*Keep from All Thoughtful Men: How U.S. Economists Won World War II*

by on July 15, 2012 at 1:32 pm in Books, Economics, History | Permalink

That is a new book out by Jim Lacey.  Here is one good review by Christopher Tassava:

…Lacey (a retired U.S. Army officer and current writer on defense matters) describes the bureaucratic fights between civilian experts and military staff over the extent and speed to which the American economy — hardly firing on all cylinders as war began in Europe — could be reoriented to produce the munitions necessary for a serious military effort. At the center of Lacey’s story are three economists who, he shows, had far-sighted views of the true capacity of the American economy: the reasonably well known Simon Kuznets and two nearly forgotten figures, Robert Nathan and Stacy May.

Lacey capably uses archival and secondary sources to show that these three men, along with a small group of other civilians inside the federal bureaucracy, were able to use social-scientific methods, including, crucially, statistical techniques, to assess how large the U.S economy could grow, how quickly that growth could occur, and how much war materiel the economy could produce for use by the U.S. and Allied militaries. Lacey persuasively shows that Kuznets, Nathan, and May were able to forecast in late 1942, before the first anniversary of Pearl Harbor, that June 1944 would be the moment at which the American “arsenal of democracy” would be able to produce sufficient materiel to launch a substantial invasion of Europe.

1 Ajay July 15, 2012 at 2:17 pm

The big question in my mind is how can we explain the booming prosperity that the united states went through as soon as WW2 ended? Was it really aggressive fiscal policy which turned the tide or was it something else?

2 affenkopf July 15, 2012 at 2:33 pm

The rest of the world being in ruins might have played a part.

3 The Original D July 15, 2012 at 4:08 pm

The Marshall Plan helped too.

4 Willitts July 15, 2012 at 9:53 pm

Plants and factories retooled for civilian production, millions of women and blacks entering the labor force, demolished competitors, new extraction of raw materials previously too expensive to extract, and global trade hegemony from newly established trading partners.

Ferengi Rules of Acquisition:

34. War is good for business.
35. Peace is good for business.

Rinse and repeat.

Seriously, I doubt of the fiscal argument. The huge destruction of resources during the war should have contracted our production possibilities frontier. We gained labor resources, conquered or liberated areas with natural resources, and established new trade relationships. Our allies and enemies took large hits to their infrastructure and industry while we expanded ours.

We had the advantage of two huge oceans to our east and west, a peaceful ally to the north and a poor, weak country to our south. Distance is (or was) the best armor. Our supply of natural resources is vast. Our free society fostered innovation and rewarded technology. Our character in warfare has always been vicious and tenacious, until recently.

5 Frank July 16, 2012 at 3:27 pm

How about catch-up growth?

6 prior_approval July 15, 2012 at 2:17 pm

And yet, those same economists could not have an inkling of what the American military was capable of in terms of incinerating cities, both using conventional weapons and then nuclear weapons.

World War II was won by mass slaughter – most of it practiced by and against the Russians. The cross Channel invasion of France in 1944 was a trivial sideshow in comparison.

And this is what the Soviets were able to do, after having lost much of their western territory to German invaders (wikipedia quotes) –
‘Advised months in advance that the attack would fall on the neck of the Kursk salient, the Soviets designed a plan to slow, redirect, exhaust, and progressively wear down the powerful German panzer spearheads by forcing them to attack through a vast interconnected web of minefields, pre-sighted artillery fire zones, and concealed anti-tank strong points comprising eight progressively spaced defense lines 250 km deep—more than 10 times as deep as the Maginot Line—and featuring a greater than 1:1 ratio of anti-tank guns to attacking vehicles. By far the most extensive defensive works ever constructed, it proved to be more than three times the depth necessary to contain the furthest extent of the German attack.’

