Review: Ages of American Capitalism

Ages of American Capitalism: A History of the United States, Jonathan Levy. New York: Random House, (Forthcoming, April 20,) 2021.

Summary: An economic history of the United States, dividing the history into ages of commerce, capital, control, and chaos.

I received an early e-galley of this book and by the time I worked through this massive tome, I thought it would be in print. Perhaps because of publishing delays, it won’t be out until April 20 of next year. If you want to read a history of the United States from an economic perspective, pre-order this book now.

Jonathan Levy covers the period from 1660 up until the present. He divides this history up into four ages. If you cannot remember all the economic developments, charts, booms and recessions, you need to remember just four words: commerce, capital, control, chaos.

The Age of Commerce spans the period of 1660 to 1860. The focus of this period, from the early colonies to the election of Lincoln focuses on trade, often the surplus of household economies exchanged for other needed commodities. One particular feature of American commerce was the “portable capital” of slavery, creating booms of sugar, tobacco, and cotton. One of the critical questions of this period was whether Hamilton’s centralized banking-fueled economy or Jefferson’s agrarian Empire of Liberty would prevail. Northern and Southern versions of commerce, the beginnings of an industrial society in the northeast and old northwest, and the slave economy of the south, laid the groundwork for the divisions leading up to the Civil War.

The Age of Capital spans the period from 1860 to 1932. The Civil War spelled the end of slave capital and led to a new period of industrial capital, first in the explosive growth of railroads, and then the illiquid capital of industrial production. All of this was made possible by the use of fossil fuels. One of the most fascinating chapters in this section, that illustrates the fusion of all these factors, is that on “Fordism.” The age was marked by cycles of boom and bust. A return to the gold standard in the 1920’s resulted first in a great boom, and then the greatest bust, the beginning of the Great Depression.

The inauguration of Franklin D. Roosevelt also opened The Age of Control. Levy delimits this as the years of 1932 until 1980, ending with the economic shocks of the late 1970’s. Levy uses the language of “control” because that was the focus of Roosevelt’s New Deal policies. The critical thing was to deploy capital, employing breadwinners through infrastructure development programs, and providing income security through Social Security. Ultimately the war economy ended the depression as government funds were invested in war production. This was followed by the consumerism of the 1950’s, a fascinating chapter on the development of the post-war economy into which I was born. That began to unravel in the late 1960’s and early 1970’s, particularly as OPEC controlled the price of oil at high levels, triggering the painful combination of high inflation and high unemployment we came to know as “stagflation.”

From 1980 to the present is Jonathan Levy’s The Age of Chaos. Things started with the “Volcker Shock,” a policy of high interest rates to bring down inflation (we bought our first house with the help of a determined realtor in this crazy period). Many of the promises of Reagan never materialized but the value of the dollar soared. Income growth shifted from labor to owners of property, whether real estate or stocks, an economy built less on production than speculation and an increasing disparity between laborers and those in the service economy, and investors. Home ownership was encouraged, with the granting of increasingly risky mortgages, bundled into investment instruments guaranteed by the big investment houses. In 2008 it all came crashing down, only to be put back together in the Obama administration with assets continuing to grow in value until the pandemic.

We are left wondering what will come next. While assets seem to grow, many see little growth in income. We face what may be an existential necessity to transition from the fossil-fueled economy. Levy believes we are at a place of reckoning. Will we keep repeating history, especially the recent history of Chaos? He proposes that this history is important to know as we determine our economic course in the future. I also think it critical in making sense of our past and how we’ve gotten to this place. Understanding the role of economics in historical events like the tensions leading to the civil war raises a question about the contemporary fault lines in our society. How do we make sense of our urban, suburban, and rural economies? Is this at all connected to our islands of blue in seas of red in so many parts of the country? I’m not persuaded that economics are the only factor but I also wonder if we cannot understand our history and contemporary social fabric without it. I’ve not seen anyone do quite what this book does, and the author has a good case for the importance of what he has done.


Disclosure of Material Connection: I received a complimentary review copy of this book from the publisher via Netgalley. The opinions I have expressed are my own.