There is a paradox about capitalism that has gone unresolved for two hundred years.
On the one hand, it has displayed a productive power without precedent in human history. The steam engine, electricity, the semiconductor, the internet — each leap broke through the demographic and material limits of all previous forms of society. On the other hand, that very same system has repeatedly lost itself in speculative bubbles, rent-seeking monopolies, and price extortion, as if its first instinct were not to create wealth but to find a quicker way of moving money from someone else's pocket into its own.
Mainstream economics recognizes only the first face — capitalism is efficiency-driven, cost-optimizing, technologically innovative. But this explanation has an awkward hole: if capitalism is so "natural," why has it existed for only a few centuries of human history? Why, in the thousands of years before, was the natural state of the market not "efficiency optimization" but stagnation?
Jonathan Levy decides to take both faces at once. He has written a nearly thousand-page history of the American economy, Ages of American Capitalism, attempting to demonstrate a central thesis:
The profit motive has never been sufficient to drive long-term capitalist development. The history of capitalism is an endless conflict between a short-term tendency to hoard and a long-term capacity to invest.
In his NLR 159 review, Javier Moreno Zacarés offers a generous yet lethal assessment: Levy's instinct is entirely correct — the profit motive is not enough. But the theoretical framework he builds around that instinct is self-contradictory.
Keynes: Productive Investment Is "Contrary to Nature"
Levy's theoretical foundation comes from Keynes. The choice carries a deeper meaning.
Keynes once said something that makes free-market fundamentalists uncomfortable: for capitalists, productive investment is contra natura — contrary to nature. They would rather hold wealth in liquid form, avoiding the uncertainty of long-term fixed investment. If capitalism did achieve productive expansion, it was not because capital did so "naturally," but because some external force — the state, war, social movements — compelled it to.
Levy draws this intuition out into a thread running through the whole of American economic history. From the Age of Commerce (1660–1860), with its colonial-Smithian growth, to the Age of Capital (1860–1932), when the Civil War gave birth to large-scale industry — the focus of the narrative is not "capitalist entrepreneurialism" but external investment inducements (military procurement, railroad land grants, construction loans); from the Age of Control (1932–1980), with its developmentalist state — welfare, public investment, class compromise (big business kept control of investment, on condition of a commitment to domestic investment and high wages); to the Age of Chaos (1980 to the present) — the profit rate fell, the Volcker shock reversed the logic of investment, and old industrial habits gave way to a liquidity culture of "buying and selling appreciating assets"; from then on the pattern became one of anaemic bubbles and devastating crashes.
Levy's diagnosis is cold and concise: the 2008 bailout merely restored "asset-price-appreciation capitalism" without changing the logic of investment. The 2010s recovery was asset-based, jobless, unequal. Obama missed the chance to restart developmentalism.
The owners of capital retained the privilege of deciding where, when, and what to invest in.
A Fatal Self-Contradiction
Up to this point, Levy's framework is a handsome one. It is Keynesian — the profit motive is not enough; external forces are needed to induce investment. But Moreno Zacarés points out that when Levy tries to explain the origins of capitalism, his narrative quietly switches channels.
In the sequel, The Real Economy, Levy traces the global birth of capitalism: in the thirteenth century the concept of "capital" appears in the Italian city-states, global trade brings demand-side external shocks, silver flows into China, English public debt becomes "a permanent investment multiplier"...
Where is the problem? This narrative is essentially Smithian: trade brings specialization, specialization brings productivity, productivity brings more trade, and ultimately capitalism is born. But Levy's own Keynesian premise says that the profit motive and trade exchange are insufficient to explain the productive expansion of capitalism — you also need external forces to compel capital toward productive investment.
Levy draws inspiration from Keynes and insists that capitalism is a radical rupture with the historical norm. But he cannot resist tracing the birth of capitalism back to ancient forms of commercial profit — which reflects traditional Smithian thinking. In the end, the story falls between two stools.
A brilliant contrast makes this contradiction vivid. In 1783 the Qing Empire sat atop a great hoard of silver — worth six times its annual revenue. But there it sat, a precautionary store of value, not capital. At the same time, England's public debt had grown to twenty times its annual revenue, and those debts were capital — they induced productive investment and ultimately led to capitalism.
The same "money" was dead inventory under the Qing and live capital in England. The difference lay not in trade, not in the profit motive, not in consumer desire — it lay in social property relations.
Brenner's Answer: Market Compulsion, Not Consumer Desire
The framework Moreno Zacarés thinks Levy is missing is Robert Brenner's theory of "social property relations."
Brenner's thesis is remarkably concise: capitalism did not grow out of trade, nor was it midwifed by consumer desire. It was born of the contingent outcome of agrarian class struggle.
After the Black Death, lords and peasants across Europe played out different games. East of the Elbe, the lords won and reinforced serfdom — but they won so thoroughly that free labor meant no incentive to innovate, and stagnation became inevitable. In most of Western Europe, the peasants won, keeping their personal freedom and customary possession — but they also won a trap: subsistence farming plus a commercial sideline, hedging risk through low cost and diversification, precisely forgoing the possibility of higher productivity through innovation.
Both roads led to stagnation. Neither set of winners had any incentive to innovate.
