Review of Ages of American Capitalism: A History of the United States, by Jonathan Levy (Penguin Random House, 2021).
Explorations into the history of American capitalism have proliferated during the last fifteen years or so. Studies of the relationship between slavery and capitalism especially have commanded attention. Scholars of what has been called the “associational state” are re-examining government offices as the site of entrepreneurial opportunity and regional business development. The fertilization of western extractive and transportation enterprises by east coast financial interests has spawned new research and insight. Historians have deployed the concept of primitive accumulation to capture the relationship between capitalism and pre-capitalist societies, particularly in the borderlands. Until now, however, no one has attempted to write an all-encompassing history of American capitalism. That makes Jonathan Levy’s Ages of American Capitalism a daunting act of intellectual bravery.
A great deal of older scholarship in effect amounted to histories of American capitalism. Labor history, almost by definition, has been about how capitalism has affected the lives of working people, on and off the job, and how in turn they have helped determine the evolution of capitalism. Something similar might reasonably be said about a wide range of subjects: business histories of course, but also histories of consumerism or of industrialization, intellectual histories of critics and defenders of capitalism, biographies of leading business people, or studies of the Gilded Age and Reconstruction, or histories of social mobility. What’s new is the sense among a widening circle of scholars that capitalism and its vicissitudes comprise the narrative and analytical core of the American experience.
Writing history bears some relationship to the times in which that writing happens, even if the subject under investigation has no such apparent connection, is remote in time and place. Arguably, this new delving into the history of American capitalism may have something to do with recent political events and cultural sensibilities. Talk of a “second Gilded Age” has been commonplace for some time; so too has a relentless focus on the inequalities of American life. Obversely, decades celebrating the virtues of the free market inevitably incited a counter-reaction. The near meltdown of the American financial system and economy beginning in 2007-08 reverberates still. Occupy Wall Street and the astonishing emergence of the Bernie Sanders movement in and outside the political arena come the closest to a forthright challenge to American capitalism since the days of the Great Depression.
However, as Levy’s prodigious volume demonstrates, the emphasis of the new scholarship on the history of American capitalism is quite different than earlier treatments, even if they didn’t go by that name. To put the matter most simply, back then the focus of study was on capitalism as a system of production. Now the analytical eye is trained instead on the circuits of circulation, on capitalism as a complex system of exchange, on the realization of profit rather than its source – more on the commodity, less on how it originated.
Here too one can sense the impact of more recent transformations in contemporary economic and political life. Wall Street is our new Pittsburgh, producing car loads of collateralized debt obligations, debenture bonds, credit default swaps, mortgage-backed securities, and a host of other arcane financial derivatives, all of which drive the ups and downs of the economy. Speculation in the trading of these instruments constitutes the high drama of business affairs. Finance, not production, seems to make the wheels go round.
Indeed, the old order resting on industrial capitalism has largely fled the premises for the global South or the rural hinterlands where it is nearly invisible. De-industrialization has thereby nearly erased the public presence of the labor movement and with it the “labor question,” once considered the central dilemma confronting American society. Consequently, the relationship between labor and capital at the workplace, in political and even in cultural life, a relationship once viewed as indispensable for understanding the history of capitalism, no longer carries that weight. Money-making, not only for banks, but for non-financial corporations has been de-linked from production, from employment and productivity. Instead, attention has shifted to those arenas where the material is de-materialized, where land and labor are capitalized, collateralized, traded, and speculated in, where that liquified capital flows, why it flow here and not there, why on some fearsome occasions it stops flowing, appears as the essence of capitalism.
Tides of Liquidity
Certainly, this is the starting point and end point of Jonathan Levy’s monumental, erudite, and deeply researched book. Ages of American Capitalism is an enormously capacious and ambitious undertaking, an attempt to write a history of American capitalism as a civilization. It has something to say, and often something original and important to say, about everything from the nature of colonial-era mercantilism to the architectural signature of postwar mass consumption capitalism, from the dynamics of the political coalition that destroyed slave society, to the emergence of Houston as the prototypical “liquid city” of the post-industrial era. Despite that remarkable reach, however, Levy’s is in some sense a simpler, psychological history of American capitalism.
