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This book provides a new quantitative view of the wartime economic experiences of
six great powers: the UK, the USA, Germany, Italy, Japan, and the USSR. What
contribution did economics make to war preparedness and to winning or losing the
war? What was the effect of wartime experiences on postwar fortunes, and did those
who won the war lose the peace? A chapter is devoted to each country, reviewing its
economic war potential, military-economic policies and performance, war expenditures, and development, while the introductory chapter presents a comparative
overview. The result of an international collaborative project, the volume aims to
provide a text of statistical reference for students and researchers interested in international and comparative economic history, the history of World War II, the history
of economic policy, and comparative economic systems. It embodies the latest in
economic analysis and historical research.

The economics of World War II

Studies in Macroeconomic History
Series Editor: Michael D. Bordo, Rutgers University
Editors: Forrest Capie, City University Business School
Barry Eichengreen, University of California, Berkeley
Nick Crafts, London School of Economics
Angela Redish, University of British Columbia
The titles in this series investigate themes of interest to economists and economic
historians in the rapidly developing field of macroeconomic history. The four areas
covered include the application of monetary and finance theory, international economics and quantitative methods to historical problems; the historical application
of growth and development theory and theories of business fluctuations; the history
of domestic and international monetary, financial and other macroeconomic institutions; and the history of international monetary and financial systems. The series
amalgamates the former Press series Studies in Monetary and Financial History and
Studies in Quantitative Economic History.
Other books in the series:
The Gold Standard and Related
Regimes
Michael D. Bordo
0-521-55006-8
Monetary Regimes in Transition
Michael D. Bordo and Forrest Capie,
editors
0-521-41906-9

The Strategy and Consistency of
Federal Reserve Monetary Policy,
1924-1933
David C. Wheelock
0-521-39155-5
Canada and the Gold Standard
Trevor J.O. Dick and John E. Floyd
0-521-40408-8

Elusive Stability
Barry Eichengreen
0-521-44847-6

Europe's Postwar Recovery
Barry Eichengreen
0-521-48279-8

A Monetary History of Italy
Michele Fratianni and Franco Spinelli
0-521-44315-6

The Rise of Financial Capitalism
Larry Neal
0-521-45738-6

Managing the Franc Poincare
Kenneth Moure
0-521-39458-9

The Credit-Anstalt Crisis of 1931
Aurel Schubert
0-521-36537-6

Between the Dollar-Sterling Gold
Points
Lawrence H. Officer
0-521-45462-X

Competition and Monopoly in the
Federal Reserve System
Mark Toma
0-521-56258-9

Japanese Banking
Norio Tamaki
0-521-49676-4

Banking Panics of the Great Depression
Elmus Wicker
0-521-56261-9, 0-521-66346-6

The economics of
World War II
Six great powers in international comparison

edited by

MARK HARRISON

I CAMBRIDGE
UNIVERSITY PRESS

PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE

The Pitt Building, Trumpington Street, Cambridge, United Kingdom
CAMBRIDGE UNIVERSITY PRESS

The Edinburgh Building, Cambridge CB2 2RU, UK
www.cup.cam.ac.uk
40 West 20th Street, New York, NY 10011-4211, USA
www.cup.org
10 Stamford Road, Oakleigh, Melbourne 3166, Australia
Ruiz de Alarcon 13, 28014 Madrid, Spain
© Cambridge University Press 1998
This book is in copyright. Subject to statutory exception and to the provisions
of relevant collective licensing agreements, no reproduction of any part may
take place without the written permission of Cambridge University Press.
First published 1998
First paperback edition published 2000
Typeface: Monophoto Times 10/12pt

System: QuarkXPress [SE]

A catalogue recordfor this book is available from the British Library
Library of Congress cataloguing in publication data
The economics of World War II: six great powers in international
comparison / edited by Mark Harrison.
p. cm.
Includes bibliographical references.
ISBN 0 521 62046 5 (hardbound) - ISBN 0 521 78503 0 (paperback)
1. World War, 1939-1945 - Economic aspects. 2. Great Britain Economic conditions - 1918-1945. 3. United States - Economic
conditions - 1918-1945. 4. Germany - Economic conditions - 1918-1945.
5. Italy - Economic conditions - 1918-1945. 6. Japan - Economic
conditions - 1918-1945. 7. Soviet Union - Economic
conditions - 1918-1945. I. Harrison, Mark, 1949HC58.E36 1997
940.53'14^dc21 97-10264 CIP
ISBN 0 521 62046 5 hardback
ISBN 0 521 78503 0 paperback
Transferred to digital printing 2005

Contents

List of
List of tables
List of contributors
Preface
List of abbreviations

figures

1 The economics of World War II: an overview

page x
xi
xvi
xvii
xxi

1

Mark Harrison
Introduction: economic factors in the war
Population, territory, and GDP
Size and development
The determinants of mobilization
Quantity and quality
Winning the war, losing the peace

1
2
18
22
25
27

2 The United Kingdom: 'Victory at all costs'

43

Stephen Broadberry and Peter Howlett
Introduction
Mobilization for war
Industry
The long-run impact on wealth
Conclusion

43
43
56
65
72

vn

viii

Contents

3 The United States: from ploughshares to swords
Hugh Rockoff

81

Introduction
The production miracle
The factors of production
Financing the war
The long-run consequences of the war
Conclusion

81
82
98
107
111
117

Germany: guns, butter, and economic miracles
Werner Abelshauser

122

Introduction
The prewar 'economic miracle'
As much butter as necessary, as many guns as possible
Mobilization for war and the postwar inheritance
Conclusion

122
123
131
151
169

Italy: how to lose the war and win the peace
Vera Zamagni

177

Introduction
The war economy
The cost of the war
War losses
Conclusion

177
178
197
207
213

Japan: guns before rice
Akira Hara

224

Introduction: the phases of Japan's war economy
Production and expenditure
Economic controls during the war with China
Economic controls during the Pacific War
Mobilization of the workforce
Mobilization of finance and money
Wartime statistics
Conclusion: changes due to wartime control

224
225
233
241
251
256
261
264

Contents

ix

7 The Soviet Union: the defeated victor
Mark Harrison

268

Introduction
The economic potential for war
Mobilizing the potential
The cost of war (I): war
Real output and employment
The defence burden and foreign aid
Living standards and demography
The cost of war (II): the long run
Conclusion

268
268
272
274
279
286
290
292
296

Index

finance

302

Figures

1.1 Real GDPs of the great powers, 1938-1945
2.1 GDP, employment, and output per worker in the UK,
1938-1945
3.1 The US production possibilities curve, 1939-1948
4.1 Germany's GNP by end use, 1938-1943
5.1 Trends in Italy's GDP by end use, 1938-1945
6.1 Japan's real GDP and industrial production, 1937-1945
7.1 Soviet real GDPs and defence outlays, 1940-1944

page 11
45
97
159
181
228
288

Tables

1.1 Population, gross domestic product, territory, and empires
of the Allied and Axis powers within contemporary
frontiers, 1938
page 3
1.2 National and colonial boundaries of 1942, showing
populations and GDPs of 1938
7
1.3 Wartime GDP of the great powers, 1939-1945, in
international dollars and 1990 prices
10
1.4 The main neutral-country trading blocs of the wartime
coalitions, showing population and GDP of 1938
13
1.5 Armed forces of the great powers, 1939-1945
14
1.6 War production of the great powers, 1939 to August 1945
15
1.7 War production of the great powers, 1942-1944
17
1.8 The military burden, 1939-1944
21
1.9 Weapon systems of the great powers in World War II:
military-technical specifications
28
1.10 GDP per head of the great powers, 1938-1987
34
1.11 War losses attributable to physical destruction
37
2.1 Real GDP of the UK at constant factor cost, 1939-1946
44
2.2 UK population and employment, 1939-1946
46
2.3 UK GDP per head and per employee, 1939-1946
46
2.4 Output per person employed in the USA and Germany, 1937
46
2.5 Components of UK expenditure on GDP at constant market
prices, 1938-1946
47
2.6 The distribution of UK net national expenditure, 1938-1944
47
2.7 The UK inflationary gap, 1941
49
2.8 Financing the UK central government deficit, 1938-1945
51
2.9 Money and prices in the UK, 1939-1945
51
2.10 The UK balance of payments, September 1939 to 1945
52
2.11 UK overseas debts in mid-1945
53
2.12 Distribution of the UK working population, 1939-1945
55
xi

xii

List of tables

2.13 Total persons in UK employment by branch, 1939-1945
2.14 UK output of selected commodities, 1939-1945
2.15 Quarterly index of total munitions output of the UK,
1940-1944
2.16 Output, employment, and labour productivity in UK
agriculture, 1939/40-1945/6
2.17 Bogart's 'direct costs' of World War I
2.18 Bogart's 'direct and indirect costs' of World War I
2.19 An official balance sheet evaluation of the effects of World
War II on the UK economy
2.20 Revised UK national balance sheet calculation on a
conventional basis
2.21 UK human capital losses during World War II
3.1 United States GNP and military outlays, 1938-1948
3.2 United States price trends, 1939-1948
3.3 United States GNP by final use, 1938-1948
3.4 United States government outlays on war, 1938-1947:
alternative measures
3.5 Commerce Department estimates of United States personal
consumption expenditures, 1939-1948
3.6 United States real personal consumption: estimates based on
alternative deflators, 1939-1948
3.7 United States civilian food consumption, 1938-1948
3.8 The balance of payments of the United States, 1938-1948
3.9 Vital statistics of the United States population, 1938-1948
3.10 The composition of increases in the United States supply of
labour, 1939-1948
3.11 The working population of the United States
3.12 The increase in female employment in the United States
compared with 1940, by marital status, 1944 and 1948
3.13 Composition of the United States labour force by industry
group,1938-1948
3.14 Outputs, inputs, and total factor productivity in the United
States economy, 1939-1949
3.15 Sources of the increase in United States government spending,
1942-1945
3.16 Monetary statistics of the United States, 1938-1948
3.17 Actual and counterfactual consumption in the United States,
1941-1960
4.1 The GDP of Germany, total and per head, within postwar
frontiers of the Federal German Republic, 1929-1945

