A war economy
or wartime economy
is the set of contingencies undertaken by a modern state
to mobilize its economy
for war production. Philippe Le Billon
describes a war economy as a "system of producing, mobilizing and allocating resources to sustain the violence." Some measures taken include the increasing of Taylor rates
as well as the introduction of resource allocation
programs. Approaches to the reconfiguration of the economy differ from country to country.
A German poster from the First World War
telling the public how to save soap and oil during wartime
On the supply
side, it has been observed that wars sometimes have the effect of accelerating technological progress
to such an extent that an economy is greatly strengthened after the war, especially if it has avoided the war-related destruction. This was the case, for example, with the United States
in World War I
and World War II
. Some economists (such as Seymour Melman
) argue, however, that the wasteful nature of much of military spending eventually can hurt technological progress.
The United States has a very complex history with wartime economies. Many notable instances came during the twentieth century in which America's main conflicts consisted of the World Wars
, the Korean War
, and the Vietnam War
World War I
Poster issued during the First World War
by the educational division of the U.S. Food Administration
In mobilizing for World War I
, the United States expanded its governmental powers by creating institutions such as the War Industries Board
(WIB) to help with military production.
Others, such as the Fuel Administration
, introduced daylight saving time
in an effort to save coal and oil while the Food Administration
encouraged higher grain production and “mobilized a spirit of self-sacrifice rather than mandatory rationing.”
Propaganda also played a large part in garnering support for topics ranging from tax initiatives to food conservation. Speaking on Four Minute Men
, volunteers who rallied the public through short speeches, investigative journalist George Creel
stated that the idea was extremely popular and the program saw thousands of volunteers throughout the states.
World War II
In the case of the Second World War
, the U.S. government took similar measures in increasing its control over the economy. The Japanese attack on Pearl Harbor
provided the spark needed to begin conversion to a wartime economy. With this attack, Washington felt that a greater bureaucracy was needed to help with mobilization.
The government raised taxes which paid for half of the war's costs and borrowed money in the form of war bonds to cover the rest of the bill.
“Commercial institutions like banks also bought billions of dollars of bonds and other treasury paper, holding more than $24 billion at the war’s end."
The creation of a handful of agencies helped funnel resources towards the war effort. One prominent agency was the War Production Board
(WPB), which “awarded defense contracts, allocated scarce resources – such as rubber, copper, and oil – for military uses, and persuaded businesses to convert to military production."
Two-thirds of the American economy had been integrated into the war effort by the end of 1943.
Because of this massive cooperation between government and private entities, it could be argued that the economic measures enacted prior to and during the Second World War helped lead the Allies to victory.
The United States has been involved in numerous military endeavours within the Middle East and Latin America since the 1960s. Having been in a continuous state of war since the September 11 Attacks
and having a military budget over double of its two largest military rivals.
Germany has experienced economic devastation following both World Wars. While this was not a result of faulty economic planning, it is important to understand the ways that Germany approached reconstruction. In World War I, the German agricultural sector was hit hard by the demands of the war effort. Not only were many of the workers conscripted, but much of the food itself was allocated for the troops leading to a shortage.
“German authorities were not able to solve the food scarcity [problem], but implemented a food rationing system and several price ceilings to prevent speculation and profiteering. Unfortunately, these measures did not have the desired success."
World War II
Heading into the Second World War
, the Nazis introduced new policies that not only caused the unemployment rate to drop, it created a competent war machine in clear violation of the Treaty of Versailles
. The Third Reich
implemented a draft and built factories to supply its quickly expanding military. Both of these actions created jobs for many Germans who had been struggling from the economic collapse following World War I.
However, it is worth noting that while unemployment rates plummeted, “by 1939, government debt stood at over 40 billion Reichsmarks (equivalent to 164 billion 2017 euros)."
After World War II, Germany was discovered to have exploited the economies of the countries it invaded. The most important among these, according to historians Boldorf and Scherner, was France and “her highly developed economy… [being] one of the biggest in Europe.”
This is further supported when they later reveal how the French economy provided for 11 percent of Germany's national income (during the occupation) which covered five months of Germany's total income for the war. Using extortion and forced labor, the Nazis siphoned off much of France's economic output. For example, during the early months of the Nazi occupation, the French puppet government was forced to pay a "quartering" fee of twenty million Reichmarks per day. Supposedly, the fee was payment for the Nazi occupation forces. In reality, the money was used to fuel the Nazi war economy.
Germany employed numerous methods to support its war effort. However, due to the Nazis' surrender to the Allies, it is hard to tell what their economic policies would have yielded in the long term.
is another example that followed war economy principles, especially during the 2020 Nagorno-Karabakh war
. Armenia is a small country in a blockade in the Caucasus region but still increased its military budget after 2018 reaching $640 million. In 2019 it was 18.8 % of the total Armenian budget. 
Except mobilizing financial resources, Armenia also declared mobilization and concentrated human capital (volunteers, doctors, soldiers). 
- Moeller, Susan. (1999). "Compassion Fatigue", Compassion Fatigue: How the Media Sells Disease, Famine, War and Death. New York & London: Routledge. 6 - 53.
- Goldstein, Joshua S. (2001). War and gender: How gender shapes the war system and vice versa. Cambridge: Cambridge University Press.
- Le Billon, Dr. Philippe (2005) Geopolitics of Resource Wars: Resource Dependence, Governance and Violence. London: Frank Cass, 288pp
- Gagliano Giuseppe,Economic War,Modern Diplomacy,2017,
- Climate Change is not World War
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- ^ a b Tassava, Christopher. "The American Economy During World War II". EH.net. Retrieved 2012-04-04.
- ^ a b Blum, Matthias (December 2011). "Government Decisions Before and During the First World War and the Living Standards in Germany During a Drastic Natural Experiment". Explorations in Economic History. 48 (4): 556–567. doi:10.1016/j.eeh.2011.07.003.
- ^ a b Trueman, Chris. "The Nazis and the German Economy". History Learning Site. HistoryLearningSite.co.uk. Retrieved 2012-04-18.
- ^ a b Boldorf, Marcel; Scherner, Jonas (April 2012). "France's Occupation Costs and the War in the East: The Contribution to the German War Economy, 1940-4". Journal of Contemporary History. 47 (2): 291–316. doi:10.1177/0022009411431711.
- ^ "Armenia vs. Azerbaijan: Military Expenditures". Hetq.am. Retrieved 2021-05-12.
- ^ Staff, Reuters (2020-09-27). "Armenia declares martial law and mobilization over Nagorno-Karabakh". Reuters. Retrieved 2021-05-12.
Last edited on 12 May 2021, at 23:23
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