Borrowing from John Maynard Keynes, Levy argues that the key to economic growth, or for that matter to economic collapse, under capitalism, is something Keynes called the “liquidity preference” of capitalists; that is, the desire on the part of investors to protect the value of their holdings by insuring they can be transformed easily into cash or its metallic equivalent. If excessively worried they hoard, then the economy stops. If worried but not to excess, they are inclined to what Levy calls a “transactional liquidity preference,” which means they may invest but only in markets where they can quickly cash out – stock and bond markets or financial derivative markets, for example. Then the economy may witness speculative booms, or asset price appreciations, without any necessary increase in the underlying value those securities represent. This led to the sort of real estate bubble that led to the recent crash and Great Recession. Nonetheless, under certain circumstances, when the prospect of future returns seems surer or more enticing, capitalists may put their holdings at risk in long-term investments. That is, they may exercise an illiquidity preference by investing in plant and equipment or land or slaves or in other properties less readily converted to cash. For Levy the story of capitalist economic growth and crises is in the end about those liquidity and illiquidity preferences.
The Developmental State
Preferences are not entirely capricious, although it may be hard to figure out at any particular moment why one kind of liquidity is preferred to another. Levy argues that the role of the state is critical in establishing the contours and limits of capitalist development, and setting the parameters within which liquidity preferences get expressed. Left to itself the free market may encourage economic growth, but is bound to descend into beggar-thy-neighbor commercial egoism, threatening a general loss of trust and confidence without which no capitalist economy can function. This comprises the skeletal framework for Levy’s history and for each of the four “ages” into which that history is divided: The “Age of Commerce” (running from the first colonial settlements through the Civil War); the “Age of Capital” (encompassing the industrialization of the country up to the Great Depression); the “Age of Control” (bounded by the rise and fall of the New Deal order, punctuated at the end by the election of Ronald Reagan); and the “Age of Chaos” (everything since then).
For each of these eras, Levy seeks to identify the mechanisms of public authority and policy that allowed for and guided capitalist development, which in effect managed the liquidity preferences of traders and investors so that real development, or what Levy calls an illiquidity preference, could predominate. For example, during the “Age of Commerce” those mechanisms included the mercantilist protocols regulating Atlantic and intracolonial trade. After the American Revolution, Jefferson’s “Empire of Liberty” encouraged the aggressive settler colonialism of small proprietors as well as the extension of plantation slavery. The “Age of Capital” fostered the kind of infrastructural and industrial investments that Alexander Hamilton and Henry Clay once envisioned, including government subsidized railroads, the protective tariff, the Homestead and Morrill acts, the protection of the corporation from state interference under the 14th amendment, and above all an adherence to the gold standard as the principal mechanism buoying up the confidence of investors, both domestic and foreign. In Levy’s view that same rigid adherence to the gold standard perversely locked down the economy during the Great Depression. The “Age of Control ” unfroze investment flows, first of all thanks to President Franklin Rooselvelt’s decision to abandon gold, and then to a triad of regulatory, income, and development policies which both incentivized private investment, and in some cases supplanted private with public projects. That was emphatically the case during World War II, but the center of the economy was returned promptly to the corporate sector after the war. When the counter-cyclical manipulations of fiscal policy stopped working during the “stagflation” of the 1970s, the “Age of Chaos” ensued. Long-term investments in relatively illiquid industrial assets dropped off drastically, replaced by shorter-term speculations jump started and sustained by the Federal Reserve systematically supplying fresh infusions of easy credit to keep the whole system liquid…until it couldn’t with the collapse of Lehman Brothers in 2008.
What’s My Age Again?
