The Economy During Wartime

The Economy During Wartime

A young woman sells war bonds and stamps and distributes War Production Drive literature, circa 1943 (National Archives)

Destructive Creation: American Business and the Winning of World War II
by Mark R. Wilson
University of Pennsylvania Press, 2016, 392 pp.

During the Second World War, the United States had a centrally planned economy. Strategic resources were produced in quantities set in Washington, and allocated among end users by the public officials sitting on the War Production Board. Key prices and wages were administered, not left to markets. The large majority of investment was directed, financed, and, in most cases, owned by the federal government. Thousands of private businesses that failed to comply with the planners’ instructions were simply taken over by the government—including some of the country’s largest corporations, like Montgomery Ward. For millions of Americans, the photograph of Ward’s adamantly anti-Roosevelt chairman Sewell Avery being carried from his headquarters by a squad of soldiers crystallized the new relationship between government and capital.

What are we to make of the fact that economic life was “quite completely regimented” (in the approving words of Admiral Harold Bowen) during the war? For novelists of the front lines, it could appear as part of a vast impersonal machine, consuming human lives as means to an inscrutable end. Think of Corporal Fife in The Thin Red Line, watching his transport ship coming under attack by Japanese planes: “A regular business venture, no war at all. It was weird and wacky and somehow insane. . . . It was as though a clerical, mathematical equation had been worked out, as a calculated risk.” For historian Mark Wilson, whose attention is fixed on the home front, there’s no such ambivalence. His new book Destructive Creation is a defense of the management of the war economy by “clerical, mathematical equation,” against those on the right, who attribute wartime production to the genius of private business, and those on the left, who see the wartime state as an engine of profiteering and monopoly. The book is animated by the idea that wartime planning represents a lost model for effective public direction of the economy: “If American policymakers had applied the lessons of World War II mobilization to the toughest challenges of the later twentieth century, people around the world would be better off today.”

The Second World War was certainly an economic success story, in that it coincided with the most rapid economic growth in U.S. history. Much of this growth came not in the recovery from the Depression, but in the post-1940 period, when the country was already more or less at full employment. Between 1938 and 1944, unemployment fell by about 10 million. (This includes people leaving the Works Progress Administration and similar jobs programs.) Over the same period, private employment and military employment each ...

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