And the Soviets paid for this success in the following fashion –
‘Glantz estimates Soviet losses during Operation Kutuzov (12 July–18 August) at 112,529 killed and 317,361 wounded, for a total of 429,890 casualties;[137] the Western Front as losing 25,585 killed and 76,856 wounded and sick; the Bryansk Front suffered 39,173 killed and 123,234 wounded and sick. The Central Front lost 47,771 killed and 117,271 wounded and sick.[137] Total casualties for the “Battle of Kursk” were 863,303 men.’ (In comparison, total American casualties in WW II were 405,399 according to http://www.abmc.gov/search/wwii.php)

And this is the sort of material costs the Soviet economy handled –
Soviet material losses for Citadel (5–16 July) amounted to 2,586 tanks and self-propelled guns out of 3,925 committed to combat (well over 50 percent). Roughly, this was seven times the number of German losses. Total material losses for Kutuzov totaled 2,586 tanks and self-propelled guns out of an initial strength of 2,409, well over 100 percent. The material losses in the Polkovodets Rumyantsev operation were also heavy. Glantz quotes Krivosheyev’s numbers of 1,864 tanks and self-propelled guns out of 2,439 engaged, well over 50 percent. The loss ratio was roughly 5:1 in favor of the Germans.

According to Christer Bergström, Red Air Force losses amounted to 677 on the northern flank and 439 on the southern flank of the bulge during Citadel. In the north, 5–11 July, Soviet losses amounted to 430 destroyed aircraft. The 2nd Air Army suffered 433 casualties in total in the north during July 1943. Total losses for the 17th Air Army were 244 during the same period. Other unit casualties are uncertain. Bergström’s research indicates total Soviet air losses were 1,104 between 12 July and 18 August, covering Operations Citadel and Kutuzov.’

Losses which the Soviets did not even blink at, as their factories were cranking out battlefield weaponry (tanks, artillery, aircraft, infantry weapons, etc.) at a rate which no other combatant of WWII could match.

But then, Stalin never did place any faith in economists. He just used the vast resources of a totalitarian state to keep himself in power, regardless of cost, while crushing another totalitarian system which also placed no faith in its economists.

7 albert magnus July 15, 2012 at 3:05 pm

The USSR won the war, but they didn’t do it alone. The US sent the USSR 427,000 vehicles mostly 2 1/2 ton Dodge trucks which was about 2/3 of their truck fleet. Also, 5 million tons of food, 13 million boots, 2000 locomotives, 11,000 frieght carriages, 540,000 tons of rail and enormous amounts of refined petroleum. Also, the US built an entire Army and Navy from almost from scratch and helped build the Commonwealth forces as well. Its a very impressive feat.

Also, the US built about twice as many aircraft as the USSR in WWII and they were better planes!

8 Vanya July 15, 2012 at 3:47 pm

In all honesty the USSR would have beat the Germans eventually even with no US help at all. Germany was woefully overstretched even by December 1941. D-day is vitally important because it is really the key victory in the Cold War. Had we not staged a succesful landing by 1944, the USSR would have overrun all of Germany by late 1945 and the Western Allies would have had very little leverage on the continent. Even France and Italy might not have gone Communist, but their governments would have been far more pro-Soviet and there would be no NATO. D-Day was certainly a turning point in history, just not a decisive battle in WWII.

9 cassander July 15, 2012 at 6:53 pm

The Germans were only overstretched because of the need to defend against allied efforts, mainly Dozens of divisions in France, immense resources devoted to defending against bomber campaigns and repairing the damage done by them. Meanwhile the US was supplying two thirds of the USSR’s aviation gas a third of its explosives, and copper for a third of its ammo. On their own, the USSR and Germany were fairly evenly matched industrially. Both possessed about 15 percent of global industry pre war.

10 Ajay July 15, 2012 at 9:36 pm

Vanya is correct. Even if the Germans were to commit everything they had to fighting the Russians, it was truly impossible to take over a country like Russia let alone Moscow. It is simply not true that the Germans were evenly matched to Russia. if you look at the beginning of the war, The USSR had far more planes, tanks, and mechanized infantry than that of the Germans. unfortunately, the reasons for so many of the USSR’s blunders are the fault of Stalin’s orders to defend Stalingrad and to station troops near the border of Germany before suspicion of operation Barbarossa. But the biggest reason why Germany, in any circumstance, would fail to take over Russia is due the Geography. Like my history teacher says:”never fight a land war in Asia.”

