EC104 Topic 8

amarjotsidhu's version from 2015-06-06 03:35

Section 1

Question Answer
What is economic warfare?War carried out using military and economic means. Economists look at the requirements of war, quality/quantity of resources and mobilisation policies
Factors that influenced WWI and WWIIVictory went to the side that had the greatest quantity of military resources, based on size and development; time and geography; GDP/head influenced military resources
Economic system required for war in 20th centurywealthy free market economy or totalitarian regime
Costs of ear during 20th century203 million died (86 by communism) - communism only cares about regime survival = willing to kill citizens
Trends in violencewe are becoming less violent
War and crime in 20th century vs. historyhigh levels of organised violence (wars, communism), 3 of top 10 occasions of violence by numbers killed happened in the 20th century
Phases of mobilisation in WWIMilitary mobilisation -> industrial shortage -> food and material shortages
Military mobilisation in WWI (phase 1)Rush to volunteer = too many soldiers, not enough war workers ; volunteers were skilled industrial workers and miners = "shell crisis" - too many soldiers, not enough weapons
Industrial shortage in WWII (phase 2)not enough weapons, not enough materials; controls on industry imposed with the govt. forming committees to allocate war materials; new factories built and funded; skilled workrs exempted from military service or replaced by half trained unskilled workers (often women or men in agriculture); soldiers and munitions poured into battle = not enough food but too many soldiers and war workers
Food and material shortages (phase 3)food shortages = demands for the govt. to intervene in market, buy food and distribute it at low prices; but farmers reluctant to sell food and low prices; by 1916, cities in Turkey, Russia, Austria and Germany experiencing food shortages; by 1917, Germany had many half built war factories but lacked materials and workers to finish and operate them
Public policy in Germany Austria, Russia, etc. govts. tried to transfer costs of war onto peasantry by forcing them to sell food at low prices for distribution in towns through urban consumers; this did not work = black markets and corruption + urban famine, revolutionary insurrection and downfall of emperors
Mobilisation in Germany and Franceover mobilised their resources, leaving nothing available for civilian economies and causing GDP contraction during later period of war
Rich country advantage in warricher countries with higher incomes more honest administration and more commercialised farming could solve problems more efficiently
Ferguson on allied advantageAllies' advantage of quantities was such that they should have won in 2 years. It took 4 due to allied incompetence (generals too conservative and incompetent to use resources well)
Broadberry and Harrison on what determined victory in WWIIQuantity decisive but also quality (level of development) of a country's resources was important in deciding the qualities that could be mobilised; total war takes time
Political consequences of the warcollective punishment and isolation of losers - Germany and Russia; more European states = greater scope for coordination failure; mistrust, fear, hatred
Economic consequences of the warwar and GD shocked global society; Germany prepared its economy for expansion
New states created after WWIAustria-Hungary = Austria, hungary, etc. ; Russia = soviet union, Estonia, Finland, etc. ; Ottoman Empire = Turkey, Armenia, Iraq, etc.
Consequences of WWI on GermanyGermany did not want to reparations (angry about Versailles); causes of hyperinflation not purely reparations related - state budgets paid for with new money printed for the purpose. Hyperinflations across central and Eastern Europe were political -> compliant central bankers monetized budgetary deficits. Peace lost = WWII
Hyperinflationexperienced by a number of Eastern European states e.g. Russia, Germany, Poland
Political consequencesvoters punished govts. for recessions e.g. Germany = rise of Hitler
Response to GD and WWI failuresBelieving war was inevitable, Stalin began rearmament. Britain and France tried to appease Hitler but also rearmed
European response to Hitler (1935/36)shift to increasing military mass production in US, USSR and UK; great purge by Stalin
Eichengreen on fiscal multipliersonly time they worked = in Nazi Germany during rearmament