57
59
60
63
67
67
68
69
70
83
86
88
89
90
91
93
96
99
100
101
103
104
106
108
110
114
124

List of tables

4.2 German industrial production within contemporary frontiers,
1935-1944
4.3 Cumulative outlays on civilian job creation in Germany
1933-1934
4.4 Alternative estimates of German military expenditure by
fiscal year (1 April-31 March), 1932/3-1939/40, and by
calendar year, 1932-1939
4.5 German government spending and national income, 1928 and
1932-1938
4.6 The share of government expenditure in government income,
1938
4.7 External sources of finance for Germany's military spending,
1940-1944
4.8 Germany's munitions output, 1929-1944: monthly series
4.9 The net output of German industry, by industry group, 1939—
1944
4.10 Numbers employed in Germany on orders for the armed
forces, 1939-1943
4.11 Consumption and retail sales in Germany, 1938-1944
4.12 The cost of living for a German family, 1939-1944
4.13 Calorific content of food rations for a worker's family member,
1939-1945
4.14 Output per worker in German industry, 1940-1944
4.15 Labour productivity in German heavy industry, 1938-1944
4.16 The GNP of Germany, by final use, 1938-1944
4.17 The size and composition of Germany's civilian labour
force by industry within prewar frontiers, 31 May 1939—
1944
4.18 Age structure of gross fixed capital of West German industry,
1935, 1945, and 1948
4.19 The Giitegrad: net fixed assets of West German industry, 1936,
1945, and 1949
4.20 Gross industrial fixed assets in the British-American
occupation area, 1936-1948
4.21 The growth of real gross output of German industry, by
branch and sector, 1936-1944
5.1 Italian GDP and capital stock, 1938-1948
5.2 Indices of industrial production, 1939-1948
5.3 Italian output of selected industrial products and raw
materials, 1938-1948
5.4 Italian energy supplies, 1938-1948

xiii

125
126

134
138
139
143
152
153
153
154
154
155
155
157
158
160
167
168
168
169
179
182
184
186

xiv

List of tables

5.5 Total energy available, and exports and imports: Italy in two
world wars
5.6 Italy's estimated need for strategic raw materials during World
War II
5.7 Italian employment in Confindustria firms, 1936-1943
5.8 Italian agricultural production and consumption, 1938-1948
5.9 Size of the navies of three combatants in the Mediterranean,
June 1940
5.10 Italian warship construction, 1935-1943
5.11 Italian output of military aircraft, 1933-1943
5.12 Munitions output for the Italian army, June 1940-June 1943
5.13 Italian public expenditure, revenues, and deficit, 1933-1947
5.14 Italian military expenditure, 1933-1947
5.15 Estimated Italian expenditure on military equipment,
operations, and construction, 1940-1943
5.16 Italian public debt 1938-1946, 31 December
5.17 Italian military and civil casualties (killed and missing in
action) by year and theatre of combat, 1940-1945
6.1 Japan's GDP (expenditure) and population, 1934-1955
6.2 Japan's industrial production, alternative estimates, 1937-1955
6.3 Japanese steel supply, 1934/6 to 1945
6.4 Coal supplies to mainland Japan, 1934/6 to 1945
6.5 Japan's balance of trade, 1936-1941
6.6 Japanese shipping available for freight transport, 1941-1945
6.7 Japanese aircraft production, 1934/6 to 1945
6.8 The population of mainland Japan, 1934-1945
6.9 Japanese military personnel, 1930-1945
6.10 Japan's employed population, 1936-1947, selected years
6.11 Japanese central government defence outlays, 1934/6 to 1944
6.12 Money in circulation in mainland Japan, 1934/6 to 1947
6.13 Wholesale and consumer prices in Japan: alternative estimates,
1937-1945
6.14 The loss to Japan's national wealth as a result of the Pacific
War
7.1 Agricultural employment and productivity of four great
powers, 1938/40
7.2 USSR state budget outlays and revenues, 1941-1945
7.3 USSR state budget revenues: the increase officially attributed
to wartime financial measures, 1941-1945
7.4 The Soviet stock of cash and retail trade, 1940 and 1942-1945
7.5 Soviet retail trade and price deflators, 1940 and 1942-1945
7.6 Soviet price deflators, 1941-1945

187
188
189
191
193
194
196
196
198
201
206
208
213
227
229
230
231
232
245
248
252
253
254
257
258
261
263
270
275
276
277
278
279

List of tables
7.7
7.8
7.9
7.10

Soviet GNP by sector of origin, 1940-1945
The Soviet working population, 1940-1945
Women's share in Soviet employment, 1940-1945
Net value added per worker in Soviet material production,
1940-1945
7.11 Soviet GNP and the defence burden, 1940 and 1942-1944:
alternative measures
7.12 Soviet defence employment, 1940 and 1942-1944: alternative
estimates
7.13 Soviet losses of physical and human assets during World
War II

xv
283
285
286
286
287
289
293

Contributors

Werner Abelshauser (Faculty of History and Philosophy, University of
Bielefeld)
Stephen Broadberry (Department of Economics, University of Warwick)
Akira Hara (Faculty of Economics, University of Tokyo)
Mark Harrison (Department of Economics, University of Warwick)
Peter Howlett (Department of Economic History, London School of
Economics)
Hugh Rockoff (Department of Economics, Rutgers University, and the
National Bureau of Economic Research)
Vera Zamagni (Department of Economics, University of Bologna)

xvi

Preface

The purpose of this book is to provide a new comparative evaluation of the
wartime economic experience of six great powers: the UK, USA, Germany,
Italy, Japan, and the USSR. It asks: what contribution did economics make
to these countries' war preparedness, and to winning and losing the war?
What was the effect of wartime experience on the postwar fortunes of the
great powers? It aims to provide a text for students of international and
comparative economic history, the history of World War II, the history of
economic policy, and comparative economic systems, and a work of reference for scholars engaged in research in these fields.
The scope of each chapter includes each country's economic war potential, military-economic performance, war expenditures and losses, and the
long-run impact of World War II on each country's economy. Each
country's prewar size and development level, economic system characteristics, and military-economic policy are considered in relation to the part
they played in the war effort of their respective coalitions, and in the
outcome of the war as a whole. Existing interpretations of wartime economic performance are reviewed and revised: what does the wartime experience tell us about the capacity and durability of different economic
systems, the effectiveness of regulation by quantities versus prices, the
social and economic limits on resource mobilization, the policy and practice of rearmament 'in width' or 'in depth', and the role of foreign resource
transfers? Hypotheses about whether the war helped to remove or entrench
institutions hindering long-run economic development are also reappraised.
Three things make this the right moment for such a reappraisal. First,
there is a sense in which we are no longer living in the 'postwar period' and
have passed beyond it. The defining moment of the era in which we live
now was the ending of the Cold War in 1991, not the ending of World War
II more than fifty years ago. Indeed one result of the end of the Cold War
has been to present scholars engaged in international and comparative
xvii

xviii

Preface

economic history with new research on World War II, and new collaborative opportunities, not least in Russia and with Russians.
At the same time there is a deeper sense in which the terrible events of
World War II continue to shape our contemporary world. Consider the
range of issues today confronting the countries which led that struggle problems such as the difficulties hindering Europe's economic and monetary unification; the bloody ethnic disintegration of Yugoslavia; the attempt
to reassert international jurisdiction over war crimes in Bosnia; Italian,
German, and Japanese reassessments of their wartime leaders and roles;
Japan's search for a world role commensurate with its economic status; its
regional difficulties in relation to the two Koreas and the two Chinas; its
unresolved territorial dispute with Russia; Russian nationhood in the
process of its redefinition in terms of military and Slavophile ethnic values;
American engagement and disengagement with European security and the
rebuilding of eastern Europe. As we face up to these issues, we cannot help
hearing the motifs of 1939-45 being orchestrated over again, often by men
and women (but in fact they are nearly always men) of the postwar generation who think, wrongly, that these are their own new tunes, and that they
are playing them for thefirsttime. Therefore it remains important for us to
see World War II as it really was, so that we can learn to see today as it really
is.
Second, contemporary economic problems - ranging from the rebuilding of eastern Europe to adjustment of the western European economies to
new centres of economic power on the Pacific Rim - have brought renewed
interest in the processes of post-World War II reconstruction. But investigation of postwar reconstruction requires the background of a wellfounded account of the war itself - of such aspects as the degree of mass
participation in the war effort, the social and economic limits to mobilization, the degree of continuity of market and administrative institutions, the
entrenchment or destruction of interest groups, and the true extent of war
damage to human and physical assets. Only if wefirstunderstand these will
we go on to understand how our world remade itself afterwards.
Third, the war offers an experience of intrinsic interest to present-day
economists in terms of government versus the market. With the end of the
Cold War, our understanding of economic systems is moving away from an
oversimplified contrast between free-market capitalism and bureaucratic
state socialism. But this demands a deeper analysis of the social relationships and government institutions which make markets work. It is commonly observed of the twentieth century that when war broke out, markets
broke down. To explain this several hypotheses are traditionally proposed:
market allocation was insufficiently slow to mobilize resources through the
operation of price signals and incentives, the potential redistribution of