These “ages” Levy describes are of course far more complex than this brief summary allows. He brilliantly synthesizes a vast literature and adds to that his own original research. Nonetheless, his broad schema raises questions. On the hand, the whole design is lent a certain underlying coherence by zeroing in on how public intrusions from outside the private economy have proven indispensable for assuring the confidence in future pecuniary gain that in Levy’s view lies at the heart of the capitalist psyche. But the rubrics he deploys to capture these “ages” are a hybrid mix, not always consistent with one another, and as an ensemble don’t comprise a coherent road map to the history of capitalism in the United States.
Why, for instance, is the “Age of Chaos” any more chaotic than the “Age of Capital,” which was punctuated by frequent panics and depressions? Why, to take the converse case, isn’t the “Age of Chaos” just as much an “Age of Control” given the meticulous and chronic intervention into the credit markets by the Federal Reserve aimed at stabilizing liquidity preferences on the plane of transactional liquidity? From the standpoint of economic development, the “Age of Chaos” might more aptly be characterized as the Age of Underdevelopment, an era in which the long upward arc of expanded reproduction reversed, when a nation that began as an underdeveloped country, found itself devouring the wherewithal of its former industrial preeminence and standard of living.
Moreover, Levy’s categories are incommensurate. Two of them, “control” and “chaos,” signal psycho-political conditions, while the other two, “commerce” and “capital,” represent more conventional forms of economic life. There is also a flatness to the overall design. Capital may be controlled or chaotic or just plain capital, but that makes no room for the variety of capitalisms. There is little intra-capitalist conflict in Ages, yet critical episodes in capitalism’s history – the evolution of the New Deal, for example – are less comprehensible without taking them into account. Nor do we learn much about sectoral distinctions which make the worlds of extractive capitalism or agricultural capitalism or financial capitalism or merchant capitalism different from one another, or the ways these incubate characteristic modes of behavior, family organization, regional loyalties, social hierarchy and belief. Similarly, the genus Capital may include more than one species. Family capitalism and its rarer offshoot, dynastic capitalism – the capitalism of Rockefeller, Harriman, and Gould – preceded corporate-managerial capitalism, the publicly traded corporation with multitudes of anonymous owners administered by a salaried bureaucracy, as the dominant form of industrial organization. Both fall within the “Age of Capital.” Yet they often diverged in their political leanings, in their labor relations, and their stance regarding government intervention into the marketplace. Doesn’t all that matter?
And why should a history of capitalism segregate off “commerce” into a silo of its own? After all, commercial life and market exchange has been around for a long time, well before capitalism came to define the way much of the world went about providing for its material sustenance. Commerce of some sort always is part of capitalism’s metabolic system, as are the more or less complex financial mechanisms installed to lubricate that trade. Levy argues that the very considerable extension of the division of labor, and therefore of exchange, as described by Adam Smith and underwritten by the mercantilist objectives of the British empire, constituted a distinct political economy. That seems right. But whether it thereby deserves to be treated as a separate age of capitalism is another matter.
If capitalism is defined as an economy driven by expectations of future pecuniary gain, then Levy’s schema holds together, if not elegantly. But as Levy notes, his “Age of Commerce” embraces a whole world of small independent freeholders who live amidst yet apart from the market, largely self-sufficient, engaging in trade at the margins, motivated not so much by the desire for pecuniary profit but rather by the struggle to maintain a competency and a rough equality.
Moreover, this “Age” and its commercial fortunes, is even more decisively underwritten by slavery, where the situation is also ambiguous. Levy is indebted to the recent historiography that uncovered the intricate ways the capitalized plantation and the collateralized body of the slave were imbricated into global financial markets. But he explicitly stays clear of debates over whether American capitalism was inherently a racialized capitalism. He acknowledges the existence of a non-capitalist ideology among the planter elite, while pointing out that this paternalistic justification had not always worked to prettify the “peculiar institution.” It was a late antebellum outgrowth, functioning as a rationale for planters seeking to shield their enterprises from the cost pressures of the world market in manufactured goods by making the plantation a more self-sufficient, if steeply hierarchical “community.”
