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A war economy or wartime economy is the set of contingencies undertaken by a modern
state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, United States * ''Our S ...
to mobilize its
economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
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 In economics, resource allocation is the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by various means, such as markets, or planning. In project management, resource allocati ...
programs. Approaches to the reconfiguration of the economy differ from country to country. Many states increase the degree of planning in their economies during wars; in many cases this extends to
rationing Rationing is the controlled distribution of scarce resources, goods, services, or an artificial restriction of demand. Rationing controls the size of the ration, which is one's allowed portion of the resources being distributed on a particular ...
, and in some cases to conscription for civil defenses, such as the
Women's Land Army The Women's Land Army (WLA) was a British civilian organisation created in 1917 by the Board of Agriculture during the First World War to bring women into work in agriculture, replacing men called up to the military. Women who worked for the W ...
and Bevin Boys in the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
during
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposing ...
. During
total war Total war is a type of warfare that includes any and all civilian-associated resources and infrastructure as legitimate military targets, mobilizes all of the resources of society to fight the war, and gives priority to warfare over non-combata ...
situations, certain buildings and positions are often seen as important targets by combatants. The
Union blockade The Union blockade in the American Civil War was a naval strategy by the United States to prevent the Confederacy from trading. The blockade was proclaimed by President Abraham Lincoln in April 1861, and required the monitoring of of Atlanti ...
,
Union Union commonly refers to: * Trade union, an organization of workers * Union (set theory), in mathematics, a fundamental operation on sets Union may also refer to: Arts and entertainment Music * Union (band), an American rock group ** ''Un ...
General
William Tecumseh Sherman William Tecumseh Sherman ( ; February 8, 1820February 14, 1891) was an American soldier, businessman, educator, and author. He served as a general in the Union Army during the American Civil War (1861–1865), achieving recognition for his com ...
's March to the Sea during the
American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states ...
, and the
strategic bombing Strategic bombing is a military strategy used in total war with the goal of defeating the enemy by destroying its morale, its economic ability to produce and transport materiel to the theatres of military operations, or both. It is a systematica ...
of enemy cities and factories during World War II are all examples of total war. Concerning the side of aggregate demand, the concept of a war economy has been linked to the concept of " military Keynesianism", in which the government's
military budget A military budget (or military expenditure), also known as a defense budget, is the amount of financial resources dedicated by a state to raising and maintaining an armed forces or other methods essential for defense purposes. Financing militar ...
stabilizes
business cycle Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examin ...
s and fluctuations and/or is used to fight
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
s. On the
supply Supply may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as in confidenc ...
side, it has been observed that wars sometimes have the effect of accelerating
technological progress Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, science, ...
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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
in
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
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. War is often used as a last ditch effort to prevent deteriorating economic conditions or currency crises, particularly by expanding services and employment in the military, and by simultaneously depopulating segments of the population to free up resources and restore the economic and social order. A temporary war economy can also be seen as a means to avoid the need for more permanent militarization. During World War II, U.S. President
Franklin D. Roosevelt Franklin Delano Roosevelt (; ; January 30, 1882April 12, 1945), often referred to by his initials FDR, was an American politician and attorney who served as the 32nd president of the United States from 1933 until his death in 1945. As the ...
stated that if the
Axis powers The Axis powers, ; it, Potenze dell'Asse ; ja, 枢軸国 ''Sūjikukoku'', group=nb originally called the Rome–Berlin Axis, was a military coalition that initiated World War II and fought against the Allies. Its principal members were ...
won, then "we would have to convert ourselves permanently into a
militaristic Militarism is the belief or the desire of a government or a people that a state should maintain a strong military capability and to use it aggressively to expand national interests and/or values. It may also imply the glorification of the mili ...
power on the basis of war economy."


United States

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 A world war is an international conflict which involves all or most of the world's major powers. Conventionally, the term is reserved for two major international conflicts that occurred during the first half of the 20th century, World WarI (1914 ...
, the
Korean War , date = {{Ubl, 25 June 1950 – 27 July 1953 (''de facto'')({{Age in years, months, weeks and days, month1=6, day1=25, year1=1950, month2=7, day2=27, year2=1953), 25 June 1950 – present (''de jure'')({{Age in years, months, weeks a ...
, and the
Vietnam War The Vietnam War (also known by other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vietnam a ...
.