Preface

xix

income towards profits in war industries was threatening to social stability,
individual households and firms left to themselves pursued a strategy for
defeat (i.e. to wait and see, to look for a free ride on the back of others'
efforts, to conserve peacetime priorities, occupations, and relationships,
and not to accept temporary mobilization). As a result, the war everywhere
saw an enormous growth of government at the expense of private uses of
resources, and a displacement of market forces by government allocation.
At the same time it is far from clear that the corollary of market failure
was necessarily government success. There were some problems which
markets might have solved anyway (such as the restriction of private consumption) on which government expended considerable efforts. There were
other problems which government sometimes made worse (e.g. by overmobilizing resources). There was also a third group of problems which could
not be solved either by markets or by government (e.g. an overall deficiency
of resources). While the authors of this book adopt a variety of perspectives on the central issue, a common theme of their accounts is the significance of constraints on government action, and the importance of finding
a balance between market forces and administrative force in their social
context.
This book does not just dwell on failure. Another often-repeated theme
of the chapters which follow is that of economic miracles. At the time, the
successes of German and Japanese recovery from the 1929 slump, the
American, German, and Soviet productive efforts in World War II, and the
German, Italian, and Japanese postwar recoveries were all described as
'miraculous' from one point of view or another. A central concern of the
authors is to show that, on closer inspection, there were no miracles - and
no irrational disasters, either. There was nothing special about being
American, German, Italian, Russian, or Japanese (it is more than 200 years
since the last British 'economic miracle' of the Industrial Revolution, and
even that is disputed nowadays). There were rationally understandable, successful combinations of luck, judgement, force of will, inherited resources
in the right place at the right time, and the institutions to set them to work,
giving them moral as well as economic force -just as the economic setbacks
and disasters of this period can be rationally understood as the result of bad
luck, bad timing, defective institutions, and lack of resources.
Perhaps that makes everything sound too simple. According to
Clausewitz, who founded modern strategic studies in the years after the
Napoleonic wars, 'Everything is very simple in War, but the simplest thing
is difficult' {On War, 1968, ed. A. Rapoport, Harmondsworth). The imperatives of war appear to simplify everything down to a few basic requirements, but to attain them in the 'resistant medium' constituted by danger,
shock, surprise, excitement, fear, hunger, exhaustion, wounds, bereave-

xx

Preface

ment, boredom, isolation, ignorance, deception, self-interest, and indiscipline, turns out to be a process of endless complexity. In World War II the
process of applying violence to the army of the adversary also required societies and economies to undergo violent alteration. Because of this the world
changed and was never the same again. To understand the result is the
authors' common purpose.
Acknowledgements

The contributors to this volume are members of the international workgroup on the economic history of World War II. Our workgroup was
formed in 1991, and met on two occasions, at the Universities of Bielefeld
(Germany) in May 1993, and at the University of Warwick (England) in
September 1994.
The contributors are deeply indebted to the other participants in our two
meetings, especially Vladimir Busygin (Novosibirsk), Nick Crafts (LSE),
Grigorii Khanin (Novosibirsk), Stephan Merl (Bielefeld), Avner Offer
(Oxford), Richard Overy (London), Rolf Petri (Florence), and Bryan
Sadler (Warwick), and also to the secretaries to the workgroup, Iris Kukla
(Bielefeld) and Jenny Penfold (Warwick) for their efforts on our behalf.
They also wish to express their appreciation to the Universities of Bielefeld
and Warwick for their hospitality.
Werner Abelshauser thanks Eamonn Noonan, and Akira Hara thanks
Mitaka Ltd for their respective translations.
Finally, the generous financial support of the Volkswagen Foundation
under the programme Diktaturen in Europa des 20. Jahrhunderts:
Strukturen, Erfahrungen, Uberwindung und Vergleich was indispensable for
the final success of our project. We are duly grateful.
Mark Harrison

Abbreviations

ABB
ACS
ADGB
AM-lire
Ammassi
ASBI
ASKI

BA
CIA
CNR
Confindustria

CSO
CSVI

DAF
DINTA

ESB
GARF
GATT
GDFCF
GDP
GDP(E)
GHQ

Amt fur Berufserziehung und Betriebsfuhrung
(Germany)
Archivio Centrale dello Stato (Italy)
Allgemeiner Deutscher Gewerkschaftbund
(Germany)
lire issued for expenditure by the Allied powers
(Italy)
compulsory pooling of basic foodstuffs (Italy)
Archivio Storico della Banca d'ltalia (Italy)
Auslandersonderkonten fur Inlandszahlungen
(Germany)
Bundesarchiv (Germany)
Central Intelligence Agency (USA)
Consiglio Nazionale delle Ricerche (Italy)
Confederazione Generale dell'Industria Italiana
(Italy)
Central Statistical Office (UK)
Consorzio Sowenzioni su Valori Industriali
(Italy)
Deutsche Arbeitsfront (Germany)
Deutsches Institut fur Technische Arbeitsschulung
(Germany)
Economic Stability Bureau (Japan)
Gosudarstvennyi Arkhiv Rossiiskoi Federatsii (the
Soviet Union, Russia)
General Agreement on Tariffs andTrade
gross domestic fixed capital formation
gross domestic product
gross domestic product (expenditure)
General Headquarters of the Allied Powers
(Japan)
XXI

xxii

List of abbreviations

gross national product
government owned, privately operated capital
(USA)
Gosudarstvennyi komitet statistiki (the Soviet
Goskomstat
Union)
Verein zur Vorbereitung der AutostraBe
HAFRABA
Hansestadte-Frankfurt-Basel (Germany)
International Bank for Reconstruction and
IBRD
Development (the World Bank)
IMF
International Monetary Fund
International Military Tribunal (Germany)
IMT
Istituto per la Ricostruzione Industriale (Italy)
IRI
Istituto Centrale di Statistica (Italy)
ISTAT
Istoriia Vtoroi Mirovoi voiny (Bibliography, the
IVMV
Soviet Union)
Kanketsu Showa Kokusei Soran (Bibliography,
KSKS
Japan)
Long-term economic statistics (Bibliography,
LTES
Japan)
Metallurgische Forschungsgesellschaft mbH
Mefo
(Germany)
Ministry of International Trade and Industry
MITI
(Japan)
Material Product System of national accounts (the
MPS
Soviet Union)
North Atlantic Treaty Organization
NATO
NKVD
Narodnyi komissariat vnutrennykh del (the Soviet
Union)
NMP
net material product (the Soviet Union)
NNP
net national product
NS
national-socialist, or Nazi (Germany)
NSDAP
Nationalsozialistische Deutsche Arbeiterpartei
(Germany)
OECD
Organization for Economic Cooperation and
Development
R&D
research and development
RAND Corporation The United States Air Force think-tank (USA)
RDL
Regio Decreto Legge (Italy)
RGAE
Rossiiskii Gosudarstvennyi Arkhiv Ekonomiki
(the Soviet Union, Russia)
Reichsmarks (Germany)
RM
RSI
Repubblica Sociale Italiana (Italy)

GNP
GOPO

List of abbreviations

RST
SNA
SPD
SS
SVIMEZ
TsSU
UK
USA
USAF
USSBS
USSR
WTB

xxiii

Rossi-Sorgato-Toniolo (Bibliography, Italy)
System of National Accounts
Sozialdemokratische Partei Deutschlands
(Germany)
Schutzstaffel (Germany)
Associazione per lo Sviluppo del Mezzogiorno
(Italy)
Tsentral'noe statisticheskoe upravlenie (the Soviet
Union)
United Kingdom (of Great Britain and Northern
Ireland)
United States of America
United States Air Force
United States Strategic Bombing Survey
Union of Soviet Socialist Republics (the Soviet
Union)
the German trade unionists Woytinski, Tarnow,
and Baade

1

The economics of World War II: an
overview
Mark Harrison

Introduction: economic factors in the war

This book deals with two issues in the economics of twentieth-century
warfare. First is the contribution of economics to victory and defeat of the
great powers in World War II. Second is the impact of the war upon longrun economic trends and postwar institutions in the economies of the great
powers.1
What was the contribution of economics to the outcome of the war? As
far as this first question is concerned, the authors share a broad understanding of'economies', which comprises the national requirements of the
war, the quantity and quality of resources, their availability and mobilization, and the institutions and policies which mobilized them for wartime
purposes. As for resources, we understand them to include not only physical resources such as minerals, materials, and fixed capital assets, and
financial stocks andflows,but also the human resources represented by the
working population, its health and literacy, its degree of skill, training, and
education, as well as assets represented by scientific knowledge and
technological know-how.
How important were these economic factors in deciding who won the
war, and who lost? In answering this question it has always made sense to
distinguish two periods of the conflict. In the first period, economic
considerations were less important than purely military factors. This was
the phase of greatest success for the powers of the Axis, and it lasted
roughly until the end of 1941 or into 1942 (the exact turning point differed
by a few months among the different regional theatres). In thisfirstperiod,
the advantages of strategy andfightingpower enabled Germany and Japan
to inflict overwhelming defeats upon an economically superior combination of powers. The factors of strategic deception and surprise, speed of
movement, skill in the concentration of forces and selection of objectives,
martial tradition, and esprit de corps were all on their side.
1

2

Mark Harrison

Of course, economic factors were not entirely absent. If Germany or Japan
had been poor, agrarian nations the size of Liechtenstein, neither would have
launched war against the most powerful industrial economies in the world.
Nonetheless, despite significant economic inferiority, the Axis powers made
substantial progress towards their war aims and at times appeared to be on
the verge of complete success. Their outstanding generalship and the combat
qualities of their armies had created a catastrophic situation for the Allies;
'On the face of things', writes Richard Overy, 'no rational man in early 1942
would have guessed at the eventual outcome of the war.'2 It was also largely
the military failures of the Axis powers, not their economic weakness, which
brought this first period of the war to an end without the decisive victory
which had previously appeared within their grasp.
In the second period of the war, which began in 1942, economic fundamentals reasserted themselves. The early advantages of the Axis were dissipated in a transition period of stalemate. A war of attrition developed
in which the opposing forces ground each other down, with rising force
levels and rising losses. Superior military qualities came to count for less
than superior GDP and population numbers. The greater Allied capacity for taking risks, absorbing the cost of mistakes, replacing losses, and
accumulating overwhelming quantitative superiority now turned the
balance against the Axis. Ultimately, economics determined the
outcome.3
Population, territory, and GDP
The prewar balance

There is considerable evidence to support this view, but its scope must be
nearly global in coverage and requires some explanation. A first balance
can be struck for the alliance system which existed prior to the outbreak of
the world war. Table 1.1 gives basic indicators for the prewar coalitions
based on the frontiers of 1938 - population, territory, and GDP. The military-economic significance of GDP and population may be obvious; they
set the upper limit on the production and personnel potentially available
for war. Territorial expanse was also of importance; it helped to determine
the quantity and diversity of available natural resources such as metallic
ores and mineral fuels, and the degree to which each coalition could expect
to form a self-sufficient economic bloc under conditions of wartime disruption of international trade.
On one side was the Anglo-French alliance system which, when the
respective colonial empires are taken into account, comprised nearly 700
million people - one third of the globe's population - and 47.6 million
square kilometres. On the other side were the powers of the Axis - Germany