Ages of American Capitalism is full of such important insights even if they are not entirely compatible with the book’s overall approach. In discussing the patriarchal household economy typical of much of the pre-Civil War North and Midwest, Levy makes the larger point that what he calls the “politics of property” remained a potent force in American public life long after the war. Not only did this desire for a freehold continue to animate American politics through the era of Populism, it reappeared again and again in different if diluted forms. It was part of the allure of suburbia, and even played a role in George W. Bush’s talk of a new “ownership society” and in a more tangible way in the craving for home buying during the run-up to the subprime mortgage debacle. Current concern with the vast and growing inequalities in the distribution of wealth appropriately emphasize the inordinate political power of the wealthiest, deployed relentlessly to keep themselves the wealthiest. But it is quite useful to pay attention to another kind of mass politics of property that has been part of the nation’s political chemistry, which helps to ballast a capitalist political economy that, left to its own devices, can become top-heavy and unstable.
Asking the Labor Question
As valuable as Levy’s treatment of the “politics of property” is, it also goes to the heart of what a book so concentrated on the realm of circulation, liquidity preferences, and future expectations of pecuniary gain, may be missing. Another way of understanding the “politics of property” in the nineteenth century is to see it as one recurring answer to the “labor question.” Although that question animated public life from the time of the first colonial settlements through the mid -twentieth century, it does not carry that weight in Levy’s history. The quest for land and other forms of petty property was first of all grounded not in an appetite for pecuniary gain, but as one principal form in which productive labor would assure self-sufficiency, independence from outside sources of power, and become the existential arena of self-creation. Hovering in the background, even during the early Republic, was the looming threat of dependent forms of labor, not only various species of unfree labor which were around since Plymouth and Jamestown, but even the prospect of free wage labor which many grew to fear as a new, capitalist form of slavery: wage slavery. Seen in this light, the whole panoply of mass movements that made the Gilded Age so socially uproarious – the Knights of Labor, the anti-monopoly movement, Populism, cooperatives and the vision of a cooperative commonwealth – were profoundly anti-capitalist even as they practiced the “politics of property.” They were late manifestations of the “labor question” as first enunciated by John Smith in the early seventeenth century, when he depicted settler colonialism as the chance for “every man may be master and owner of his owne labour and land…”
Ages of American Capitalism certainly includes treatments of labor relations and incidents from labor history. However, due to its analytic focus on the liquidity preferences of capitalists and on the realm of circulating capital more generally, the social relations of capitalist production where the labor question gestates, are left out of the book’s basic framework (slave labor is the singular exception which Levy treats at some length). This shows up in various ways. Before capitalists can express their liquidity preferences, they need to have capital, but Levy’s treatment of the origins of capital accumulation is scanty. He refers of course to the settler seizure of indigenous lands, but primitive accumulation, of which land confiscations are one kind, occurred and recurred all through the nineteenth century, uprooting and absorbing pre-capitalist household economies both in United States and all across southern and eastern Europe. Much of the social upheaval and class conflict during the Gilded Age has its roots in this process of existential threat.
In a related case, Levy devotes two paragraphs to indentured servitude (one of which is a well-known anecdotal account of one such servant). Yet during the colonial period three quarters of a million indentured servants arrived in the colonies (along with nearly 400,000 slaves) and made up a major component of the unfree labor force. The wealth and well-being of the British colonial settlement is inconceivable without taking account of their presence. Their servitude was often the occasion of the harshest treatment. Infractions of their terms of service , whether real or made up, were treated with draconian, including corporal, punishments. Indentured servants could be sold, rented, used as collateral, or included in a bequests. Runaways, of which there were many, could suffer lengthy extensions of their terms of service if they were captured. Surveillance was constant and included pass systems and patrols not unlike those deployed to keep slaves enslaved. On the other hand, because they were not slaves, the population of indentured people looked forward to achieving a freehold of their own once they served out their time. This was not an uncommon outcome, and they became an early constituency for the “politics of property” best understood as a form of labor emancipation.
