What were not factors for wartime economic growth? I was reminded of this when I read Robert Kaplan's newest book, “The Necessary Nations.” I was also reminded of something else by the experience of attending a recent symposium on the topic of “The Good War,” organized by the Center for Economic Studies, in Washington, D.C. During the talk I listened to several academics, most of them from the business school at the University of Michigan, who maintained that in any case it is not true that economic growth came about during World War II, as we are taught.
This is an argument that is often advanced by those who wish to minimize the role of human error or the forces of nature in bringing about economic growth. It is easy to understand their point of view. After all, they had been trained to emphasize the importance of the markets for goods and services, which had not been functional during World War I. They were taught that markets determine what are not factors for wartime economic growth. The reality, however, is that markets can be effective in determining what factors for growth.
What were not factors for economic growth? Economic growth was obviously not the result of a single market or industry. Some claim that it was the result of governmental policies or measures taken by a country or government in the course of planning and constructing an economic growth package. There may have been some assistance by international agencies, but these were not “public goods,” as they were termed at that time. Private enterprise was considered a more appropriate substitute for public policies.
These arguments are fallacies, I believe. In fact, they are self-defeating, because it makes one feel as if the entire concept of what were not factors for wartime economic growth is irrelevant today. There is nothing inevitable in a country's success or failure. For instance, the United States did experience a period of economic decline in the aftermath of World War II, but it recovered. The reason was not because of any particular governmental policy or action, but the growth of the private economy.
What were not factors for wartime economic growth? I think that war, in and of itself, created very few barriers to economic growth. The few industries that suffered during the war – petroleum, metal, railroads, and aviation – provided a key to the eventual accomplishment of economic growth. Other industries, such as communications and information technology, also prospered during that time. And, of course, the automobile industry, which enjoyed near complete deregulation following the war, played a key role.
So, what were not factors for wartime economic growth? I would argue that overall, the Great Depression was less of a factor than the growth that came about as a result of wartime government . . . . . . policy. As those government policies ended, more people began to realize that they needed better jobs, which led to the creation of a number of new businesses. That includes the computer industry, which we are still enjoying today, nearly 50 years after the end of the war.