relationship between the two varied at different
times. In the Age of Control, policymakers sought to encourage long-term
investment in illiquid assets. They operated under the Keynesian assumption
that excessive saving among investors – the propensity of hoard and opt for
liquid assets during times of uncertainty – stunted aggregate demand,
consumption, and employment. Levy holds that starting in the 1980s
investors’ demand for liquidity became more speculative (again following
Keynes), as their focus became increasingly short-term (p. 587). The newer
mindset was to “pull capital from less profitable lines of production and
deploy them wherever more immediate profits [could] be made.” (p. 603)
Rejecting the assumptions of older economists once associated with the
University of Chicago, Levy is critical of the notion that rational
investors will benefit the greatest number of people through the free
mobility of capital.

New economic paradigms in Levy’s telling are often preceded by political
revolutions. Jacksonian Democrats initiated a new era of capitalism that
differed from Hamiltonian Federalism; Lincoln Republicans ended slavery and
inaugurated the Age of Capital; and Franklin D. Roosevelt’s (FDR’s)
landslide election launched the New Deal and departure from the
deflationary gold standard. Students of American history will find much of
this material familiar, almost as if they are reading a textbook. But *Ages
of American Capitalism* goes beyond the limits of a textbook, for it
contains original arguments and figures with citations to some of the
latest scholarly literature. Helpful maps, graphs, and images are evident.
The dense, complex discussions that may prove challenging at times for
undergraduate readers are balanced by interesting details about the lives
and business practices of larger-than-life entrepreneurs like Andrew
Carnegie and Henry Ford. Levy is also attentive to the way economic
realities were reflected in language, literature, film, paintings,
photographs, and emotions. His analysis of the conformity and fears
embedded in postwar consumerism and suburbia is spot-on.

A book of this length will inevitably raise points of contestation. It is
debatable to what extent the anemic economic recovery from the Great
Recession fully explains the rise of Trumpism (pp. 737-738), in contrast to
the cultural, media-driven, and authoritarian factors highlighted by much
of the recent political science literature. Although Levy’s commentary on
Andrew Jackson’s Bank War perpetuates some thinly sourced conventional
wisdom (p. 111), it is to his credit that he affirms more recent
scholarship characterizing the Jacksonians and their Populist Party
descendants not as anti-capitalist, democratic heroes but as
anti-monopolists who desired equal opportunity in commerce (pp. 298-299).
Indeed, there is a level of seriousness, depth, and breadth here that
cannot be found in Charles Sellers’s *The Market Revolution*.

It is impossible in a short review to touch upon every major insight of a
lengthy book, but one that emerges repeatedly is the role of investor
confidence. Whether it was the unprofitable, government-subsidized railroad
boondoggles in the Gilded Age, Enron’s accounting tricks in the 1990s, or
Lehman Brothers’ mortgage-backed securities in the early 2000s, success
depended less on whether a firm could realize short-term profits by selling
tangible assets and more on whether investors had the confidence and
expectations that these firms would one day be valuable. The games
worked—and indeed, this was a “confidence game” as Levy writes—as long as
firms could roll over their debts with access to abundant, cheap credit.
But once confidence waned and credit ran dry, disaster could strike. “Over
the centuries,” Levy boldly states, “every single crisis there has ever
been has been a crisis of confidence.” (p. 128).

Sometimes, large firms learned to politicize “confidence” and “uncertainty”
to secure their preferred policy outcomes. During the New Deal era the
National Association of Manufacturers and Chamber of Commerce railed
against the uncertainty of taxes and regulations by launching a “capital
strike,” electing to deliberately withhold employment-generating investment
until newly emboldened government agencies backed off. Such tactics
continued in the Cold War era. Levy, certainly no determinist, saw a brief
window of opportunity for more positive reform from 1945 to 1948 amid a
nationwide wave of labor strikes and hopes for full employment and public
housing legislation. By 1948, this window had closed. The “Red Scare,”
McCarthyism, and the Taft-Hartley Act pushed New Deal liberalism to the
right. American workers, unlike their German counterparts, would never claw
from the hands of the owners of capital the right to have any input over
how a company’s profits and investments would be used.

Today’s Americans may recall a similar lost opportunity in Barack Obama’s
first term. Years of low interest rates from the Federal Reserve during the
Age of Chaos had fueled asset price inflation, especially in stocks and
real estate, delivering most of the gains of GDP to those who owned the
most assets; namely, the wealthy. After a historic election victory in 2008
on the heels of the greatest financial crisis in about 80 years, Obama had
a mandate to offer a new political economy to address inequality in the way
that FDR did. What transpired was mostly a continuation of the Age of Chaos
that began with Ronald Reagan (admittedly Obama did not have the enduring
and sizable Democratic majorities of FDR’s time). The Fed and Treasury
subsidized the financial institutions who helped cause the Great Recession
while offering little to no mortgage relief for the average American
homeowner. A slow and painful recovery ensued. “What was needed,” according
to Levy “was for democratic politics and the state to chart a new
direction, a new, viable long-term economic path, by changing the logic of
investment.” (p. 717).

Throughout *Ages of American Capitalism*, Levy warns us not to be nostalgic
for bygone eras. We cannot go back to the racism and sexism of the Age of
Control. He closes by calling for a new and more imaginative age of
democratic politics to break us out of the Age of Chaos. The book he has
compiled, years in the making and rigorously researched, is a noteworthy
accomplishment.



Stephen W. Campbell is a Lecturer in the Department of History at
California State Polytechnic University, Pomona. His first book, *The Bank
War and the Partisan Press: Newspapers, Financial Institutions, and the
Post Office in Jacksonian America*, was published by the University Press
of Kansas in 2019.

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