England took a third road — one no one had deliberately chosen, that emerged from a particular configuration of class struggle. By the mid-fifteenth century serfdom had dissolved, but English lords retained relatively large demesnes. They did something rare on the Continent: they evicted the customary peasants, consolidated the best land into commercial leasehold plots, and entrusted them to a new class of entrepreneurial tenant farmers. Peasant resistance escalated into the great anti-enclosure uprisings of the early sixteenth century — and was suppressed. The other face of dispossession was the birth of a large rural proletariat.
And then something remarkable happened. The tenant farmers who obtained leasehold contracts found themselves standing in a competitive commodity market. They had to put the land to its most profitable use — not because they "wanted to," but because if output was insufficient when the lease came up, they would not be able to rent it the following year. Specialization, switching with prices, adopting improved techniques — these were not expressions of entrepreneurial "spirit"; they were aliases for the pressure to survive. By the mid-seventeenth century England was a net exporter of surplus grain. Between 1660 and 1740 the price of wheat fell by a third.
Capitalist production and its accompanying impulse to grow were born primarily of market compulsion, not consumer desire.
This thesis rewrites the causal chain. It is not "consumers wanted more things → trade expanded → specialization → capitalism." It is "peasants were deprived of the means of subsistence → forced to depend on the market → market competition compelled innovation → capitalism." The market here is not a site of opportunity but a site of compulsion — you do not enter it because you "want to"; you enter it because you have no other way to live.
The Problem of Psychologizing
Moreno Zacarés also points to another of Levy's tendencies that is open to question: he attributes financialization to psychological impulses.
From Keynes, Levy inherits the concept of "liquidity preference," and on top of it he adds the psychoanalytic resources of Freud and Deleuze — reading hoarding as a structure of desire, and financial speculation as "an unconscious release." For Levy, financialization is a cultural pathology: capitalists invest "out of habit," but when past investments begin to rust, "a primitive liquidity preference kicks in."
Moreno Zacarés is not buying:
The financial incontinence that Levy reads as the expression of an unceasing, irrational desire can, at the macro level, be perfectly understood as a perfectly rational response to a lack of attractive profit rates in the productive sector.
This is a crucial methodological disagreement. If you attribute financialization to "psychological impulses," then your political conclusion is: we need a strong state to "rein in" the irrational behavior of capitalists. But if you attribute financialization to a structural decline in the profit rate — global manufacturing overcapacity, intensifying competition, the exhaustion of profitable investment opportunities — then the political conclusion is entirely different: the problem is not that capitalists are "not rational enough," but that the system has reached the "point of capital satiety" that Keynes predicted, and no amount of psychological massage can bring capital back to productive investment.
Robert Gordon's research supports the latter judgment: the century-long wave of innovation from 1870 to 1970 (electricity, concrete, indoor plumbing, the internal combustion engine) had already exhausted the productivity frontier; ICT has had a comparatively modest effect on labor productivity; and the "miracle-level returns" touted by AI's promoters look extremely unrealistic.
Brenner's diagnosis is more structural: postwar American aid and technology transfers rebuilt Germany and Japan, American outward foreign direct investment accelerated the process, German and Japanese manufacturers wrested market share from American manufacturers, and then the Asian Tigers and finally China deepened the overcapacity.
The signal sent by these more pessimistic researchers is that the point of capital satiety predicted by Keynes has finally arrived.
Who Will Build the Ark?
In his conclusion, Moreno Zacarés pushes Levy's Keynesianism to an endpoint it does not dare reach.
Keynes himself envisioned "a comprehensive socialization of investment" — capital owners would retain private wealth but be managed by public institutions. But as a "liberal gentleman," he never posed the obvious next question: if liquidity preference is tamed and the capitalist class is reduced to an idle aristocracy, why not simply abolish the private ownership of the means of production?
At the end of Ages, Levy calls for "a democratic politics of capital." But he does not tell you what that looks like, concretely. Moreno Zacarés says it for him:
If the productivity of green technology is already high, competition already intense, and profit rates already low — as the research of Brett Christophers and others suggests — then private capital is unlikely to lead the green transition; what is needed is direct state planning. If so, what kind of social coalition and geopolitical configuration is needed to underwrite such a project? Who will build the ark?
This question has no answer. But it is more honest than Levy's framework. Because if you admit that the profit motive is insufficient to drive productive investment — if you admit that financialization is not pathology but a structural consequence — if you admit that Keynes's "point of capital satiety" has arrived — then there is only one conclusion: to wait for capital to return on its own to productive investment is to wait for a ship that will never come. The ark will not grow out of the profit motive. It must be built — by whom, from what materials, under what political conditions: that is the real question.
Moreno Zacarés's diagnosis points in the same direction as the discussions in this journal on wealth and the future. Once capital crosses the phase-transition threshold — once it ceases to be "a resource for improving the holder's own life" and becomes "a control variable constraining the choice space of others" — innovation and vitality lose their attraction for it. The profit motive is a real engine below the threshold; above the threshold it becomes the rhetorical cover for rent. Levy says "the profit motive has never been sufficient to drive long-term capitalist development" — perhaps the more precise formulation is: the profit motive is sufficient below the threshold, but the world above the threshold requires a driving force beyond the profit motive. What that driving force is, no one yet has an answer. But at the very least, posing the right question — instead of going on pretending that the profit motive still works — is the first step.