Title: Economics of Coercion and Conflict
Author: Mark Harrison
Scope: 3 stars
Readability: 3 stars
My personal rating: 4 stars
See more on my book rating system.

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Topic of Book

Harrison examines the economies of the Great Powers during World War I and World War II to see to what extent economic factors determined the winners of each conflict.

Key Take-aways

• The Allies won both World War I and II because they had much wealthier economies than the Central Powers/Axis. This enabled them to mobilize far more military resources in the long run.
• The Allies also had substantial advantages in size of territory and population, though these were less important.
• If Germany had been able to win a quick war in 1914 and 1939-41 (as was their plan), the Allies would never have had the time to mobilize their economic advantage.
• In World War I, most of the power had predominantly agricultural economies based upon subsistence farmers who could barely produce enough food for their families let alone huge armies. These empires appear powerful, but they were unprepared for a long industrial war. Hence these nations ran out of food and ammunition first and their empires imploded in revolution at the end of the conflict.

Important Quotes from Book

The pattern of military and economic mobilization in World War II suggests five stylized facts (Harrison, 1998a). First, victory went to the side that supplied the greatest quantity of military resources to the theatres of war. Second, superiority in military resources was based on superior wealth: the richer countries had a systematic, disproportionate advantage in their ability to supply the front with troops and military equipment. Third, are the qualifications: time and geography mattered. The richer countries needed time to make superior resources count. The countries that were closer to the front line tried harder. Fourth, the significance of other noneconomic factors like leadership, organization, discipline, and morale was largely conditional on wealth, geography, and time. Given superior resources and the need and opportunity to apply them, the richer countries could solve other problems that defeated the poorer ones. Fifth, these were rules for market economies. In World War II, Stalin broke them by inventing a new kind of command economy that could produce military power out of proportion to its economic weight.

There is one aspect of the narrative that I will take for a starting point, and it is my first retreat from unbridled economic determinism. Economics would not have played an important role if either war had gone according to the aggressors’ plan of attack. These plans were invariably for a short campaign ending in a speedy victory.

But in both world wars, a point came where it lost its relevance. It was at this point, the Battle of the Marne in 1914 and the Battle of Moscow in 1941, that economic factors began to exert their power. This is why time generally limited the role of economic factors in the two world wars: the economic factors played their part once circumstances had given them time to enter the game.

In both world wars the side won that fielded the greatest quantity of men and military equipment.

In World War I, the Allied armies outnumbered those of the Central Powers by 60 per cent…  In World War II, the Allied armies outnumbered those of the Axis by a somewhat smaller margin, 40 per cent. But in weapons and military equipment, roughly speaking, 2:1 was the minimum Allied advantage;

Clearly, resources did not uniquely determine the outcome on the battlefield. It is more reasonable to claim, first, that resources decided the outcome on the battlefield when other things such as leadership, organization, and morale were equal on both sides; second, in the two world wars these other things were very often nearly equal in fact, or if they were not equal at first they tended to become roughly equal given time, so that in practice resources did determine the outcome on the battlefield.

But with material superiority even bad strategy could eventually prevail. Without material superiority, on the other hand, a single bad decision could lead to disaster. The Allies could afford a Gallipoli, but the Axis could not afford a Stalingrad.

To put it another way, the best way that  a country could prepare for war was to arrange to be large and generally prosperous beforehand. Compared to this, nothing else mattered much.

The size of each side is measured by adding up the populations, territories, and gross domestic products of the territories at war…. GDP was more important than either territory or population,

Even in the first stage of the war [WW1] the Allies had access to five times the population, eleven times the territory, and three times the output of the Central powers.

As the war continued, the Allied powers’ advantage in output grew. The decisive year was 1917. When America displaced Russia, the Allied population and territory declined but its output multiplied; the average development level of the Allied powers rose above that of the Central Powers for the first time.

In both wars the wartime changes in output favoured the Allies.

Wartime economic success [the rate a nation can increase its military spending at the beginning of the war] can be largely explained on the basis of each country’s prewar economic development level measured by GDP per head. Moreover, the same pattern is evident in World War II…  three fifths of the total variation in wartime production can be explained by the prewar economic development level, leaving only two fifths of the story to be told on the basis of national peculiarities of policy, governance, and morale.

In the first war another factor was geography, or proximity to the front line. In the second war geography mattered less, but a new kind of economic system proved unexpectedly important.

[In WW2] there were two countries that proved capable of pursuing capital intensive warfare on a broad front in World War II: the Soviet Union and the United States. The rest were also-rans.

Countries like Russia and Austria-Hungary were large and before World War I no one doubted for a moment that they were first-rate military powers. The war showed, however, that their power was built on third-rate economic foundations. Given that they were large, why did it matter so much that they were also poor? The reason lay in agriculture: these were countries that ran short of food long before they ran out of guns and shells.

One of the most striking attributes of relative poverty was the role of subsistence farming.

And not only from Russia, for Italy, Austria-Hungary, the Ottoman Empire, and Germany all had large peasant populations that proved extremely difficult to mobilize for much the same reason.