Elisions or silences of that kind shorten the book’s reach, yet accompany some of its most trenchant insights. Levy makes frequent excursions into the cultural refractions of capitalist evolution. So, for example, he provides a wonderful analysis of Herman Melville’s novel The Confidence Man to illustrate how the commercial fevers of the Jacksonian era produced an all-sided crisis of confidence instigated by the rapid spread of market relations. But Levy has far less interest in the great body of Melville’s work, including Moby Dick, which interrogates the labor question as it was emerging in antebellum capitalist America.
Telling the story of capitalism in America without regard to the central role of the labor question mars even some of Levy’s most important arguments. In discussing the “Age of Capital,” he notes that the “politics of property” which held together the dominant political coalitions linking the North to the Midwest, both before and after the Civil War, gradually shifted their center of gravity to the “politics of income” as industrial wage labor became ubiquitous in the late nineteenth century. With the prospect of widespread property ownership dwindling, punctuated by the defeat of Populism, the way to reconcile democracy and capitalism was through managing the distribution of the national income. The business unionism of Samuel Gompers and the fledgling American Federation of Labor, which Levy describes in some detail, was one manifestation of this new emphasis on the distribution of income, not property. Levy observes that this approach continued and expanded during the “Age of Control” and remains a salient aspect of contemporary political life. All this is true enough, and reflects a current preoccupation with the maldistribution of income and with equality more broadly. What it leaves out of account is a third politics, what might be called a politics of exploitation, which left a profound impact on public life from the Gilded Age through the period of the New Deal.
Exploitation is not a subject category listed in the index to Ages of American Capitalism. There are a very few uses of that term in the book itself, and these are reserved to describe particularly egregious forms of wage labor (sweatshop work for instance), on the tacit presumption that the normal forms of wage labor don’t deserve that obloquy. That is the conventional wisdom today, but it was not for our ancestors. Zeroing in the “politics of income,” as useful as that is, may efface a consequential evolution in the history of poverty. Poverty was once associated with exploitation at work, but in the last half of the twentieth century it was more commonly connected to exclusion from work and the capitalist labor market.
Remarkably, the names of Emma Goldman, Eugene Debs, and “Big Bill” Haywood don’t appear in the book’s index. Yet no capitalist in America was unaware of their presence, nor did they go unnoticed by politicians, including presidents. Levy shows little interest in, for example, the great strikes in Lawrence, Massachusetts or Paterson, New Jersey led by the Industrial Workers of the World. The point here is not that he fails to give credit where credit is due, nor is it a moral criticism. Rather, it points to the more fundamental gaps in the book. The strikes, and more rarely the mass strikes, which excited whole communities in the “Age of Capital” – whether they were led by highly visible syndicalists like Haywood or socialists like Debs, or by more obscure working people at Carnegie’s Homestead steel works (which Levy depicts well) or in the mines of the Rocky Mountain west – were not first of all about equality of income or the politics of property, but rather about dependency as a new form of slavery, about exploitation, and about the prerogatives of private capital to determine the fate of everyone else.
Without locating this story of the social and political relations of labor and capital at the heart of this history, something essential goes missing. Still, Ages of American Capitalism has much to teach. Levy’s explanations of the ways liquidity preferences have helped shape political outcomes is brilliant, lucid where it is so easy to get lost in the swamplands of financial transactions. He makes a good case that his “Age of Chaos” is best seen as an economy of asset price appreciation, which better captures what’s transpired over the last several decades than do more familiar rubrics like “neoliberalism” or a “second Gilded Age” or “postindustrial society.” His treatments of cultural artifacts – novels, poems, photographs, sculptures, films, and especially architecture – often work well to make American capitalism come alive not merely as an economy, but as a civilization. The book’s concluding pages, which argue that the failure of the “Age of Control” and especially the “Age of Chaos” is to directly confront the problem of who controls the flow of investment capital, are telling and open up a passageway to the labor question, which has been largely eclipsed by the “equality question: in recent times. Historians will debate the central thesis of Levy’s book for years to come. It is that important and thought provoking and it’s the reason the book will endure.