The economics of World War II: an overview

Table 1.1. Population, gross domestic product, territory, and empires of the
Allied and Axis powers within contemporary frontiers, 1938

Territory, sq. km

GDP, international
dollars and 1990
prices

Population
million
1

total
thou.
2

per thou.
people
3

total, $ bn
4

per head, $
5

47.5
42.0
30.0
10.5
35.1
70.9
453.8
689.7

245
551
19,185
140
389
12,099
14,994
47,603

5
13
639
13
11
171
33
69

284.2
185.6
114.6
30.3
76.6
48.5
284.5
1,024.3

5,983
4,424
3,817
2,882
2,182
684
627
1,485

89.5

796

9

469.8

5,252

68.6
6.8
43.4
71.9
59.8
8.5
258.9

470
84
310
382
1,602
3,488
6,336

7
12
7
5
27
412
24

351.4
24.2
140.8
169.4
62.9
2.6
751.3

5,126
3,583
3,244
2,356
1,052
304
2,902

190.6

1,246

7

685.8

3,598

411.7

9,800

24

320.5

778

Allies/Axis
Great powers only

2.7
0.5

7.5
0.6

2.8
1.4

1.4
0.7

0.5
1.5

China/Japanese empire

3.1

4.9

1.6

1.4

0.4

Allied powers
UK
France
UK dominions
Czecho-Slovakia
Poland
French colonies
UK colonies
Allied total
of which, great
powers only (UK
and France)
Axis powers
Germany
Austria
Italy
Japan
Japanese colonies
Italian colonies
Axis total
of which, great
powers only
(Germany Austria,
Italy, and Japan)
China
(exc. Manchuria)

Notes:
Countries and groups of countries are ranked under each subheading in descending order of
their GDP per head. 'Colonies' include League of Nations mandates and other
dependencies. Figures are given for territory within 1938 frontiers, except as noted below.
UK dominions: Australia, Canada, New Zealand, Union of South Africa. Canada
includes Newfoundland and Labrador.
Czecho-Slovakia: including the Sudetenland (annexed by Germany in September 1938).
French colonies: mainly in the Near East, Africa, and Indo-China.

4

Mark Harrison

Notes to Table 1.1 (cont.)
UK colonies (including joint Anglo-French and Anglo-Egyptian colonies): many
countries in the Near East, south and southeast Asia, Africa, the Caribbean, and Oceania.
Germany: the geographical entity of the Versailles treaty, excluding the Sudetenland and
Austria.
Japanese colonies: Korea, Formosa (Taiwan), and Manchuria.
Italian colonies: mainly Libya and Abyssinia (Ethiopia).
Sources:
Population
All figures from Maddison (1995), appendix A, except that Czech-Slovakia, Poland,
Germany, China (except Manchuria), Manchuria itself, and various colonial populations,
all within contemporary frontiers, are taken from League of Nations (1940), 14-19.
GDP
Population multiplied by GDP per head (for Czecho-Slovakia, GDP per head of 1937).
GDP per head
All figures from Maddison (1995), appendix D, except as follows.
UK dominions: for South Africa, the white population (20 per cent of the total, from
League of Nations (1940), 14-19) is assigned the same GDP per head as the average for
Australia, New Zealand, and Canada, and the black and coloured population is credited
with the African regional average.
French colonies are divided among Indo-China, Algeria, and other (mainly African)
colonies. The GDP per head of French Indo-China is based on that of Vietnam (see above),
and that of Algeria is derived in the same way. France's other colonies are credited with a
GDP per head based on the African regional average.
UK colonies are divided among south Asia, Africa, and other. The GDP per head of
south Asian colonies is a weighted average of that for 1938 of Burma, India, Pakistan, and
Bangladesh within modern frontiers.
The GDP per head of African colonies is taken as that of Maddison's African regional
average, and that of other (mainly southeast Asian colonies, but also of those in the Pacific,
and Caribbean) is based on the Asian regional average.
Italian colonies: the weighted average of GDPs per head of Libya and Ethiopia, derived
as above.
Japanese colonies: for Korea and Formosa, GDPs per head are those given by Maddison
for South Korea and Taiwan; that of Manchuria is based on his China average.
Territory
League of Nations (1940), 14-19. All figures are within boundaries of 1938, except that
Germany excludes Austria and the Sudetenland; the frontiers of Czecho-Slovakia are those
of the beginning of the year.
Territory per thousand
Territory divided by population.

(now including Austria), Italy, Japan, and the much smaller colonial empires
of Italy in Africa and Japan in east Asia; these amounted to 260 million
people and a little more than 6 million square kilometres. Thus the Allies
outweighed the Axis by 2.7:1 in population and 7.5:1 in territory. In the Far
East, Japan was also at war with China, the population and territory of
which exceeded those of Japan and its existing colonies by 3.1:1 and 4.9:1.
For each country or region the table lists GDP as well as population and
territory. Population and territory can be measured without much ambigu-

The economics of World War II: an overview

5

ity, and the researcher need worry only about measurement error. GDP is
different because it requires a complex process of evaluation of each
country's real product in a common set of prices. For table 1.11 rely mainly
on Angus Maddison's historical time series which are expressed in presentday dollar values and extrapolated back over long periods. This in itself
allows many opportunities for error. In addition many of the countries
(especially the relatively poor colonial possessions) represented in the table
are assigned GDP values on the basis of indirect evidence. Therefore the
GDPfiguresmay be taken as indicative, but not precise. According to table
1.1 the Allies of 1938 with their empires disposed of more than $ 1,000 billion
of real product, compared with the $750 billion of Axis GDP, an Allied
advantage of 1.4:1. China also outweighed Japan and its colonies in GDP
by a similar margin. In every major respect, therefore, the Axis disadvantage
was strongly marked, though less in GDP than in population or territory.
The potential advantage of the Allies was greater in population, and still
more in territory, than in GDP. This is explained by the adherence to the
Allied bloc of great low-income regions in Africa and Asia - the British and
French empires. Thus the territorial expanse per head of the Allied population was nearly three times that available to the Axis population. But the
average Allied income level was less than $1,500 per head, half the Axis
level of $2,900. The same imbalance is present in the comparison of China
with the Japanese empire: Japan was poor by west European standards, and
its colonies were poorer, but China was poorer still, with less than half the
income per head of the Japanese empire.
Suppose we narrow the focus to the great powers alone - the UK and
France on one side, Germany (excluding Austria), Italy, and Japan on the
other. When the lesser powers and colonial empires are excluded, the
balance of size shifts against the Allies; although richer in resources and
GDP per head, they were smaller than the Axis powers, with only half their
population, 60 per cent of their territory, and 70 per cent of their GDP.
The balance in wartime
Under the impact of war, the balance changed. Two factors were at work.
One was the accession of new allies to each side as the war became a global
conflict. Between 1938 and 1942 the Axis powers were joined by Finland,
Hungary, and Romania, the Allies by the USA and USSR. China, already
at war with Japan in 1938, was also becoming an Ally, although one of
doubtful military value, not least because of its internal civil war of nationalists versus communists. The Allies were the principal beneficiaries of
globalization of the war - just in population, for example, the USA and
USSR represented more than 300 million people compared with the gain to
the Axis of the 28.5 million combined population of Finland, Hungary, and

6

Mark Harrison

Romania. The other process was the changes in de facto jurisdiction arising
mainly, though not exclusively, from Axis expansion. By 1942 the Allies of
1938 had lost territories on which there had resided before the war some 260
million people. Partly on this account, and partly at the expense of previously neutral countries and colonial populations, the Axis powers had
brought under their own control territories in Europe and Asia with a
prewar population of nearly 350 million people. Indeed, to change the
balance in their own favour was a principal strategic objective of Axis expansionism; each of the Axis powers aimed to achieve self-sufficiency within a
colonial sphere expanded at the expense of the Allied and neutral powers.
The changing balance is illustrated in table 1.2, which recalculates the
resources on each side within the boundaries of 1942 when the Axis empires
had reached their greatest extent. However, for many regions wartime
population and GDP indicators are unreliable or non-existent. Therefore,
the table is based not on incomes and populations of 1942 but on the 1938
aggregates already used in table 1.1; it shows the purely territorial effect of
change in the boundaries of control, holding GDP and population constant, and does not take into account the fact that by 1942, for example, the
USA was much richer or the USSR much poorer than in 1938 within constant frontiers.
Table 1.2 shows that by 1942 the economic odds had shortened greatly
in favour of the Axis. Using 1938 indicators, by 1942 the ex ante advantage
of the Allies had fallen to 1.9:1 in population (but still 7:1 in territory, a
figure reflecting the vast north American prairies and Siberian steppe) and
only 1.3:1 in GDP. If China is excluded, the equivalent figures are 1.2:1 and
1.1:1. In other words, by 1942 the Axis powers were no longer economically
inferior to the Allies, and were on more or less equal terms in overall GDP
of 1938.
The assumptions underlying table 1.2, in particular the use of 1938
income levels, correspond in a certain sense with the expectations of Axis
military-economic policy. Before the war German and Japanese decision
makers looked at the colonial spheres of their adversaries and saw them to
be rich sources of labour and materials, which they expected to be able to
take over intact and exploit to the full. At the same time, when they looked
at their adversaries' home territories, they did not anticipate any very vigorous economic mobilization in response to Axis expansionism. In short,
they did not expect their enemies to become very much richer than before
the war or their colonial annexations to become very much poorer in consequence of the war itself. In fact, however, wherever the Axis powers conquered, incomes fell and the difficulty of extracting resources from the
conquered territory increased. At the same time their enemies mobilized
their resources and became, on average, richer and economically more powerful than before the war.

