In Ages of American Capitalism, Jonathan Levy provides a sweeping explanation of the Great Recession, arguing that it was not a rare or unexpected event, but rather a result of how today’s financial capitalism works. Levy situated the 2007-08 crisis not as a random “credit tsunami” or unforeseeable disaster, but as a logical outcome of post 1982 capitalism. The capitalist regime was a cause for this outcome as it is a regime addicted to asset price appreciation, dependent on speculative financing, and unsafely balanced on confidence in liquidity. Levy frames the financial system as a fragile ecosystem of belief in which the disappearance of a willing buyer or stable asset value could cascade into systemic paralysis. His narrative tracks the collapse not just as a financial story, but as a moral and political one. It is the failure of both the market and the state to recalibrate capitalism toward the public good. Despite the scale of the collapse and the sweeping tools deployed to prevent a second Great Depression, the crisis gave rise not to a reformed economic order, but to a “zombified” version of the old one entrenched with inequality and financialization more than ever.
Levy’s overall analysis is well argued. I agree with his critique that the crisis was deeply endogenous which was baked into a financial system that normalized risky practices under the name of “innovation.” His insight that the system is “confidence-led” rather than “capital-led” is crucial and it reframes our understanding of economic sustainability from material fundamentals to psychological and institutional trust. I particularly resonate with his critique of mainstream economists like Robert Lucas, who declared that the problem of depressions had been solved, only to be blindsided by reality. However, while Levy critiques Obama Administration’s lack of imagination, I think he underestimates the immense political constraints it faced, especially from a divided Congress to the Tea Party backlash that hijacked the fiscal discourse. Furthermore, his framing also does not seem to fully address the global dynamics of financial panic. The demand for dollar liquidity was not just a domestic concern, but a systemic global dependency.
Levy’s framing remains extremely relevant today as the world navigates a new era of economic uncertainty. The tech sector’s overvaluation, speculative crypto markets, and pandemic induced fiscal responses mirror many of the liquidity and confidence dynamics we saw during the Great Recession as well as what Levy critiques in his work. While AI driven trading and fintech innovations claim to have reduced systemic risks, the structural dependency on liquidity and confidence remains. Moreover, democratic politics again seems ill-equipped to deliver redistributive or transformative economic policy on top of a gridlocked Congress and public distrust. Thus, his work poses a crucial question: Can capitalism evolve without the shock of collapse, or is it destined to stagger from crisis to crisis?
Will Wright 