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The Economic Consequences of U.S. Mobilization for the Second World War
A reminder that war is not always, or even generally, good for long-term growth
Many believe that despite its destructive character, war ultimately boosts long-term economic growth. For the United States this view is often supported by appeal to the experience of the Second World War, understood as a triumph of both production and productivity. Alexander Field shows that between 1941 and 1945 manufacturing productivity actually declined, depressed by changes in the output mix and resource shocks from enemy action, including curtailed access to natural rubber and, on the Eastern Seaboard, petroleum. The war forced a shift away from producing goods in which the country had a great deal of experience toward those in which it had little.
Learning by doing was only a partial counterbalance to the intermittent idleness and input hoarding that characterized a shortage economy and dragged down productivity. The conflict distorted human and physical capital accumulation, and once it ended, America stopped producing most of the new goods. The war temporarily shut down basic scientific research and the ongoing development of civilian goods. U.S. world economic dominance in 1948, Field shows, was due less to the experience of making war goods and more to the country’s productive potential in 1941.
Many believe that despite its destructive character, war ultimately boosts long-term economic growth. For the United States this view is often supported by appeal to the experience of the Second World War, understood as a triumph of both production and productivity. Alexander Field shows that between 1941 and 1945 manufacturing productivity actually declined, depressed by changes in the output mix and resource shocks from enemy action, including curtailed access to natural rubber and, on the Eastern Seaboard, petroleum. The war forced a shift away from producing goods in which the country had a great deal of experience toward those in which it had little.
Learning by doing was only a partial counterbalance to the intermittent idleness and input hoarding that characterized a shortage economy and dragged down productivity. The conflict distorted human and physical capital accumulation, and once it ended, America stopped producing most of the new goods. The war temporarily shut down basic scientific research and the ongoing development of civilian goods. U.S. world economic dominance in 1948, Field shows, was due less to the experience of making war goods and more to the country’s productive potential in 1941.
472 pages, Hardcover
First published October 18, 2022
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Displaying 1 - 3 of 3 reviews
January 28, 2024
An excellent book overturning a widespread myth about US economic performance during WWII
No, the US economy did not achieve new levels of economic efficiency during WWII. It delayed much research and shifted the focus towards weapons that could be rapidly developed. The US economy produced a lot of weapons and equipment. But it experienced a large drop in productivity at the start of the war as a result of companies starting to make products they had no previous experience making. Those companies improved their efficiency during the war. But they did that from low starting points caused by large shifts in what got made.
Why do we hear otherwise? Feel good rhetoric during the war encouraged triumphal views in order to boost morale, and in order for both businesses and government figures to argue that they were doing great jobs. Industry spent big on promoting pro private enterprise rhetoric because they wanted to reduce New Deal control over the economy after the war.
The war actually imposed large opportunity costs on businesses that lost out on the opportunity to gradually improve the efficiency of the business processes that they used to make peace time products. The US economy's productivity grew faster during 1929-1940 than during 1941-1948. Had WWII never happened, we would likely be much wealthier today.
I am persuaded by the author's evidence and reasoning. Also, a great example not mentioned by the author is the case of transistors and the computer industry. WWII delayed the discovery of the transistor by causing Bell Labs to delay solid state physics research by several years. See The Idea Factory: Bell Labs and the Great Age of American Innovation by Jon Gertner for details. The opportunity costs for delayed transistor development were massive.
No, the US economy did not achieve new levels of economic efficiency during WWII. It delayed much research and shifted the focus towards weapons that could be rapidly developed. The US economy produced a lot of weapons and equipment. But it experienced a large drop in productivity at the start of the war as a result of companies starting to make products they had no previous experience making. Those companies improved their efficiency during the war. But they did that from low starting points caused by large shifts in what got made.
Why do we hear otherwise? Feel good rhetoric during the war encouraged triumphal views in order to boost morale, and in order for both businesses and government figures to argue that they were doing great jobs. Industry spent big on promoting pro private enterprise rhetoric because they wanted to reduce New Deal control over the economy after the war.
The war actually imposed large opportunity costs on businesses that lost out on the opportunity to gradually improve the efficiency of the business processes that they used to make peace time products. The US economy's productivity grew faster during 1929-1940 than during 1941-1948. Had WWII never happened, we would likely be much wealthier today.
I am persuaded by the author's evidence and reasoning. Also, a great example not mentioned by the author is the case of transistors and the computer industry. WWII delayed the discovery of the transistor by causing Bell Labs to delay solid state physics research by several years. See The Idea Factory: Bell Labs and the Great Age of American Innovation by Jon Gertner for details. The opportunity costs for delayed transistor development were massive.
December 7, 2023
I quite enjoyed the book on the whole although it was a bit of a slog at time when explaining the technicalities of measuring things like TFP. Although I would not have the author remove those sections as they were essential to a broader understanding, it is just the nature of the beast. Having by coincadence just reads Gordon's the rise and fall of American Growth of which this book appears to be a direct response, although obviously not the focus of the book I would have enjoyed the author's take on why despite the downturn in productivity in the war why it was able to pick back up again after. The only thing preventing me from giving the book 5 stars is only applicable to audio listerners as there is no included pdf which would have made understanding the book easier.
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April 6, 2023Very fun read but not ultimately all that convincing. He argues that US mobilization for the war held back the development of the technologies that would ultimately ensure the American boom. He speaks in purely economic/technological terms, outside politics, but even accepting his logic, his evidence is simply not all that convincing. Very reliant on TFP (aka “the measure of all that we don’t know”). Good book and reading it was a useful exercise.
Displaying 1 - 3 of 3 reviews