The economics of World War II: an overview

Table 1.2. National and colonial boundaries of 1942, showing populations
andGDPsof!938

Territory, sq. km
Population
million
1
Allied powers
Allied total, 1938
China, 1938
(exc. Manchuria)
Net gain, 1938^2
Allied total, 1942
excluding China
of which, great
powers only (UK,
USA, and USSR)
Gains, 1938-42
USA
USSR
US colonies
Near East and
North Africa
Losses, 1938-^2
France
Czecho-Slovakia
Poland
Occupied USSR
US colonies
French colonies
UK colonies
Axis powers
Axis total, 1938
Net gain, 1938-42
Axis total, 1942
of which, great
powers only
(Germany and
Austria, Italy,
and Japan)
Gains, 1938-42
Denmark
Netherlands
Belgium
France
Norway

total
thou.
2

per thou.
people
3

GDP, international
dollars and 1990
prices
total, $ bn
4

per head, $
5

689.7

47,603

69

1,024.3

1,485

411.7
93.8
1,195.2
783.5

9,800
20,401
77,803
68,003

24
—
65
87

320.5
724.5
2,069.3
1,748.8

778
—
1,731
2,232

345.0

29,277

85

1,443.5

4,184

130.5
167.0
17.8

7,856
21,176
324

60
127
18

800.3
359.0
26.5

6,134
2,150
1,495

38.6

6,430

167

52.1

1,351

42.0
10.5
35.1
62.4
15.9
70.9
23.2

551
140
389
978
296
12,099
933

13
13
11
16
19
171
40

185.6
30.3
76.6
134.2
23.9
48.5
14.4

4,424
2,882
2,182
2,150
1,497
684
621

258.9
375.7
634.6

6,336
4,834
11,169

24
—
18

751.3
800.7
1,552.0

2,902
—
2,446

190.6

1,246

7

685.8

3,598

3.8
8.7
8.4
42.0
2.9

43
33
30
551
323

11
4
4
13
110

20.9
44.5
39.6
185.6
11.6

5,544
5,122
4,730
4,424
3,945

Mark Harrison
Table 1.2 (cont.)

Territory, sq. km
Population
million
1
Axis Gains fcont.)
Finland
Czecho-Slovakia
Greece
Hungary
Poland
Baltic states
Occupied USSR
Bulgaria
US colonies
Yugoslavia
Romania
Dutch colonies
Thailand
UK colonies
French colonies

total
thou.
2

per thou.
people
3

GDP, international
dollars and 1990
prices
total, $ bn
4

per head, $
5

3.7
10.5
7.1
9.2
35.1
6.0
62.4
6.6
15.9
16.1
15.6
68.1
15.0
23.2
24.1

383
140
130
117
389
167
978
103
296
248
295
1,904
518
933
740

105
13
18
13
11
28
16
16
19
15
19
28
35
40
31

12.7
30.3
19.3
24.3
76.6
12.9
134.2
10.5
23.9
21.9
19.4
77.4
12.5
14.4
10.9

3,486
2,882
2,727
2,655
2,182
2,150
2,150
1,595
1,497
1,360
1,242
1,136
832
621
452

Losses, 1938-42
Italian colonies

8.5

3,488

412

2.6

304

Allies/Axis, 1942
exc. China
great powers only

1.9
1.2
1.8

7.0
6.1
23.5

3.7
4.9
13.0

1.3
1.1
2.1

0.7
0.9
1.2

Notes:
The Allied powers
Between 1938 and 1942 the UK was joined by the USA, USSR, and China in the alliance
which would eventually become the United Nations.
USA: including Alaska and Hawaii.
USSR: the territory of 1938, excluding the annexations of 1939^0 (eastern Poland,
Bessarabia and northern Bukovina from Romania, a strip of Finnish territory, Estonia,
Latvia, Lithuania).
US colonies: Philippines, Puerto Rico.
China: China, already partially dismembered by Japan, was a doubtful military asset,
being as much a battleground (with its own continuing civil war as well) as a power. In the
table, Allied totals are computed with and without China.
Allied gains and losses
Over the period between 1938 and 1942, the following changes transpired in terms of
military defeat, occupation, and annexation.
Near East and North Africa: the British took effective control of the former Italian
colonies as well as Egypt, Iran, and Iraq.
France, Czecho-Slovakia, and Poland were defeated and occupied directly or (in the case
of Vichy France) incorporated into the German economic space.

The economics of World War H: an overview
The latter aspect of the war is captured in table 1.3, which shows the
GDPs of the great powers from 1938 through to 1945 (see also figure 1.1).
The table makes some allowance for the fact that both France and Italy
changed sides during the war (twice in the French case), but the spirit of the
table is to look at the changing economic strength of the great-power coaliNotes to Table 1.2 (cont.)
Occupied USSR: shown here is only that part (see above) which had been subject to
Soviet jurisdiction in 1938; the rest is counted elsewhere.
US colonies: the Philippines were lost to Japan.
French colonies: in wartime these fell technically under the jurisdiction of the Vichy
regime, but (apart from French Indo-China, dealt with below) were mostly remote from the
Axis economies and played little role in the war efforts of either side. In the
same way, although the Allies were joined by the governments-in-exile of Belgium and the
Netherlands, Belgian and Dutch colonies were either seized by Japan (the Dutch East
Indies) or lost to both sides.
UK colonies: Burma, Borneo, Hong Kong, and Malaya were lost to Japan.
Axis gains and losses
Between 1938 and 1942, Germany was joined on the eastern front by Finland, Hungary,
and Romania.
Germany and her allies conquered Denmark, Netherlands, Belgium, France, Norway,
Czecho-Slovakia, Greece, Poland, the Baltic states and other Soviet territories, Bulgaria,
and Yugoslavia.
Japan seized the Philippines from the United States, the Dutch East Indies, Thailand,
the British colonies in East Asia listed above, and French Indo-China.
By the end of 1942, however, Italy had lost its African empire.
Sources:
In most respects, as for table 1.1. However, some new countries enter the table, and some
have to be taken in parts.
US colonies: the weighted average for Puerto Rico and the Philippines. For Puerto Rico,
GDP per head in 1950 is interpolated on the South American regional average for sample
countries in 1938 given by Maddison (1995), 212 (the same procedure, using the African
and Asian regional averages, is used below for Zaire, Algeria, Vietnam, Libya, and
Ethiopia, and in table 1.2 for Egypt, Iran, and Iraq).
Thailand: GDP per head and population are taken from Maddison (1995), appendices A
andD.
Egypt, Iran, and Iraq: population and GDP per head, given for 1950 by Maddison
(1995), appendix F, are interpolated on his African and Asian regional averages respectively
for 1938.
USSR: 1938 population within contemporary frontiers is from Andreev, Darskii,
Khar'kova (1990), 41 (converted to mid-year), and GDP per head as in Maddison.
In 1941-2 the USSR lost 1,926,000 square kilometres of territory occupied on Jan. 1,
1939 by 84,852,000 people (TsSU (1959), 39) - say, 84 million as of mid-1938. However, in
1938 other jurisdictions (Polish, Latvian, Lithuanian, Estonian, Romanian, etc.) had
covered more than 21.5 million of the 84 million, who must therefore be excluded to avoid
double counting. The same applies to 948,000 of the 1,926,000 square kilometres. It is
assumed that the 1938 GDP per head of the occupied territories was the same as for the
USSR as a whole.
Dutch colonies: the GDP per head of the Dutch East Indies is based on that of Indonesia.

9

10

Mark Harrison

Table 1.3. Wartime GDP of the great powers, 1939-1945, in international
dollars and 1990 prices (billions)
1938

1939

1940

1941

1942

1943

1944

1945

Allied powers
USA
UK
France
Italy
USSR

800
284
186
—
359

869
287
199
—
366

943
316
82
—
417

1,094
344

1,235
353

1,399
361

1,499
346

—
359

—
318

—
464

117
495

1,474
331
101
92
396

Allied total

1,629

1,721

1,757

1,798

1,906

2,223

2,458

2,394

Axis powers
Germany
France
Austria
Italy
Japan

351
—
24
141
169

384
—
27
151
184

387
82
27
147
192

412
130
29
144
196

417
116
27
145
197

426
110
28
137
194

437
93
29
—
189

310
—
12
—
144

Axis total

686

747

835

911

903

895

748

466

Allies/Axis
USSR/Germany

2.4
1.0

2.3
1.0

2.1
1.1

2.0
0.9

2.1
0.8

2.5
1.1

3.3
1.1

5.1
1.3

Sources: For 1938, see table 1.1. Other years are interpolated on index numbers as follows:
UK, table 2.1 (col. 4); USA, table 3.1 (col. 4); Germany, table 4.1 (col. 1); Italy, table 5.1
(col. 3); Japan, table 6.1 (col. 1); USSR, table 7.7, part (A). Figures for the USSR for 1939
are interpolated on population within 1938 frontiers on the assumption that GDP per head
remained unchanged compared with 1938 (for evidence on this score see Harrison (1994),
269; Maddison (1995), 200). For France and Austria see Maddison (1995), appendix B.

tions as they existed in 1942. The prewar GDP of the combined Allied
powers exceeded that of the Axis powers by 2.4:1. Subsequently the ratio
moved somewhat against the Allies, falling to 2:1 in 1941, because the Axis
economies expanded while the resources of France, knocked out of the
Allied coalition in 1940, became available to Germany. In 1941 Soviet GDP
was also beginning to fall under the impact of German attack. But 1941
was the Allied low point.
From 1942 onwards the ratio moved steadily in the Allied favour. First,
the United States economy, already by far the largest among the great
powers in GDP terms, embarked on a huge quantitative mobilization drive;
by 1944, US GDP stood at nearly twice its 1938 level. Second, the Soviet
economy, although hit hard by invasion in 1941 and harder still in 1942,
was subsequently stabilized and then mobilized to a higher level of output.
Third, Italy was knocked out of the Axis coalition in 1943. Fourth, the

11

The economics of World War II: an overview
1600

• USA
o USSR
• Germany + Austria
A

UK

• Japan
• Italy
• France
1938 1939 1940 1941 1942 1943 1944 1945
Figure 1.1 Real GDPs of the great powers, 1938-1945
Source: table 1.3

