War Economy

[Enforcer Talen]

I think this is the right forum, but boot as necessary.

From time to time, I read how a country is in a war economy, prices locked, production set, labor running at close to 100%. . . and when they stop, it usually causes some sort of catastrophic depression. The latest example Ive heard of was from the Salvation War thread, which leads me to my question -

If you know all of these bad things are going to happen, why stop? Admittedly, having dozens of mothballed divisions somewhere is a waste of labor, so you might put it into building super-colliders or something like the New Deal; but why do you stop a war economy?

[open_sketchbook]

Because a war economy runs on imaginary money, loans, war bonds, endless shortages and occasionally just plan old forced labour, and that has consequences. When you finally stop, there will be more people owed money then there is money, and you'll have to face that music sooner or later. Sooner is better, as the longer you let it go on the worse it'll get.

[MKSheppard]

Because you'd like to build something other than tanks planes and guns?

Because people like to buy new model cars, refrigerators, and something better than VICTORY CLOCKS?

[Sea Skimmer]

A war economy means not only cutting off the supply of civilian goods, but also forgoing normal investment and maintenance cycles for existing factories and especially for transportation infrastructure. You just work that shit into the ground, and put a band aid on anything that breaks. Whatever construction resources exist will all go into building entirely new plants, most of which are only useful for making weapons.

This means after a few years, the existing stuff is literally falling apart and the whole industrial system will just begin to crush under its own poorly up kept weight no matter what you do. The idea is the surge of weapons you get should let you win before that happens. If it doesn’t and you maintain a perpetual war economy then you end up like North Korea sooner then later. North Korea only lasted so long because of Soviet support.

However it is entirely possible to sustain a high but non mobilization level of spending for a very long time. Up to 10% of the GDP is within reason, which is about double what the US spends today.

[Simon_Jester]

Yeah. The only way to take war-economy levels of control and make them last is to go full command economy, at which point instead of just taking as much GDP as possible and turning it into weapons (or particle accelerators or highways or whatever), you're doling it out to everything. So that instead of just ordering factory workers to make machine guns and tanks, you're ordering them to make spare parts for their own factories. You're ordering them to make civilian automobiles. You're ordering them to do more or less the same things they'd do anyway in a free market economy.

Whether command economies can work is a separate question... but generally, a capitalist state that goes into "war economy" mode won't want to transition to a command economy after the shooting stops.

[ShadowDragon8685]

Caveat: If you don't know cars, this won't make any sense.


Maintaining a war economy to fight a war is like flooring the gas in your car and keeping the gears low so that the tachometer red-lines. It accelerates you a lot faster and more powerfully, but you should only do it if you need to - say, trying to rejoin traffic averaging 75 miles an hour from a standing stop on the side of the road, or to avoid someone barreling at you from the side. It will fuck your engine if you let it redline for any length of time, but if the alternative is becoming a road traffic statistic, a little risk and wear on your engine is worth it.

That's how it is with a war economy. You're imposing financial and infrastructrual strain on your country, in exchange for building guns, tanks and planes right now!

It's good if you're fighting a war and the alternative is getting out-produced. Not so hot as a way of life.

[K. A. Pital]

Not even command economies (outside of DPRK whom Skimmer already mentioned) maintained a war economy for a substantial length of time. It's impossible to do without fucking up your nation.

Yeah, you can order people around but that's what happens anyway in any economy - the economy shifts to conversion and whether you like it or not, there's a depression of sorts, or at least the costs of conversion to bear. Even command economies bear the cost of conversion when you disband huge divisions, close down tank plants and shift people to other plants. It can't be done via handwaving and without a cost.

[mingo]

It seemed to me, that the Viet nam war was our attempt at "not stopping", which is why we had that lovely recession/depression under the Carter administration

[Surlethe]

In addition to the sectoral shift Stas mentioned (workers laid off from tank factories will take some time to find reemployment at car factories), there's also the fact that the economy is coming down from a high. When you go to a war economy, you squeeze as much as you can out of the economy; unemployment falls far below the natural level, manufacturing rises far above its efficient level, and so forth. So when you transition away from a war economy, you're necessarily going to see a contraction in economic activity, if only because the economy is readjusting to its natural level. Here's an analogy: if you've been boiling water, its temperature will drop when you turn off the burner, even though it's not freezing.

[Sea Skimmer]

It seemed to me, that the Viet nam war was our attempt at "not stopping", which is why we had that lovely recession/depression under the Carter administration

From 1952-1959 the US spent over 10% of its GDP on the military every year. That would be our main not stopping time. Spending levels during the Vietnam War were for the most part lower then those of the early 1960s and 1950s. It’s kind of impressive, the US was able to spend more money building nuclear weapons and delivery systems then it needed to spend to send a 500,000 man army into battle.

Spending as a percentage of the GDP then dropped every year from 1968 until 1981 when a slight increase began.