Economic history of World War II

Before war
Before war there was the Great Depression, the United States dealt with it through the New
Deal, which focused on the 3 Rs: Relief (of the unemployment), Recover (of the economy to
normal levels) and Reform (of the financial system in order to prevent a repetition of the
depression. This measures strengthened the democracy.
For the United Kingdom the Great Depression meant the renouncement to the Gold
Standard (a monetary system in which the standard economic unit of account is based on a fixed
quantity of gold) and the economic problems gave rise to radical movements (such as communist
and fascist) who promised solutions.
In Germany when the Nazis came to power the most pressing issue was the unemployment
which they solved (they registered the most rapid decline in unemployment in any country during
the Great Depression) but as unemployment decreased standards of leaving languished.
Eventually this economic policy was supplemented by the boost to demand provided by
rearmament and swelling military spending and Hitler issued the Four-year plan whose aim was
to make Germany self-sufficient to fight a war within four years while trying to move away from
partially free trade to economic self-sufficiency.
Japan took advantage of the 1st World War and advanced his economy, they looked at their
expansion as a necessity because it kept foreign states from blocking Japans access to raw
materials and therefore their military force was seen as a necessity for defense. During the Great
Depression Japanese economy suffered less than most industrialized nations. Their industrial
growth was geared toward expanding nations military power. In order to secure their economic
they started to occupy territories which gave them access to natural resources.
Italy was in a weakened condition after the 1st World War and when Benito Mussolini came to
power he instated a new regime that had a generally laissez-faire economic policy. This regime
was changed, which meant that free trade was replaced by protectionism. After Great
Depression hit holdings of large banks were nationalized and a number of mixed entities
was formed. Their aim was to satisfy both the wishes of the government and the wishes of
business, this was called corporatism. Due to Mussolinis ambitions of extending Italys foreign
influence they became involved in the Spanish Civil War and also invaded Ethiopia, as a result
military spending increased and Italy had the second highest percentage of state-owned
enterprises after the Soviet Union.
For the Soviet Union things were a bit differently, they were only slightly affected by the Great
Depression and the impact of the crisis was that they turned from a rural to an industrial
society and they succeeded to build up heavy industry at the cost of millions of lives.
Production and labor
In most countries, production of consumer good was ended or greatly reduced and their
economies became war-economies which meant that machinery, resources and labor were used to
manufacture war goods. The United States was by far the most productive nation in the war,
mostly because its industrial capacity was never touched by the war. To the opposite side
Germanys factories were destroyed and same thing happened with Japan.

The war had caused shortage of labor in all countries. Britain had a successful record of
mobilizing the home front in order to support the war effort, they did this by mobilizing women
at home. Germany, on the other hand, decided to put slaves at work. In the United States skilled
positions were opened for the black people and the rest of the countries encouraged retired people
and children to work for factories and in farms.
Industry
While at war, the industry of the countries were directed to war-production and it was
difficult to produce for again for civil without causing unemployment, but mostly United
States and the Soviet Union had to deal with this problem since in most of the countries industry
was destroyed and after the war they needed plans and help to regain their power.
Europe was divided between United States and the Soviet Union and while Western Europe
received help from the United States through the Marshall Plan, Eastern Europe became
sphere of influence of the Soviet Union. In Italy the ambition of business-men and the help
were enough to make the North of Italy full of industrial cities. For Japan, who lost most of its
colonies and its industrial cities, it was all seen as a new beginning and a way of gaining
competitive advantage because they built new factories with modern equipment while others
were still having old factories.
Economies during and after war
In the first years of war United States stood aside and helped Soviet Union and United
Kingdom with money, munition, food, meanwhile they produced everything they needed for war.
While at war each and every country adopted a war-economy. For Italy this meant pressure
from the business-man that provided money and for every country this meant a decreasing in
the living standards. While being at war, the only ones that thought about what will happen
after the war were the British, they came up with a Minister of Reconstruction whos aim
was to think about was should be done for them to recover after war. They decided to handle
three particular urgent needs: first, some easement of civilian living standards; secondly, some
rebuilding of capital equipment; thirdly, some expansion of exports.
Most economies collapsed after the war because they had to deal with the Great Depression,
then with the war and they were left with almost nothing. Every country dealt in his own way
with the after-war period and Japan, Germany, Italy experienced a miracle. After the war all
that was left from the expanded economy of Japan was shortage, inflation and currency
devaluation, what saved them was the decision to build new factories and the help from the
United States, for Italy it was the help of the United States which made it possible and for
West Germany the ideas of the economists made it possible, they adopted a new currency
which had value and gave people incentive to work, it was initiated a central bank independent of
the government and they also created a social welfare system. For the United Kingdom thing
were differently, they accepted help from the United States but they adopted measures like
increasing taxes, nationalizing industries and creating a welfare state with national health,
pensions and social security. This measures lead to the most rapid growth United Kingdom
had ever experienced.