GDP of occupied France fell steadily year by year. Fifth, by the end of
1944, the German and Japanese economies were collapsing. Thus, in 1942
and 1943 the great-power economic balance moved strongly in favour of
the Allies and even before the economic collapse of Germany and Japan
had already reached 3.3:1 in 1944.
Only on the eastern front did the Allies not possess the advantage. The
Soviet Union had more than twice Germany's population and many times
its territory, but, with 1938 per capita income at 40 per cent of the German
level, was roughly the same size in GDP terms. Because the German
economy grew under the stimulus of increasing mobilization, while the
Soviet economy collapsed under the weight of German attack, by 1942
rough parity had been transformed into a substantial German advantage.
Still relatively untroubled by Allied bombing and the threat of a second
front in the west, Germany was able to devote nearly all of its military

12

Mark Harrison

resources to the war in Russia. The war in eastern Europe was therefore
much more closely fought than in other theatres where the Allies always
held the upper hand economically speaking. With recovery in 1943 the
Soviet economy was able to reestablish a narrow advantage, but it remained
afinelybalanced thing until 1945.
In another respect as well the Allies retained an important overall advantage, even in the worst periods of setback and defeat. This lay in the bloc of
trading partners available to each side, illustrated in table 1.4. Allied naval
supremacy limited Germany and Italy to overland trade with their neutral
neighbours and the neutrals adjacent to occupied Europe; together these
constituted a zone with a prewar population of 70 million people and GDP
of $150 billion. But this was little more than half the size of the bloc available to the Allies made up by the Irish Republic, the neutral neighbour of
the UK, and the countries of central and south America, several of which
eventually declared war on Germany in early 1945. Again, trade with neutrals principally benefited the western Allies, and was turned to Soviet
benefit only indirectly through the medium of Allied aid to the USSR.
Table 1.5 reveals that by 1944 thefivegreat powers still in the game were
fielding more than 43 million soldiers (probably more than one-third of
their combined prewar male population of working age), with two-thirds of
them wearing Allied uniform. Thus the table also shows how the advantages of size were translated into numerical superiority of military personnel. Before the war the combined forces of the Anglo-French alliance
just outweighed those of Germany, though not of the Axis powers taken
together. In 1940 and 1941, despite the rapid war mobilization of the UK,
the French surrender and Italian entry into the war ensured that the Allied
(from mid-1940 to mid-1941 the British alone) forces became numerically
inferior to their enemies. With 1941, however, German attention switched
to the east. From 1942 onwards, despite Japanese entry into the war, with
American mobilization now added to the Soviet war effort, the forces of the
Axis were always outnumbered in the main theatres of conflict. By 1944 the
Allied advantage stood at almost 2:1 on the eastern front as in the west and
the Pacific.
The quantitative disadvantage of the Axis powers was even greater in
munitions than in men, as the data in table 1.6 suggest.4 The rawfiguresare
summarized in table 1.7 which shows, first, the astonishing quantities of
weapons produced in the period of most intense global conflict, 1942-4:
nearly 50 millionrifles,automatic weapons, and machine guns, more than
2 million guns and mortars, more than 200,000 tanks, more than 400,000
combat aircraft, nearly 9,000 major naval vessels. But by far the greater part
of this vastflowemerged from Allied factories and shipyards. As table 1.7
reveals, in every broad category of ground and air munitions Allied produc-

13

The economics of World War II: an overview

Table 1.4. The main neutral-country trading blocs of the wartime coalitions,
showing population and GDP of 1938
GDP, international dollars
and 1990 prices
Population
million
1

total, $ bn
2

per head, $
3

Allied trading bloc
Ireland
Independent states of
Central and South
America

2.9

9.2

5,126

126.7

250.3

1,975

Allied total

129.7

259.4

2,001

Axis trading bloc
Switzerland
Sweden
Spain
Portugal
Turkey
Portuguese colonies
Spanish colonies

4.2
6.3
25.3
7.6
17.0
9.5
1.0

26.4
29.8
51.1
12.9
23.1
7.0
0.7

6,302
4,725
2,022
1,707
1,359
735
714

Axis total

70.8

151.0

2,133

Allies/Axis

1.8

1.7

0.9

Notes:
Ireland, although neutral, could scarcely avoid a high degree of commercial integration into
the British war economy. The only significant neutral trading partners of the wartime Allies
were in Central and South America, but the colonial dependencies are already accounted
for or otherwise dealt with in table 1.2, so only the independent states remain to be dealt
with here: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican
Republic, Ecuador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay,
Peru, Salvador, Uruguay, Venezuela.
Spanish colonies: mainly Spanish Guinea, Spanish Morocco, and Spanish Sahara.
Portugese colonies: mainly Angola and Mozambique, but also territories elsewhere in
Africa, India, and east Asia.
Sources: As tables 1.1 and 1.2. Populations are taken from League of Nations (1940) where
not given by Maddison (1995). GDPs per head are from Maddison (1995), except that,
where not available for the territories specified, the regional average is assumed, weighted
where necessary (as in the case of Portuguese colonies) by population.

14

Mark Harrison

Table 1.5. Armed forces of the great powers, 1939-1945 (thousands)
1939

1940

1941

1942

1943

1944

1945

Allied powers
USA
UK
France
USSR

—
480
5,000
—

—
2,273
7,000
5,000

1,620
3,383
—
7,100

3,970
4,091
—
11,340

9,020
4,761
—
11,858

11,410
4,967
—
12,225

11,430
5,090
—
12,100

Allied total

5,480

14,273

12,103

19,401

25,639

28,602

28,620

Axis powers
Germany
Italy
Japan

4,522
1,740
—

5,762
2,340
1,630

7,309
3,227
2,420

8,410
3,810
2,840

9,480
3,815
3,700

9,420
—
5,380

7,830
—
7,730

Axis total

6,262

9,732

12,956

15,060

16,995

14,800

15,560

Allies/Axis:
eastern front
western and
Pacific fronts

—

—

1.1

1.5

1.4

1.9

2.3

1.2

0.8

0.9

1.1

1.9

1.9

1.6

Notes:
The Allied and Axis totals sum the preceding rows in each column; however, the Axis total
is based on the average of the alternative Japanese series. The ratios of Allied to Axis forces
on each front are calculated as follows.
Western and Pacific fronts: for 1939 UK and France versus Germany. In 1940, the French
and Italian forces are included, each with a 50 per cent weight since Italy joined the war in
mid-year, at the same time as the French surrendered. In 1942-3, USA and UK versus onetenth of the German armed forces, plus Italy, plus Japan (the average of the alternative
series), but in 1943 the Italian forces are given a weight of two-thirds corresponding to the
eight months of fighting before the Italian surrender. In 1944-5, USA and UK versus onethird of the German armed forces, plus Japan.
Eastern front: USSR versus Germany, assuming that Germany allocated 90 per cent to
the eastern front in 1941-3, but only two-thirds in 1944-5.
Sources:
USA, table 3.11 (col. 3).
UK, table 2.13.
France: according to Kedward (1995), 401, there were 'just under 5 million' in the French
army after mobilization in September 1939, with 'a further two million possible soldiers
available in the Empire', which I assume to have been mobilized by 1940.
USSR, as table 7.8.
Germany: Forster, Messenger and Petter (1995), 468.
Italy: personal communication (Vera Zamagni).
Japan, table 6.9 (the rounded average of cols. 1, 2).

The economics of World War II: an overview

15

Table 1.6. War production of the great powers, 1939 to August 1945 (units)
1939
USA
No. of months
Thousands
Rifles, carbines
Machine pistols
Machine guns
Guns
Mortars
Tanks and SPG
Combat aircraft
Units
Major naval vessels
UK
No. of months

1940

1941

1942

1943

1944

1945

Total

—

—

1

12

12

12

8

—
—
—
—
—

—
—
—
—
—

—

—

38
42
20
3
0.4
0.9
1.4

1,542
651
662
188
11.0
27.0
24.9

5,683
686
830
221
25.8
38.5
54.1

3,489
348
799
103
24.8
20.5
74.1

1,578
207
303
34
40.1
12.6
37.5

12,330
1,933
2,614
549*
102.1
99.5
192.0

—

—

544

1,854

2,654

2,247

1,513

8,812

45

4

12

12

12

12

12

8

72

18
—
19
1
1.3
0.3
1.3

81
—
102
10
7.6
1.4
8.6

79
6
193
33
21.7
4.8
13.2

595
1,438
284
106
29.2
8.6
17.7

910
1,572
201
118
17.1
7.5
21.2

547
672
125
93
19.0
4.6
22.7

227
231
15
28
5.0
2.1
9.9

2,457
3,920
939
390
100.9
29.3
94.6

57

148

236

239

224

188

64

1,156

No. of months

—

—

6

12

12

12

8

50

Thousands
Rifles, carbines
Machine pistols
Machine guns
Guns
Mortars
Tanks and SPG
Combat aircraft

—
—
—
—
—
—
—

—
—
—
—
—
—
—

1,567
90
106
30
42.3
4.8
8.2

4,049
1,506
356
127
230.0
24.4
21.7

3,436
2,024
459
130
69.4
24.1
29.9

2,450
1,971
439
122
7.1
29.0
33.2

637
583
156
72
3.0
20.5
19.1

12,139
6,174
1,516
482
351.8
102.8
112.1

Units
Major naval vessels

—

33

62

19

13

23

11

161

Thousands
Rifles, carbines
Machine pistols
Machine guns
Guns
Mortars
Tanks and SPG
Combat aircraft
Units
Major naval vessels0

USSR

16

Mark Harrison

Table 1.6. (cont)
1939
Germany
No. of months
Thousands
Rifles, carbines
Machine pistols
Machine guns
Guns
Mortars
Tanks and SPG
Combat aircraft

4
451
40
20
2
1.4
0.7
2.3

1940
12

1941

1942

1943

1944

1945

Total

12

12

12

12

4

68

1,359
325
96
22
4.2
3.8
8.4

1,370
232
117
41
9.8
6.2
11.6

2,275
234
263
74
23.0
10.7
19.3

2,856
229
509
148
33.2
18.3
34.1

665
78
111
27
2.8
4.4
7.2

10,328
1,257
1,176
320
78.8
46.3
89.5

40

196

244

270

189

0

954

6

12

12

8

—

—

38

1,352
119
59
6
4.4
2.2b
6.6

Units
Submarines

15

Italy
No. of months

—

Thousands
Rifles, carbines
Machine pistols
Machine guns
Guns
Mortars
Tanks and SPG
Combat aircraft

—
—
—
—
—
—
1.7

—
—
—
—
—
—
3.3

—
—
—
—
—
—
3.5

—
—
—
—
—
—
2.8

—
—
—
—
—
—
2.0

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
125
10
17.0
3.0
13.3

Units
Major naval vessels

40

12

41

86

148

—

—

327

4

12

12

12

12

12

8

72

83
—
6
1
0.5
0.2
0.7

449
—
21
3
1.6
1.0
2.2

729
—
43
7
1.1
1.0
3.2

440
—
71
13
1.5
1.2
6.3

634
—
114
28
1.7
0.8
13.4

885
3
156
84
1.1
0.4
21.0

349
5
40
23
0.3
0.2
8.3

3,570
8
450
160
7.8
4.8
55.1

21

30

49

68

122

248

51

589

Japan
No. of months
Thousands
Rifles, carbines
Machine pistols
Machine guns
Guns
Mortars
Tanks and SPG
Combat aircraft
Units
Major naval vessels

Notes:
a
Small calibre naval and aviation weapons accounted for roughly half this number.
b
Including armoured cars.
Sources:
Ground and air munitions (SPG are self-propelled guns), except Italy: IVMV, vol. XII
(1982), 168, 181,183,200,202.
Major naval vessels (excluding landing craft, torpedo boats, and other auxiliary craft),
except Italy: Overy (1995), 1060.
Italy, allfigures:personal communication (Vera Zamagni).