11 philemonloy July 15, 2012 at 10:51 pm

Re: ‘Like my history teacher says:”never fight a land war in Asia.”’

Genghis Khan and his ilk did quite fine, thank you.

12 Go Kings Go July 16, 2012 at 1:02 pm

Ajay-

The Germans didn’t mean to occupy Russia, they meant to depose the communist and install a friendlier regime, just as they did in WWI when the communists were that friendlier regime. The Wehrmacht & Japanese, with the USSR’s people’s hatred of the communist, were more than capable of accomplishing that limited goal if not hamstrung by U.S. involvement.

13 Ape Man July 16, 2012 at 9:10 pm

I am sorry, but that opinion is way overstated. If Hitler had not been crazy and wasted some of his precious summer months beating up the Kingdom of Yugoslavia there is no telling how the war would have turned out given how fast the Germans advanced that first summer. Or what if Hitler had focused on the Soviet oil fields instead of prestige objects? It is possible Russia still would have won, but it would have been way more dicey for the Russians. And that is not even factoring in the effects of US aid. Russian dependence on America for basic transport should not be overlooked. Trucks are more important to winning battles than tanks are. And there was many times when the Germans would have one the battle if they had the extra troops on hand that were fighting in the west. A lot of the battles when the Russians first tried to go the offensive were very close run things. It was not like it was a walk in the park for the Russians even as it was.

I allow that it is impossible to say how things would have gone and that for years the Russian front was way understated in importance in the west. Nonetheless, if the German empire had been free to turn its attentions to Soviet Union without the massive and constant bombardment, with no military aid going to the soviets, with no need to guard its back and so freeing up extra troops for the effort, I don’t see how the Soviet Union could have won.

14 jc July 17, 2012 at 6:39 pm

First of all, the American and German economies were vastly larger than the Soviet economy: As Germany controlled most of Western Europe, which had overall 40% of the world’s nominal GDP in 1939, and the US had the other 40%. The US war effort can be regarded as more efficient than Germany in the sense that they were better able to integrate the US’s human and material resources into the war effort relative to Germany’s integration of Western European resources into the war effort.

However, both Germany and the United States had several times the volume of resources than the Soviet Union. For example, the Soviet Union produced 505,000 tons of explosives during the whole war while the United States produced over 3,000,000 tons. And explosives are the fundamental determinant of the firepower available to the armed forces. I note that the Allies sent about 150,000 tons of explosives as lend-lease to the Soviet Union, increasing their potential firepower by 30% from domestic supply. Still, Germany produced 1,600,000 tons of explosives during the war, which means that they had more firepower than the Soviet Union in the Eastern front, which explains why they lost 5 tanks to every German tank and why they also lost 5 men for every German soldier.

Also, soviet tank and aircraft production was large in numbers but small in actual military value, as their tanks and aircraft were inferior in quality to German, American and British tanks and aircraft. The T-34, while an ingenious design, was made at terrible quality: the average durability of a T-34 tank before mechanical breakdown during the war was 3-4 months of operation. While in terms of air combat, several German fighter pilots claim to have shoot down hundreds of Soviet Aircraft and no German pilot claims to have shoot hundreds of British or American aircraft.

Also, casualties are not an indicator of a country’s warmaking potential. The Soviet Union lost 29 million men wounded, killed and captured during the war because they were too poor to provide first rate equipment and training to their armed forces. Fundamentally they were a third world country that defeated a first world country thanks to the sacrifice of tens of millions of people, plus with very significant help from the other Allies.

Also, while it is true that the Western Front, opened in June 1944, was much smaller than the Eastern front, it is not true that it was not significant. Germany had to allocate 65-70 divisions in the Western front, divisions that couldn’t be used to help in the Eastern front, which had 160-180 divisions, that’s less than 3 times as many. There was also the Italian front which involved 25 German divisions as well. So, by mid 1944 the Western Allies had forced Germany to deploy 90-95 divisions away from the Eastern front, which severely reduced the strength of the Eastern front, fundamentally explaining why the Soviets were able to advance much faster in 1944 relative to earlier years.

