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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