Table 1.7. War production of the great powers, 1942-1944
Major
naval
vessels

Rifles,
carbines
(thou.)

Machine
pistols
(thou.)

Machine
guns
(thou.)

Guns
(thou.)

Mortars
(thou.)

Tanks
(thou.)

Combat
aircraft
(thou.)

The Allied powers
USA
UK
USSR
Allied total

10,714
2,052
9,935
22,701

1,685
3,682
5,501
10,868

2,291
610
1,254
4,154

512
317
380
1,208

61.6
65.3
306.5
433.4

86.0
20.7
77.5
184.2

153.1
61.6
84.8
299.5

6,755
651
55
7,461

The Axis powers
Germany
Italy
Japan
Axis total

6,501
—
1,959
8,460

695
—
3
698

889
83
341
1,313

262
7
126
395

66.0
11.3
4.3
81.6

35.2
2.0
2.4
39.6

65.0
8.9
40.7
114.6

703
218
438
1,359

2.7
2.3

15.6
11.9

3.2
2.1

3.1
2.2

5.3
7.0

4.7
3.3

2.6
2.0

5.5
—

3.1

22.9

4.0

3.8

3.4

6.6

3.0

—

Allies/Axis
eastern front
western and
Pacific fronts

Source: Calculated from table 1.6. Two-thirds of Italian production between mid-1940 and mid-1943 is assumed to have taken place within the
period 1942-4. For ground and air munitions, two-thirds of German war production are assigned to the eastern front. No account is taken of the
contribution of the western Allies to Soviet munitions supply, or of the Italian contribution to Axis forces in Russia.

18

Mark Harrison

tion dominated by a margin of at least 5:2 (rifles, combat aircraft), and in
some case by much more (3:1 for guns and machine guns, 5:1 for tanks,
mortars, and warships, 15:1 for machine pistols). The Allies held the upper
hand on every front - in the east almost as much as in the west and the
Pacific. On both main fronts the Allied advantage was greater in every category of weapons than in men, reflecting the higher level of equipment per
soldier of the Soviet, British, and United States armies.
Size and development
It would be a mistake to interpret thesefiguresas meaning that size was the
only economic factor of importance. Also of great significance was the level
of economic development, which, for present purposes, we will measure by
GDP per head.5 Here again the picture is complicated. Thus table 1.1
showed that the advantage of the Allies was larger in population than in
GDP. Average incomes of the prewar Allies were little more than half the
Axis level. There was still a significant gap (although a smaller one) in 1942.
But it is very important to note that GDP was distributed much more
unequally among the Allied territories than within the Axis. By 1942 the
Allies included the richest major power (the United States) as well as the
poorest (China, or, if China is discounted, the USSR), in addition to the
populous low-income colonial territories of the British empire in India and
Africa. It is of great significance, therefore, that if we confine our attention
to the core territories of each coalition, it was the Allies which held a
roughly 1.2:1 advantage in prewar development level.
Development level could be regarded as significant in the following sense.
The experience of two world wars showed that, when poor countries were
subjected to massive attack, regardless of size, their economies tended to
disintegrate. The exact mechanism of disintegration varied, but was typically already present in peacetime, in a low-productivity, poorly
commercialized agriculture, and a general lack of resource diversity. The
latter was influenced not only by lack of size, but also by poverty, since poor
economies - even large ones - relied too heavily upon agriculture and could
not afford a wide assortment of other activities. Mobilization disrupted
trade internally and externally; the more industry was concentrated upon
war production, the less was left to sell to peasants and foreigners alike in
exchange for their food and oil, and the more rapidly imports and domestic food supplies disappeared from the urban economy. Poor countries also
lacked the commercial and administrative infrastructure which modern
governments could use to foster the objectives of wartime economic policy.
Mobilization was therefore either ineffective or else self-limiting; if
mobilization was achieved it could not be sustained, and tended if anything

The economics of World War II: an overview

19

to accelerate economic collapse. In World War I this happened first to
Russia, then to Austria-Hungary, finally to Germany itself - the poorest
first, in inverse order of development level.
In World War II it was China which demonstrated first the weakness of
a low-income great power. As table 1.1 revealed, China outweighed Japan
in every economic dimension but GDP per head. Attacked by Japan in
1937, the Chinese economy disintegrated. China was saved from immediate destruction only because it was too large for Japan to swallow whole,
while the part which Japan occupied was 'too poor and rebellious to exploit
systematically'.6 The USSR was another low-income power; the Soviet
economy provides the exception to the rule because it did not collapse
under massive attack in 1941, although every historical precedent suggested that it should have done so. Among the Axis powers Japan was the
poorest, then Italy, with Germany at an income level comparable with the
British. When it was the turn of the Axis powers to go down, defeat came
to Italy in 1943, then Japan in 1945, in that order not because Italy was
poorer than Japan, but because that was the order in which the Allies
attacked them. Italy and Japan suffered most from disruption of external
rather than internal supply, bringing deprivation of imports. In 1945 the
wealthier German economy also collapsed at last, but only at the point
when heavy bombing was combined with massive attack overland from
both east and west.
Thus it may be argued that in general terms the outcome of the war was
decided by size (the economically larger coalition won), but, nevertheless,
if a large population and a large GDP were both highly desirable, a large
GDP was better because of the developmental advantages which came with
a higher level of GDP per head. The Soviet exception proves the rule,
because it displayed a capacity for military mobilization characteristic of a
much more highly developed economy, despite its relatively low income
level.
Table 1.8 shows percentages of national income mobilized by the six
great powers. Such percentages may be calculated at both current and
constant peacetime (prewar or postwar) prices, and mean something
slightly different in each case. The degree of mobilization measured in
current values takes into account changing relative scarcities of guns
versus butter and their current priorities relative to each other, whereas
a constant-price measure reflects their changing relative volumes from a
peacetime welfare standpoint. For present purposes constant prices are
more useful, but are not available in every case. Nominal relative values
are shown in the first part of the table for every country except the
USSR. The second part of the table shows constant-price measures for
the USA, Germany, and the USSR. For the USA and Germany the

20

Mark Harrison

different standards of valuation make little or no difference, and we can
infer that the same would be true for the UK from the fact that the
British GDP deflator and retail price index (table 2.9 below) followed a
nearly identical wartime path (i.e. the relative prices of consumption and
non-consumption goods, most of which were war goods, did not
change). For the USSR this would certainly not be true; as is shown in
chapter 7, the cheapening of weapons and rise in food prices meant that
the nominal defence burden fell far below the defence burden measured
at prewar prices. For Japan and Italy there is no information on this
point, and no way of knowing whether the nominal military burden may
under- or overstate the real burden.
Table 1.8 shows that, however the military burden is measured, the
Germans followed a path of ever-strengthening mobilization; nearly one
quarter of German GNP was devoted to the war effort already in 1939, and
this proportion probably reached three-quarters in 1944 before economic
collapse ensued. In 1939 Japan's nominal share of national resources committed to the war (22 per cent) was similar to Germany's, although at that
time Japan was confronted only by weak enemies. But in the next two or
three years the Japanese struggled to raise this share by even a few percentage points until 1943, when its life-or-death struggle with the two most
powerful industrialized countries in the world was already going badly. By
1944 Japan too was devoting three-quarters of GDP to the war, but Japan's
final mobilization was much more of a sudden, last-ditch effort than
Germany's, and ended the same way in economic collapse. As for the Italian
mobilization, its failure is obvious by the fact that at its wartime peak it
barely matched the prewar efforts of Italy's Axis partners, and stagnated or
declined as the war turned against Italy.
The Soviet economy, although much poorer than the Italian, and
comparable with the Japanese in terms of income per head, did not collapse
despite its initial loss of wealth and income. It mobilized rapidly, shifting
44 per cent of GNP from civilian to military uses in two years (1940-2);
maximum two-year shifts for other countries were 15 per cent for Italy, 29
per cent for Germany, 38 per cent for the UK (all in 1939—41), 31 or 32 per
cent for the USA (1941-3), and 43 per cent for Japan (but only when it was
too late in 1942-4). The Soviet economy went on to devote three-fifths of
its national income to the war effort, a little below the German and
Japanese peaks, but the Soviet peak came earlier in the war and proved
more sustainable for a variety of reasons (including Allied aid). The Soviet
success by comparison with other poorer countries was partly a matter of
size; the Soviet Union was bigger than Japan or Italy in population and
GNP, and far bigger in territory, and was already virtually self-sufficient
before the war. But the precedents of disintegration and collapse of Russia

The economics of World War II: an overview

21

Table 1.8. The military burden, 1939-1944 (military outlays, per cent of
national income)
1940