Section 2

Question Answer
New German military tacticsBlitzkrieg (independently operating penetrations groups of shock troops with air and armoured forces); qualitative superiority (improvement of military technology through feedback between battlefield to suppliers); time horizons expected to be short
Changes in German economic warfareensure food security; Lebensraum
German aim to ensure food securitylow agricultural productivity in Germany, poor dietary standards and import reliance = Germany needed territorial expansion to become self sufficient = Lebensarum and the Hunger Plan: self sufficiency in food through conquest (racially cleansed space in Eastern Europe for German surplus population who would use indigenous Slavs for cheap labour in farms and mines); aim to establish a closed regional trading bloc under German colonial administration providing food and materials to Germany
Lebensraumdue to rising wartime demand for Labour, Germany did not have a surplus population to relocate to the East; no restitution of nationalised land and property to former owners or privatisation of public assets in territory formerly under Soviet control (property to be given to ethnic Germans)
Why did Germany lose WWII?much more powerful force BUT: lack of manpower, low productive capacity after 1942, willingness of uSSR to absorb personnel losses, intra-Allied transfers (US aid)
Germany's military burdenGermany's burden becomes unsustainable by 1943 and civilian economy collapses into 1944
Allied advantage in military productionby 1945, allies had an advantage of 5.1:1 vs. axis in the production of military aircraft
Superiority of American productionUS had 2.5 years to prepare for war = could prepare calmly; business relied on more than Europe; mid1942 = total coordination of all govt. and civilian purchasing by War Production Board; civilian requirements met despite priorities given to specific production; prevented excessive military demands (rewarded efficiency gains); high levels of productivity
US govt. setting favourable prices for munitions + provision of low cost contracts and financing for new plantsbusinesses encouraged to increase production + higher profits, despite higher taxes; maximum productivity sue to high payments for munitions
Fordist principles adoptedassembly line adopted to produce bombers (Germany did not start adopting Fordist principles till 1933-44 = couldn't increase production enough); standardised parts and premade parts for ships (
Fast production of shipsfirst ships in 1939 took around 250 days to build; in 1942, fastest production = 4 days, 15 hours; poor quality + fractures but rate could not be matched vs Germany. 9 weeks per ship
Changing economic role for woenwomen entered military and civilian labour forces; high wages and job opportunities where they were given skills and responsibility = attractive; their contribution = essential to US war effort; change in attitudes = women accepted in work place; women given economic freedoms e.g. accepted into universities = beginning of mass education BUT, out of trend increases in female labour participation rate not seen (at trend before and after war. Trend rate did continue to rise after war though
Increasing numbers of females in labour market after warsomething other than war must be causing increase in females in labour market. Rockoff - this might be due to invention of technology which reduced household burdens eg driers, refrigerators, dishwashers = women freed up . War changes attitudes = important
Capital destruction aims (1942-)aim from British to target industrial infrastructure but this was problematic = changed approach ->bombing carried out at night, targeting smalll targets;
Why did British approach capital destruction via bombing?cause general economic disruption; damage to worker morale; revenge for Blitz (1941); been seen to be doing something; win war before Americans do it before us
Allied bombingGerman cities pounded night after night; precision bombing failed; up to 1 million German civilian deaths; few direct effects by 1943; hurting buildings does not impede war production, only direct hit to machinery does; Germany economy contained unanticipated reserves (people wanted to work harder); did not effect war production (war production tripled from 1941 to 1944)
Eventual effectiveness of precision bombing (1944/45)repeated precision bombing of industrial targets = vicious circles; destruction of oil capacity = shortage of aviation fuel for air defence = easier bomber penetration to targets; bombing railway marshalling yards = disruption of supplies for industry = shortages of coal and railway goods = further disruption of rail transport -> output falls by 1/3 in 1944/45
Peace after WWIIGoal not to repeat WWI consequences; Marshall (US) did not want a harsh peace and the US fear of communism means he wins (vs. Morgenthau); West Germany paid reparations e.g. German coal given free to France , costs to pay for occupation BUT Britain and US spend more importing food into Germany than they receive in reparations . After this = Marshall Plan, New Bretton Woods institutions; European adoption of American manufacturing
Harrison on what decided WWIIdecided by size (economically larger coalition won) but size not sufficient for economic survival under attack e.g. Britain smaller in terms of territory than Japan/Germany but being an open, industrialised economy = it mobilised without major food/power breakdowns due to good transport and administrative infrastructure ; quantity essential to allied strategy + pooling of resources amongst allies e.g. technology by US
Harrison on consequences of WWIIgreater cause for an integrated world economy ; capital accumulation ; commitment to mass production by British and Soviet on American, standardized model
Overy on Russia exceeding expectationsRussia outperformed Germany throughout the war from a smaller resource base + less skilled workforce