Overall, while the contribution of the Soviet Union was the single most important in the war, without the Western Allies they would have faced a German army nearly twice as large and without any of the lend-lease supplies and I don’t think such a situation would have been winnable, considering that they lost 29 million men in their historical situation.

15 Nick_L July 15, 2012 at 3:16 pm

Makes you wonder how the Canadians managed to build the worlds 3rd largest navy..

http://en.wikipedia.org/wiki/Military_history_of_Canada_during_World_War_II

“The progression Canada made from 1939 to 1945 is astonishing, going from the limited amount of warships they had to becoming the third largest navy in the world is an achievement in itself, not to mention the role they played in informing the USN in intelligence and the increase in responsibility. Their primary role in protecting merchant ships from North America to Britain was successful. Throughout the war Canada had made 25,343 successful escort voyages delivering 164,783,921 tons of cargo.[33]By the end of the war, German documents state that the Royal Canadian Navy was responsible for the loss of 52 submarines in the Atlantic. In return 59 Canadian merchant ships, and 24 warships were sunk during the battle of the Atlantic.[34]
“Canadians solved the problem of the Atlantic convoys” – British Admiral Sir Percy Noble”

16 Rahul July 15, 2012 at 3:42 pm

Is there any US group that doesn’t think that they won WW-II?

17 Willitts July 15, 2012 at 9:04 pm

War, by its nature, is a team effort. The breaking of the Japanese naval code was probably decisive in winning the Battle of Midway – the turning point in the Pacific Theater. Who deserves the credit for that: the code breakers, Nimitz and Spruance, hundreds of torpedo bomber and dive bomber pilots (including George HW Bush), etc? How about Americans who dealt with price controls and rationing or those who bought war bonds?

We won because we didn’t quit.

18 Urso July 16, 2012 at 11:17 am

Is there any people in the entire world who doesn’t take credit for winning world war 2? The US, the UK, China, Russia all do. Hell two posts up there’s a Canadian insisting that the RCN singlehandedly won the battle of the atlantic. It’s all pretty harmless, I think.

19 Jonathan July 15, 2012 at 3:58 pm

And Tjalling Koopmans used WWII as the opportunity to solve the transportation problem, eventually leading a decade or so later to the Dantzig and the simplex algorithm.

20 Dismalist July 15, 2012 at 5:01 pm

Alas, wars too, are won at the margin.

21 dearieme July 15, 2012 at 5:53 pm

“June 1944 would be the moment at which the American “arsenal of democracy” would be able to produce sufficient materiel to launch a substantial invasion of Europe.”

Does that mean that all the military talk of a cross-channel invasion in ’43 was just so much hot air?

22 Willitts July 15, 2012 at 9:35 pm

+1

I think our industrial capacity was well understood by 1941 when we passed the Lend-Lease Act, $650 billion in today’s dollars.

23 Go Kings, Go! July 16, 2012 at 12:23 pm

I’m not sure it measures as a “substantial invasion”, but Italy had already surrendered to the occupying Allied forces by June 1944.

24 mkt July 16, 2012 at 4:46 pm

I’d thought that this book had been mentioned previously here, otherwise I would’ve mentioned it to Tyler. The book is slightly disappointing, it’s not about what most of you probably think it’s about: it’s focus is on the pre-1942 planning that the US military and government were doing.

Or in many cases not doing: US parachute manufacturers, knowing that war was on the horizon, kept trying to ask the military how many more parachutes they would need and how soon, so that the manufacturers could start gearing up for the effort. According to the book, the military refused to even come up with a serious estimate, when pressed they finally said “oh maybe 35,000”. Some economist or other planner did a back of the envelope calculation: FDR is calling for 50,000 airplanes to be built by the USA, the average airplane needs 6 parachutes, hmm so US parachute manufacturers better plan on producing 300,000 parachutes. Fortunately for the US war effort, the manufacturers thought that figure made more sense than the one the military gave them. I forget the figure but by the end of the war the number of parachutes produced turned out to be IIRC in the millions.

