Freaks of Fortune: The Emerging World of Capitalism and Risk in America, by Jonathan Levy

Abstract

Freaks of Fortune: Emerging World of Capitalism and Risk in America, by Jonathan Levy. Cambridge, Massachusetts, Harvard University Press, 2012. 432 pp. $35.00 US (cloth). In this fascinating and brilliant book about capitalist development in the United States across the long nineteenth century, Jonathan Levy focuses on the history of risk and risk management. For nineteenth-century Americans, he contends, risk a new phenomenon associated with the liberal--and liberating--notion of freedom as self-ownership, yet it also correlated with unprecedented financial turmoil, as in the freaks of fortune of the book's title. Through a series of illuminating case studies, he explores first how risk emerged as a legal concept and a marketable commodity, and then how Americans of different backgrounds and persuasions constructed to curb the negative consequences of the chance-world of Rather than address the outmoded question--Why is there no socialism in the United States?--Levy analyzes how American capitalism triumphed over both the financial crises it generated and the countermovements it provoked in order for the United States to attain world economic leadership in the twentieth century. Levy's chronological framework raises an obvious question: has not risk always been with us as an essential component of the human condition? No doubt, but drawing upon the word's etymology, Levy locates the origins of risk as a discrete idea in the special challenges presented by long-distance oceanic trade. Risk, he writes, was first synonymous with marine insurance--a financial instrument for coping with the uncertainty of transporting commercial goods across maritime space (p. 3). Then in the early nineteenth century risk migrated from sea to land and insurance become a commodity widely available as a hedge against insecurity in a capitalist economy. Throughout Freaks of Fortune, Levy highlights the nexus between law, economics, and culture. He leads off with Massachusetts Chief Justice Lemuel Shaw's pivotal decision in Farwell v. Boston and Worcester R.R. Corp. (1842) that employees, not employers, were responsible for injuries incurred on the job. According to Shaw's logic, wage earners had the right to accept or decline employment on the terms they were offered. That right intrinsic to their status as free men who owned themselves and their labour power in contrast to slaves, who lacked such self-sovereignty. Yet that right carried with it risk, and employees assumed that risk in accepting employment. If employees wished to insure themselves against injury, they would have to purchase a policy in the marketplace. The legal precedent of Farwell, Levy observes, helped drag railroad workers to the front doors of the new accident insurance corporations that first sprung up in the United States during the 1840s (p. 12). For Levy, the rise of liberal individualism as an ideological system and the ascent of corporate finance as an economic system were two sides of the same coin. Although pre-capitalist strategies for offsetting risk persisted in the antebelluto era--most notably landed independence and slave ownership--he emphasizes the growth of the insurance sector as a capitalist solution to the volatility engendered by capitalism. …