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  • Freaks of Fortune: The Emerging World of Capitalism and Risk in America by Jonathan Levy
  • Christopher Clark
Freaks of Fortune: The Emerging World of Capitalism and Risk in America. By Jonathan Levy (Cambridge, Mass., Harvard University Press, 2012) 414 pp. $35.00.

Freaks of Fortune may well be the most important book on American capitalism to appear in recent years. Historians of capitalism once focused on the means and social relations of production. Now they are concerned with finance and the commodification of goods and relationships. Levy’s subject is the resultant radical instability of capitalist culture and the means by which nineteenth-century Americans sought to counterbalance it.

Central to his argument is the principle, linked to the notion of individual self-ownership, that “risk” could be commodified; indeed, he calls his book a “history of risk.” Originating in maritime insurance, the concept of risk evolved in the early nineteenth century to become distinguishable from the “perils” that gave rise to it, and so capable of being measured and valued. The consequent methods and practices helped to transform the economic world in a matter of decades. Levy discusses actuarial [End Page 273] practice and the insurance principle, savings banks, the rise and fall of the market in western farm mortgages, fraternal societies’ efforts to provide security to their members, developments in commodity futures markets, and the turn-of-the-century debate about corporate monopolies or “trusts.”

Much more than a survey of new institutions, Freaks of Fortune provides a rich, dialectically powerful account of the emergence of capitalist ways of thinking and doing. It touches on capital formation and the growth of corporations, but it particularly addresses the growth of a “culture of corporate risk management” that became characteristic of finance capitalism. Discussing market insecurity, contemporaries often invoked maritime metaphors: A ship adrift on a storm-tossed ocean was an appropriate image for a system in which fixed points of reference had evaporated into uncertainty.

Following Polanyi, Levy addresses “countermovements” that seemed to offer shelter from the vagaries of “capitalist uncertainty.”1 Some of them, like chattel slavery or the ideal of landed independence, were destroyed or weakened in the process of capitalist development. Others, such as risk management itself, or voluntary organizations’ efforts to offer security outside the insurance principle, grew in response to it. While countermovements like fraternalism or populism opposed capitalist practices, others emerged from within the system itself, generating self-doubt and efforts at reform. Yet the outcomes were never neutral. Insurance companies amassed capital from the retained premiums of customers who ceased paying and used the political influence that it purchased to keep favorable laws on the books. Corporate consolidators sought to neutralize risk by creating monopolies. Courts favoring organized futures exchanges over outside “bucket shops” made invidious distinctions between behaviors that were essentially similar. Businessmen asserted that “risk” justified their profits, but frequently the downside costs were borne by others.

The focus on capitalism as finance doubtless owes much to our current reprise of Gilded Age inequalities, booms and busts, and unregulated shenanigans. Superficial similarities between past and present can tempt historians to draw too-direct analogies between them. Levy avoids this trap, locating his examples firmly in their contexts, telling his story partly through key individuals, and suggesting how corporate management and reliance on the state became elements of the counter-movement to capitalist excess between the 1910s and the 1970s. He has given us a lively, sophisticated study that (other than in the proofreading, which is slipshod in places) sets a high standard for others to follow. [End Page 274]

Christopher Clark
University of Connecticut


1. See Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston, 2001; orig. pub. New York, 1944), 136.



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