1941

1942

1943

1944

At current prices
Allied powers
1
USA
15
UK
USSR
—

2
44
—

11
53
—

31
52
—

42
55
—

42
53
—

Axis powers
Germany
Italy
Japan

23
8
22

40
12
22

52
23
27

64
22
33

70
21
43

—
—
76

At constant prices
Allied powers
1
USA
UK
—
USSR

2
—
17

11

32

43

45

28

61

61

53

Axis powers
Germany
Italy
Japan

40
—
—

52
—
—

63
—
—

70
—
—

—
—
—

1939

23
—
—

Sources:
USA (per cent of GNP at current and 1958 prices): table 3.1 (cols. 3, 6).
UK (per cent of net national expenditure at current prices): table 2.6 (col. 2).
USSR (per cent of GNP at 1937 factor cost): table 7.11.
Germany (per cent of GNP at current and 1939 prices): calculated from table 4.16. For
war outlays at 1939 prices the same deflator is assumed as for government outlays generally;
by 1943, war outlays accounted for 96 per cent of the latter.
Italy (per cent of GDP at current prices): table 5.14 (col. 22) shows real military outlays
divided by real GDP, both converted from current values by the same GDP deflator.
Japan (per cent of GDP at current prices): table 6.11 (col. 5).

in World War I, and of China in World War II, remind us that size was not
sufficient for economic survival under attack.
The success of the British economic mobilization testifies eloquently to
the importance of development level by comparison with size and selfsufficiency. In terms of the scale factors shown in table 1.1, Britain was
smaller than Japan in population and territory, smaller than Germany in
GDP and territory, and the smallest of all the Allied powers by any
measure. Being a highly open economy, exceptionally highly industrialized,
the British economy also relied heavily on imported food and fuels. Despite

22

Mark Harrison

being neither large nor self-sufficient, the British economy was comprehensively mobilized without major breakdowns of food or power supplies.
Possessing the highly developed commercial, transport, and administrative
infrastructure that comes with a high GDP per head, the British were able
to expand the home production of calories, and ration fuel and energy
efficiently. It was also easier for the British to supply their economy with
food and fuels from across the world than for the Axis powers to exploit
effectively the less industrialized, low-income colonial areas into which they
expanded in the course of the war.
The link between development level and mobilization capacity is further
illustrated in the contrasting results of German occupation in northwestern
and eastern Europe. Northwestern Europe was the one high-income,
industrialized region into which the Axis powers expanded. France provided Germany with as much food as all of the occupied USSR, and more
industrial materials - an outcome which would have been viewed ironically
from a prewar perspective, because it was the occupation of eastern Europe
which was intended to make Germany self-sufficient in such deficit
commodities, while the occupation of France was an accidental by-product
of the evolution of the war.7 German occupation policies successfully
extracted 30-40 per cent of the wartime national products of France, the
Netherlands, and Norway (and a similar proportion from the industrialized region of Bohemia-Moravia in the east), but obtained resources at
much lower or negligible rates of extraction from the low-income, agrarian
territories of eastern Europe.8
Part of the Allied success in mitigating simultaneously the British disadvantage of small size, and the Soviet disadvantage of low development
level, lay in the pooling of Allied resources. The United States shared its
capital-intensive, high-technology resources with Britain and the USSR
(and Britain, at a lower level, also contributed to Soviet aid). The USSR
and, to a lesser extent, Britain used their territory to provide forward bases
for the assault upon Germany, and also bore the brunt of the fighting. In
this way the Allied war effort formed an economically integrated whole certainly in comparison with the war efforts of the Axis powers, each of
which evolved independently, each relying on its own isolated colonial
sphere.
The determinants of mobilization
Mobilization was essential to the war strategy of each of the powers.
Nonetheless, understanding its importance requires a distinction between
the different powers and the different theatres of the war. The Axis powers
mobilized their economies first, before the world war broke out, aware of

The economics of World War II: an overview

23

the risks of reliance on purely military advantage to bring easy successes.
When the quick victories evaporated, they continued economic mobilization in a hopeless race with an economically superior enemy. The Soviets
also began to mobilize in peacetime, in order to insure themselves against
the likelihood of aggression, whereas the western Allies mobilized their
economies only from the time when war was perceived as inevitable. Once
this point was reached, the British, Americans, and Russians alike mobilized their economies knowing that only quantitative effort could neutralize the qualitative advantage of the Axis powers.
The precise degree of mobilization was much more important for the
Russians than for the much richer British and Americans, and was more
important to the outcome on the eastern front than in the Pacific and
the Mediterranean. The Italian and Japanese GDPs were so small relative to combined Anglo-American resources that it simply did not matter
that the Italians mobilized only 20 per cent or that the Japanese mobilized as much as 70 per cent of their national income for the war. Even
a high percentage of a small quantity was still a small quantity. On the
eastern front, on the other hand, the degree of mobilization was very
important, because the German and Soviet economies were more evenly
matched in terms of total output; if the Germans mobilized 60 per cent,
and the Soviets only 30 per cent, then the Germans would win. On the
western front the percentage of resources mobilized mattered less
because the Anglo-American margin of superiority in combined
resources over Germany was so great.
WTiat underlying factors influenced the degree of mobilization? At one
time most attention was accorded to two factors - distance from the main
theatres of fighting, and the wartime economic system. Both rested on a
rough comparison of the Soviet, British, and American experiences. As far
as the first is concerned, these economies could be ranked in the same order
both in terms of the degree of mobilization (from highest to lowest), and in
terms of distance from the front line (from nearest to farthest).9 It was the
nearness of combat conditions, and the blurring of the distinction between
thefightingfront and the home front, which stimulated national feeling and
promoted economic mobilization.
The other factor which received much attention was the wartime economic system. Again a comparison of the Soviet, British, and American
experiences ranked these economies in the same order as before in terms of
the degree of planning (from most to least centralized). It was also believed
that the German economy, hindered by party interests vested in economic
slack, and by bureaucratic infighting which prevented effective coordination, remained relatively unmobilized until heavy Allied bombing, the invasion of France from the west, and the approach of the avenging Russians

24

Mark Harrison

from the east, enabled national feeling to overcome these obstacles - but by
this time, it was too late.10
These generalizations now appear to be inaccurate. As far as distance
from the main theatres of combat is concerned, the Italian and Japanese
economies remained at a low level of mobilization through 1943, despite
the adverse turn of the Pacific War for Japan and the incursion of the front
line into the Italian homeland.
As far as the degree of planning is concerned, the Japanese economy
became highly centralized, but success in terms of the degree of mobilization was belated, and was swiftly followed by collapse. In both Japan and
Italy it was the denial of imports which shackled the mobilization process
and ensured, in the case of Japan, that success was self-destructive. The
British economy became highly mobilized under centralized administrative
controls. But the Soviet economy became even more highly mobilized
despite a context of administrative shambles; only after the tide had been
turned did centralized administration reassert itself. In the German case,
likewise, it now appears that the civilian economy had become relatively
highly mobilized by an early stage in the war, notwithstanding the defects
of the political and administrative system. If there was slack, it was tied up
in wasteful intermediate uses within military industry, not in household
consumption.11
What was important was not so much to have detailed economic controls
as to be able to maintain economic integration under intense stress. This
capacity is what Italy and Japan lacked. Their economies were small in
global terms, heavily dependent on international trade, far from selfsufficient in fuels and other industrial resources. Their development level
was insufficient to compensate. What ensured the failure of their economic
mobilization, regardless of the growing threat to vital national or regime
interests, and despite intense efforts at economic control, was the disruption of overseas trade, the intensity of Allied blockade, the interruption of
supplies of coal, oil, or crucial war materials, and the obstacles to effective
sharing of resources among the Axis powers which were never overcome.
The USSR, another low-income, newly industrializing economy, was
able to avoid this fate. Offsetting its poverty were advantages of size, access
to Allied resources, and, above all, an effective system of economic integration; these gave it resilience under the kind of pressure which destroyed the
old Russian empire in World War I, and the contemporary Japanese and
Italian empires in World War II. The Soviet economy was held together by
coercion, by leadership, by national feeling, by centralized planning and
rationing, and by a system for food procurement which ensured that
farmers could not deny food to the towns.

The economics of World War II: an overview

25

Quantity and quality

When the authors of this volume examine the wartime mobilization of the
great powers' economies, their main aim is to understand what quantity of
resources was delivered to the front, by what means, and with what results
for economic life. The military qualities of the resources supplied, and what
use the generals made of them, would be entirely beyond our scope, were it
not for the fact that the relationship between qualities and quantities was
interactive.
It would be tempting to conclude from the experience of World War II
that, since ultimately the powers of the Axis were overwhelmed by quantity,
quality did not really matter. Since the quantity of military resources was
limited by overall resources, it was the fact that the Allies' total GDP was
greater than the total GDP of the Axis which decided the outcome of the
war.
But the question of the military value of resources cannot be avoided.
For one thing, the quantities do not explain why German and Japanese
leaders deliberately undertook acts of war against economically more powerful adversaries, or how they achieved such success in the early stages. It
was the very high quality of their military assets, thefightingpower of their
armies and navies, which, in the first years of the war, was almost decisive.
In 1939-41 Germany and Japan achieved sweeping military gains and conquered huge territories in spite of economic disadvantage, because of the
military qualities of their soldiers and the highly effective use made of very
limited resources. Indeed the Axis leaders saw the warlike qualities of their
military assets as providing a military substitute for productive powers, a
means of neutralizing the quantitative advantages of the enemy, and an
expansionist solution to their countries' position of economic weakness.
Germany and Japan deployed superior combat organizations which, if
quantities had been held equal on both sides, would have remained capable
of defeating the opposing forces throughout the war.12 However, the Red
Army, too, unexpectedly displayed some elements of superior fighting
power, and these qualities increased in the course of the war.
The quick victory which Germany and Japan sought was frustrated by
two factors. One was the unanticipated will to resist which became apparent at different stages in London, Moscow, and Washington. The other was
the unexpected military capacity of the Allied powers to delay defeat and
win time, a precious breathing space within which superior Allied resources
could be mobilized and brought to bear.
Once the quick victory which Germany and Japan sought had been frustrated, qualitative factors continued to exercise a major influence over the
course of the war. It was the quality, not the quantity, of German and


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