American Capitalism: A Financial History of the United States
Many readers will no doubt be discouraged by the thought of reading a nearly 1,000 page history of the American economy. But it’s well worth the time and effort.
“The Ages of American Capitalism: A History of the United States” is a stunning achievement by history professor Jonathan Levy. It’s a story and analysis of different economic systems from the colonial period to the 2016 election. And it’s relatively jargon-free and written in lively, accessible prose.
Some of the topics will be familiar, including the role of joint-stock companies in the creation of several of the 13 colonies, for example, or the decline of American industry at the end of the 20th century. By telling the story of the American economy, Levy debunks myths and misconceptions. For example, Adam Smith, the supposed patron saint of rampant capitalism, was not a critic of government intervention in the economy. Smith “made no categorical separation between the political and the economic, or the state and the market,” writes Levy. “The wealth of nations can only be the result of good policy making. Levy’s analysis of the economics of the original 13 colonies is a refutation of some of the economic grievances cited as causes of the American Revolution. For example, rather than stifling colonial trade, British trade regulations actually offered American merchants a guaranteed market for their goods: the British public.
Levy also explains the basics of economic history in details that allow the reader to understand them more deeply. For example, slave labor was fundamental to the wealth of the nation, but it is hard to imagine how true this was until Levy points out that in the middle of the 18th century, 80% of all products Americans exported to Britain were produced by slave labor.
He is also adept at demonstrating that the past is not much different from the present. Levy points out that anyone troubled by the inordinate power of corporations in contemporary American politics can find justification in the 1650 book “Leviathan” by philosopher Thomas Hobbes, in which corporations appear in a chapter titled “Those Things That Weaken, or tend towards the Dissolution of a Commonwealth. (It was a concern, Levy points out, that didn’t stop Hobbes from buying shares in the stock company that founded Virginia.)
Even mortgage-backed securities – the investment vehicles that helped trigger the Great Recession in 2008 – existed in one form or another in the 1880s, when banks pooled and sold mortgages. And the supposedly new notion of a universal basic income was proposed by Huey Long in 1934.
I can honestly say that I have never read an economic history book that is in fact quotable before. Levy quotes psychologist John B. Watson, who brooded over the contemporary stock market boom in the spring of 1929: “Playing on Wall Street is about the only real excitement we have left. And discussing the economy 60 years later, Levy notes the weakness of long-term private and public investment, “aside from military investment in things like an interstellar missile system that hasn’t worked to fight. an enemy of the cold war that was collapsing anyway. “
Levy clearly believes government should play a bigger role in the economy than has ever been politically possible. He sees the first decade of the 21st century, when the government had access to seemingly unlimited credit, as a “missed opportunity to make large-scale investments in economic life” in projects as “a new energy system to capture and reduce carbon emissions. “
Since economic activity doesn’t happen in a vacuum (although many economic theorists would like it), Levy also writes about literary and artistic responses to the ever-increasing commercialization of American life. It’s not just a book about Alexander Hamilton, Henry Ford, and the Federal Reserve; it’s also a book about Herman Melville, Arthur Miller and Andy Warhol.
But Levy’s gifts as a historian are most evident in his clear explanations of key economic concepts, some of them so fundamental to our world that we might not realize they need to be explained, such as credit. The modern economy has suffered from the scarcity of hard currencies. But when English bankers realized that they could issue credit certificates to merchants beyond the amount of gold coins in their vaults, for all intents and purposes the amount of money in circulation increased. “as by a process of alchemy”.
And while the strongest chapters in this book focus on pre-1950 history, Levy’s assessment of the economics of the late 20th and early 21st centuries is astute and unsettling. He notes that the financial sector has shifted away from investing in companies that actually produce in-demand goods to investing in foreign currencies, derivatives, and debt – a process Levy calls “the decoupling of finance from others.” parts of the economy. “Levy also chronicles the rise of the” gig economy “(meaning the decline of secure employment) and the shift towards financial security from wages and savings to acquisition. assets that have appreciated in value.
“Ages of American Capitalism” is an indispensable guide to understanding American history – and what’s going on in today’s economy.