The book does have some interesting stuff but it’s mainly about pre-war and early-war planning. And to answer the question above, yes, one of the early results that the economists and logistical planners came up with was that there would not be enough resources for a cross-channel invasion in 1943. Some military planners and politicians may have chosen to disbelieve that result, or may have been informed of it later than others were (IIRC George Marshall very badly wanted to invade in 1943 and took awhile to face reality but eventually did). So it’s an interesting book but doesn’t have the scope that the subtitle suggests, nor does it make the grandiose claims that some of the comments here are drawing from the subtitle.

25 Willitts July 15, 2012 at 9:30 pm

I’m reminded of the quote attributed to Yamamoto:

“I have traveled widely in America, my friends. Their industrial might is awesome.”

Even if this was 1970s Hollywood Hindsight rather than an actual contempraneous Yamamoto quote, some Los Angeles script writer recognized the importance of American industrial capacity to the success of the war about four decades ago.

The capacity already existed, and plants were retooled for the war. The more interesting and culturally relevant industrial factor was the untapped labor resources of women and blacks. The war led directly, and unintentionally toward equal rights. The gay community took root in San Francisco, ironically because that’s where many of them were discharged from the service.

Unfortunately, it also led indirectly to the spoiled baby boomers and the communist movement.

Would America not have fought the war if some egg headed economists doubted our industrial capacity? I doubt it. As someone above astutely observed, war is fought at the margin. We would have fought with every resource available, and not more. Our strategy would have been devised with fewer resources at hand. We could have contained the Japanese rather than conduct the island hopping campaign, put the Manhattan project into overdrive, and nuked our way to victory one city at a time. Soviet spies would have penetrated the program faster, and they might have used their own bikes on the Germans.

If you believe the other Hollywood depiction in Flags of Our Fathers, the US was nearly tapped out of cash for the war. We were at the breaking point of what we could tolerate. I think that’s why the atom bomb was dropped – a liquidity and solvency crisis.

26 DK July 15, 2012 at 11:51 pm

Right. US economists won the WWII. 10,000,000 dead Russians who killed 4,000,000 Germans had nothing to do with it.

27 Ryan Cousineau July 16, 2012 at 12:36 am

It is one thing to discuss the losses the USSR inflicted on Germany in defending the USSR. It is quite another to wonder if, without the second front and the continuous damage done by the Allies to suppress German might, both strategically and tactically (notably through resource starvation, largely via air superiority), the Russians could have successfully invaded Germany.

It seems reasonable to posit a stalemate, especially given the massive losses the Soviets suffered in their PREPARED DEFENSE OF KNOWN TERRITORY!

28 Benny Lava July 16, 2012 at 8:49 am

I love the butthurt Americans with their comments. WW2 was over by 43, long before D-Day. That is why the Allies kept getting together to carve up the world. Breton Woods, Yalta, etc all before Normandy. The war was over when the Soviets defeated the Nazis at Stalingrad. The Third Reich wouldn’t have the men or oil to fight much longer and everyone knew it. The Soviets could produce more men, oil, and tanks. Without America’s help – sorry Patriots and jingos, the T-3 tank won the war more than any fighter plane.

So why are we talking about American economists in the war again?

29 albert magnus July 16, 2012 at 12:21 pm

Oh, the mighty T-3!

30 Kevin July 16, 2012 at 2:10 pm

Of course you mean the T-34. And you’re right, much as we love the allure of the air war, fighter planes and bombers had less impact on the outcome of WW2, especially relative to the obsessive attention they get.

31 The Keystone Garter July 17, 2012 at 7:20 pm

You only got two beaches, no? Canada got our own beach and made, with 12 tanks, the goal set. You guys almost retreated from Omaha. In relation to the beach difficulty, Canada obviously fared best. You biggest contributions were Manhattan Project, and Long-Range Bombers from UK that wiped out their oil infrastructures. That was brilliant. It forced Hitler’s entire R+D, which including ICBMs for NYC (targetting airports might have won the war…) to switch to synthetic oil.
The biggest contribution might have been UK code breakers. If Hitler hadn’t bought the fake landing site, and he was delusional about many things, he might have been able to repel Normandy. I dunno how deep the Soviet supply line could keep up. They weren’t at all able to capture Ports.

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