Coming in at well over 700 pages, Jonathan Levy’s new book, Ages of American Capitalism, sets the bar for a relatively comprehensive single volume interpretation of the history of US capitalism. Bringing together insights from the post-Great Recession explosion of writings on the history of American capitalism, often called the “new history of capitalism,” it has the potential to be a defining statement of this intellectual turn.
In the Introduction he states that what has been missing in discussions regarding the new history of capitalism is a proper engagement with economics. To compensate, Levy’s overall goal is twofold: to present a full picture of the history of US capitalism that goes against the tendency in the academic field of economics (which often translates to the political arena) that focuses on mathematics and models rather than politics and social life, but also to push historians of capitalism to deal more thoroughly with the history of investment, finance, and production. The author claims the goal of his book is to, “set the historical record straight,” as to the history of American capitalism, from its early days, through the Great Recession.
The book is organized around three central premises. First, “rather than a physical factor of production, a thing, capital is a process. Specifically, capital is the process through which a legal asset is invested with pecuniary value, in light of its capacity to yield a future pecuniary profit.” In other words, in some ways reflecting Marx’s idea of capital as a process that flows, changes forms, rather than a thing (although it is not clear how much of Levy’s definition here is taken from Marx), capital can take many forms (industry, finance, etc.) and is based on a certain asset being ascribed quantitative value.
Secondly, he says, “capital is defined by the quest for a future pecuniary profit,” yet it is not the endless search for profit alone that constitutes capitalism. Rather, “the profit motive of capitalists has never been enough to drive economic history, not even the history of capitalism.” In other words, human motivation, even in capitalist society, is much greater than the profit motive alone. Slave owners were interested in profits, but also a particular lifestyle based on racial domination. Industrialists have been motivated by profit, but also a desire to create. And so on.
Third, “the history of capitalism is a never-ending conflict between the short-term propensity to hoard and the long-term ability and inducement to invest.” For Levy, this is a key feature explaining the history of capitalism. The “first move,” as he puts it, in a capitalist society, is investment. And this move provides the lens he finds most useful to make sense of capitalism’s history: not, say, the relations of production or class struggle, but the inducement to invest, and the history of the way that investors may either hoard or spend, and the assets in which they decide to invest.
Eras of American Capitalism
The rest of the book draws from these themes to analyze what the author periodizes as four eras of American capitalism. First is the Age of Commerce, approximately 1660-1860. As the British Empire expanded to New England and Virginia, creating a colonial empire based on removing indigenous peoples and importing African slaves to exploit, this era is characterized by what the author discusses as “Smithian growth.” The main factor of American capitalism in this age, primarily, was exchange, expanding the size of the market, creating a “Smithian commercial multiplier.”
The next period, the Age of Capital (1860-1932), was the era of American industrialization, resulting, eventually, in Fordism, along with a variety of revolts against rising American capitalism, from the development of workers’ movements and strikes to agrarian populism. Here, the “industrial investment multiplier” was key, as capital increasingly invested in industry and productivity rose. Third came the Age of Control (1932-1980). Rising out of the New Deal, powered by the economic stimulus of World War Two, coupled with the rise of the US as global hegemon, this era was built around the “Keynesian fiscal multiplier” in which the state would play a key role encouraging macroeconomic growth.
Lastly, there is the Age of Chaos (1980-today). Here, he argues, the key difference with earlier eras was a shift in what he calls, “capitalism’s core dynamic: the logic of investment, as it works through production, exchange and consumption.” In this era, capital increasingly sought out profit through asset appreciation and short-term liquidity, as opposed to, for instance, the earlier industrial era in which much capital was tied up in fixed investments. In other words, the tendency has been for investors to prefer putting their capital into liquid forms such as financial derivatives rather than, say, big investments in plants and labor. And, with globalization, international production chains, and just-in-time production, industry itself has taken more flexible forms.
By so periodizing the history of American capitalism, Levy highlights the complex ways that capital has shifted forms throughout American history and also brings out the role of the state in this history. Each of Levy’s periods have been determined not by economic forces alone, but by powers including government policy and law and the collective psychology of investment. As well, he brings out certain gendered and racialized aspects of this history, from the centrality of the breadwinner-housewife relationship in US history to racial slavery and beyond. Most significantly, he demonstrates the importance of finance and monetary policy to the history of US capitalism.
While the book serves as a useful overview of the history of the US economy, and the strengths of the text lie in detailed discussions of the history of financial crises, shifts in capital’s investment patterns, and the way the government has historically reshaped itself in shaping capital, there are also a variety of limits and shortcomings to Levy’s account.
Some of these may be the result of a problematic engagement with Marx. In a subsection titled “Marx’s Theory of Industrial Capital,” he summarizes parts of Marx’s ideas presented in Capital Volume 1, telling us, “Capital is rich with various arguments, but the core of Marx’s economic argument was very simple.” He then presents a problematic interpretation of Marx whose work is, perhaps, not so simple.