Published by EH.Net (January 2017)

Marc Levinson, An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy.  New York: Basic Books, 2016. vii + 326 pp.  $28 (cloth), ISBN: 978-0-465-06198-3.

Reviewed for EH.Net by Alexander J. Field, Department of Economics, Santa Clara University.

The period from 1948 to 1973 has long been considered the golden age of the U.S. economy.  For a quarter century, the growth of total factor productivity (TFP) remained strong by any standard of comparison other than that enjoyed between 1929 and 1941.  Labor productivity growth benefited as well from the revival of private sector accumulation which had gone negative and then recovered but did not on balance grow over the depression years and was then repressed and distorted by the demands of the war economy.  On the income side during the golden age the percentage gains were almost uniformly enjoyed by the various quintiles of the income distribution.

And then it fell apart.  TFP growth in the United States, except for a modest revival between 1995 and 2005, experienced retardation.  Labor productivity and the material standard of living grew more slowly, with almost all of the gains going to the top.  Consumption was sustained by rising women’s labor force participation and increasing household debt levels.  Financial crises, including in developed countries, became more frequent.  And governments and all their economic advisors seemed largely powerless to change this reality.

Marc Levinson provides a well written narrative of the descent from the golden age into what has become the new ordinary.  Levinson is a former finance and economics editor at the Economist, and the author of an excellent history of containerization.  Although not an academic economist or historian, he has been performing yeoman service contributing to the economic history of the twentieth century, something we need more of.

The book has many strengths. First, the narrative is based in part on original archival research, which enables the author to provide fresh perspectives on many events, along with colorful biographical vignettes of some of the main players in different countries. Second, it can be thought of as a G-7 book, with discussion not only of what happened in the United States and Canada, but also Germany, France, the UK, Italy and Japan, along with tangential treatment of the developing world including petroleum exporters.  Even if familiar with the course of events in one or two countries, the reader will find that the juxtaposition of narratives from different states reveals differences but also the worldwide incidence of a sea change in the developed world starting in the 1970s. Finally, Levinson’s assessments of policy regimes and policy initiatives are data driven and balanced.  The book could well be used as supplementary reading in a course on twentieth-century economic history or even a course in intermediate macroeconomics.

There are, however, several instances in which Levinson does not quite get on top of important conceptual or accounting distinctions that would be more familiar to academic economists or economic historians.  The frequency with which this occurs is much less than is common among authors writing principally for a popular audience. But they do deserve note.

First, the very minor:  it is of course the Employment Act of 1946, not the Full Employment Act (p. 25).  Second, and more important, Levinson (along with many others) doesn’t understand the distinction in bank regulation between liquidity and capital requirements. He writes that “a bank’s capital cannot be lent out to customers: it sits idly in the form of cash and short term securities just in case it is needed” (pp. 95-96).  In fact, bank capital represents the portion of the asset side of the portfolio financed by owner’s equity rather than debt, which in a retail bank would include customer deposits.  A bank could have a great capital cushion (be largely equity financed), and also be completely illiquid on its asset side, holding no cash or easily saleable securities. Bank capital protects an institution from insolvency should its assets lose value; it does not provide protection against illiquidity.

Third, Levinson’s discussion of why labor’s share has declined is something of a mish-mash.  The main cause, he suggests (p. 142) “was most likely a speedup in the rate of technological change.”  But all the data that Levinson reviews shows that the drop in labor’s share coincided with the drop in TFP growth that marked the post-1973 period.  It’s possible that if the bias of technological change altered — if it became more labor saving — it served to weaken labor’s bargaining position, and Levinson seems to be making that argument as well.

He also claims (p. 142) that “greater competition pressured firms’ profits, making it tougher for unions and workers to bargain for higher wages.”  If increased competition were compressing profits, would this necessarily be consistent with a rising capital share, the complement to a decline in labor’s share?  Why labor’s share declined is a very important question, particularly in understanding growing income inequality.  Levinson probably has some of the pieces of an answer here, but they are not arranged in a compelling fashion.  A related confusion pops up on p. 155, where he observes that politicians, in the face of the sea change, continued to offer programs devoted “to dividing up the fruits of plenty, not to reviving productivity growth and adjusting to a world of rapid technological change.”  It is difficult to imagine an economy simultaneously experiencing both declining productivity growth and an accelerating rate of technological change.

Finally, Levinson is not quite on top of the details of balance of payments accounting: “Statistically, the flow of money into and out of a country shows up in a measure called the current account” (p. 232).   This statement ignores what used to be called the capital account and is now called the financial account.  The capital account books sources and uses of foreign exchange resulting from the purchase or sale of assets, real or financial, as opposed to currently produced goods and services.

My noting of these issues should not discourage academic economists from reading this book.   You will find, inter alia, useful and balanced treatments of privatization, of job growth under Reagan and Clinton, of monetary experiments, and an excellent discussion of the barely avoided financial crisis of the early 1980s, which resulted from private sector bank loans to sovereigns in the developing world.   If you are old enough to have lived through the golden age and the subsequent slowdown this will to some extent be a trip down memory lane.  If you are younger, the book provides a welcome introduction to very important chapters in twentieth century economic history.

Alex Field is the Michel and Mary Orradre Professor of Economics at Santa Clara University, and the author of A Great Leap Forward: 1930s Depression and U.S. Economic Growth, New Haven:  Yale University Press, 2011.  Email:

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (January 2017). All EH.Net reviews are archived at