World War I

In mobilizing for
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
, the United States expanded its governmental powers by creating institutions such as the
War Industries Board The War Industries Board (WIB) was a United States government agency established on July 28, 1917, during World War I, to coordinate the purchase of war supplies between the War Department (Department of the Army) and the Navy Department. Because ...
(WIB) to help with military production. Others, such as the Fuel Administration, introduced
daylight saving time Daylight saving time (DST), also referred to as daylight savings time or simply daylight time (United States, Canada, and Australia), and summer time (United Kingdom, European Union, and others), is the practice of advancing clocks (typicall ...
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 The Four Minute Men were a group of volunteers authorized by United States President Woodrow Wilson to give four-minute speeches on topics given to them by the Committee on Public Information (CPI). In 1917–1918, over 750,000 speeches were give ...
, volunteers who rallied the public through short speeches,
investigative journalist Investigative journalism is a form of journalism in which reporters deeply investigate a single topic of interest, such as serious crimes, political corruption, or corporate wrongdoing. An investigative journalist may spend months or years rese ...
George Creel George Edward Creel (December 1, 1876 – October 2, 1953) was an American investigative journalist and writer, a politician and government official. He served as the head of the United States Committee on Public Information, a propaganda organ ...
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 World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...
, the U.S. government took similar measures in increasing its control over the economy. The Fall of France and the shifting of the front line into the
English Channel The English Channel, "The Sleeve"; nrf, la Maunche, "The Sleeve" (Cotentinais) or ( Jèrriais), (Guernésiais), "The Channel"; br, Mor Breizh, "Sea of Brittany"; cy, Môr Udd, "Lord's Sea"; kw, Mor Bretannek, "British Sea"; nl, Het Kana ...
with the outcome of the looming
Battle of Britain The Battle of Britain, also known as the Air Battle for England (german: die Luftschlacht um England), was a military campaign of the Second World War, in which the Royal Air Force (RAF) and the Fleet Air Arm (FAA) of the Royal Navy defende ...
uncertain provided the spark needed to begin conversion to a wartime economy with the passing of the
Two-Ocean Navy Act The Two-Ocean Navy Act, also known as the Vinson-Walsh Act, was a United States law enacted on July 19, 1940, and named for Carl Vinson and David I. Walsh, who chaired the Naval Affairs Committee in the House and Senate respectively. The largest ...
in July 1940. The subsequent
Attack on Pearl Harbor The attack on Pearl HarborAlso known as the Battle of Pearl Harbor was a surprise military strike by the Imperial Japanese Navy Air Service upon the United States against the naval base at Pearl Harbor in Honolulu, Territory of Hawaii ...
prolonged and expanded the measures. The 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 The War Production Board (WPB) was an agency of the United States government that supervised war production during World War II. President Franklin D. Roosevelt established it in January 1942, with Executive Order 9024. The WPB replaced the Su ...
(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." The United States mass-produced many vehicles, such as ships (i.e.
Liberty Ship Liberty ships were a class of cargo ship built in the United States during World War II under the Emergency Shipbuilding Program. Though British in concept, the design was adopted by the United States for its simple, low-cost construction. Ma ...
s), aircraft (i.e.
North American P-51 Mustang The North American Aviation P-51 Mustang is an American long-range, single-seat fighter and fighter-bomber used during World War II and the Korean War, among other conflicts. The Mustang was designed in April 1940 by a team headed by James ...
), jeeps (i.e. Willys MB) and tanks (i.e.
M4 Sherman } The M4 Sherman, officially Medium Tank, M4, was the most widely used medium tank by the United States and Western Allies in World War II. The M4 Sherman proved to be reliable, relatively cheap to produce, and available in great numbers. It ...
). 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.


Present day

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, they have an annual military budget larger than India, China, Russia, United Kingdom, Germany, Saudi Arabia, and France’s military budgets combined.


Germany


World War I

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 roblem 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 World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...
, 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 Treaty of Versailles (french: Traité de Versailles; german: Versailler Vertrag, ) was the most important of the peace treaties of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June ...
. The
Third Reich Nazi Germany (lit. "National Socialist State"), ' (lit. "Nazi State") for short; also ' (lit. "National Socialist Germany") (officially known as the German Reich from 1933 until 1943, and the Greater German Reich from 1943 to 1945) was ...
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 billion 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... eingone 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 Reichsmarks 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.


Other Examples

Armenia Armenia (), , group=pron officially the Republic of Armenia,, is a landlocked country in the Armenian Highlands of Western Asia.The UNbr>classification of world regions places Armenia in Western Asia; the CIA World Factbook , , and ' ...
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).


See also

* Companies by arms sales * Defense Economics * Diversionary war *
Economic warfare Economic warfare or economic war is an economic strategy utilized by belligerent nations with the goal of weakening the economy of other states. This is primarily achieved by the use of economic blockades. Ravaging the crops of the enemy is a cl ...
* Industrial warfare *
Military–industrial complex The expression military–industrial complex (MIC) describes the relationship between a country's military and the defense industry that supplies it, seen together as a vested interest which influences public policy. A driving factor behind the r ...
* Mass production *
Permanent war economy Military Keynesianism is an economic policy based on the position that government should raise military spending to boost economic growth. It is a fiscal stimulus policy as advocated by John Maynard Keynes. But where Keynes advocated increasing ...
* Resistance economy *
The Climate Mobilization The Climate Mobilization (TCM) is a grassroots environmental advocacy group working toward large-scale political action against global warming. It believes that the crisis of climate change requires a national economic effort on the scale of the ...
: calls for a WWII–scale economic transformation to combat climate change *
Total war Total war is a type of warfare that includes any and all civilian-associated resources and infrastructure as legitimate military targets, mobilizes all of the resources of society to fight the war, and gives priority to warfare over non-combata ...
*
War communism War communism or military communism (russian: Военный коммунизм, ''Voyennyy kommunizm'') was the economic and political system that existed in Soviet Russia during the Russian Civil War from 1918 to 1921. According to Soviet histo ...
*
War effort In politics and military planning, a war effort is a coordinated mobilization of society's resources—both industrial and human—towards the support of a military force. Depending on the militarization of the culture, the relative si ...
* World War Zero * Wartime propaganda *
War cabinet A war cabinet is a committee formed by a government in a time of war to efficiently and effectively conduct that war. It is usually a subset of the full executive cabinet of ministers, although it is quite common for a war cabinet to have senio ...
*
Victory garden Victory gardens, also called war gardens or food gardens for defense, were vegetable, fruit, and herb gardens planted at private residences and public parks in the United States, United Kingdom, Canada, Australia and Germany during World War I ...


Further reading

*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, 201


Climate Change is not World War


References

{{DEFAULTSORT:War Economy Economic planning Military economics Economic warfare