Hi Cueball. Here I go and offer a fairly comprehensive, general and forceful argument against your post, and you respond to it by being reasonable and offering counterarguments that are worth addressing. What a refreshing change in this thread.
cueball wrote:Point being that when the chips were down, our GDP estimates don't seem help us much in coming up with simple figure that can be universally applied to define economic strength. Instead we end up having to explain prima facie statistical discrepancies when we measure the stats against the facts.
Agreed.
Yes. My point is directly this. It seems that we are talking not so much about war time economic management decisions, but changes that go further back.
And again.
Qvist wrote:Secondly, does it take into account that serial production of highly standardised models in new and larger plants are intrinsically more amenable to higher labour productivity than diversified production in smaller plants? Because the transition from the latter to the former is a product of investment, and has nothing to do with labour efficiency in the sense of better management practice.
Regardless, efficiency increases resulting from "learning by doing" would persist in either model of production. Do you see any reason why this would not be so? Remember we are talking about a relative increase in labour productivity, examined in one specific model (diversified production in smaller plants).
OK, so they have taken that into account (or rather, they have looked at an area where it doesn't apply). The basic point, however, is that all aspects of the war economy, including labour efficiency, were impacted by a lot of other factors as well as decisions motivated by other concerns. Hence, it cannot be understood as an autnomous phenomenon that developed according to some identifiable internal logic. In my opinion. the key figure of thought to apply, here as elsewhere in a war effort that was so strongly defined by constraints, is "trade-off", and trade-offs tend to be not even visible unless you put things into a wider context.
Am I wrong but is it not the case that single shift production was common, even at the end of the war. This would indicate under-utilization of capital
I don't really know much about that, good question.
Qvist wrote:Thirdly, theorising by extrapolation about the possibility of lower productivity in the mining sector having little to do with the nature of the labour is plainly nonsensical and possible only if one stubbornly ignores everything else than statistical modelling. The productivity of a miner who relies to a large extent on muscle power is largely a product of chaloric input. If you remove 50,000 skilled, reasonably motivated and comparatively well-fed German miners and replace them with 50,000 untrained, reluctant and chronically underfed prisoners of war, then productivity decreases - at the end of the day, if you eat less you hack less coal. For obvious reasons, they are not very similar to aircraft factories, and there is in any case no good reason to assume that the same dynamic of factors should determine the development of productivity in these two sectors.
The whole point of doing economic analysis of management systems is so that they can be applied in different areas of production.
Yes well, that may be desirable but it is also irrelevant relative to the issue of whether that analysis in point of fact is equally or roughly analogously applicable as historical explanations to the development of two different sectors of the German war economy.
Coal mining and aircraft manufacturing are both industrial processes. The article itself bases its analysis partly on previous work done on the US aircraft industry.
Even so, there were clearly important factors involved in the equation for the mining sector that did not apply in the same way to the aircraft sector, and vice versa. Also, see the authors' last sentence: More research is required in order to determine whether these conclusions can be applied to German industry as a whole. Which is essentially also my point.
I was surprised as well. The point is this: As counter intuitive as it is the conclusion is that the skill level of workers in aircraft production had little to do with actual labour efficiency increase, and the main benefit came from learned management skills, including worker training. The article goes into some depth on this topic, even undermining the intuitive belief that there was something more motivated about German workers. It seems that there was a rather high rate of turn-over of German workers, and the evidence they provide from the audits includes assessments where Czech and Ukrainian women press-ganged into aircraft production performed at 80-90% of comparable German workers.
I haven't read that bit, but at least as summarised here, that argument seems to me a bit simplistic. Regarding the productivity of foreign labor, that is rather extensively sourced (f.e. in Tooze) and there is simply no doubt that seen over the period as a whole, there was a big (if also gradually declining) productivity gap between German and forced labor. But actually that's an instructive issue, generally with this problematic we are discussing. During the early days of mass forced labor, in 1941-42, productivity was abysmal. This is not surprising given how the labourers were treated, with a horrenduous death rate (and corresponding absenteeism through illness) due to generally horrific living conditions and particularly very low rations. Gradually however, the system responded to this state of affairs and over time conditions improved, and so did the productivity. This of course fits into the narrative you are proposing: The Germans initially used the resources this labour group represented inefficiently. Over time, realising the consequences of this, they adjusted. Hence, increased productivity through better management.
But: Once you go even superficially into the nitty-gritty and particularly the wider ramifications, it is immediately clear that it is quite senseless to approach this as if it was purely or essentially a question of industrial management. Rather, it was a question firstly of resolving the consequences of what amounted to a systemic shock to the labour structure of the German economy. This means that a period of adjustment must reasonably be expected - it represents a problem that needed to be resolved. Secondly, the root causes of what was from a productivity point of view simply inefficiency was due to factors governed by entirely different logics. For instance, the disastrously low rations in 1941-42 were connected to a general food shortage in the German sphere of control. It required a major reorganisation of the food distribution of German-controlled Europe to change this, and this involved a number of very fundamental issues other than the productivity of industry. For another, that the phenomenon existed at all, and that it was so large, was intimately connected to the military situation and the manpower needs of the armed forces. In other words, what we are seeing is a process of trade-off between industry's need for efficient use of labour, and a number of other concerns: The army's requirement for manpower which was constantly desperate after December 1941, The limitations of the food supply and the political priorities and ideological ideas that impacted both on the general attitudes to foreign workers and POWs and on the distribution of scarce resources such as food. This trade-off was gradually resolved in a way that favored the needs of industry, but the key point is that the reason why this didn't happen more quickly or fully than it did has little to do with the ability to recognise bad resource management or identify the measures needed to rectify it, and a lot to do with a number of wholly other priorities.
The upshot of this is that it becomes rather pointless to treat the development of foreign labour productivity as if it was purely or essentially a development in management efficiency, or some sort of learning curve within industry. Nobody needed a learning curve to realise that you didn't get much efficiency out of a worker who collapsed from hunger on the factory floor, or that the benefits of training were rather limited by the fact that the average worker lasted 6 months before he had to be replaced.
Then of course you can simply observe the results, call that result "management efficiency" and lump limiting and impacting factors of all kinds into the big bag of reasons why the German war economy wasn't able to be as efficient as it could have been.
But analytically, that route comes with heavy penalties. Above all, it means that you end up with a concept of efficiency that is more a rephrasing of the question than an actual answer, because most of the things that matter with regard to an actual historical explanation have gone into that big bag. Secondly, it begs the question: You end up pre-judging the question of efficiency, by treating it not relative to the actual situation in which the German economy found itself, but according to an abstract standard. This ignores that economies in war do not exist for the purpose of maximising economic efficiency, but for the purpose of winning the war. Of course, in general one is conducive to the other, but so are a lot of other things - which again brings us back to the point of trade-offs. In any case, putting the issue on such terms imposes clear limitations on what you can use the concept for. Among the things you cannot reasonably do is to treat it as a more or less self-contained process. Many factors that have nothing to so with economic management but that had great consequences
for economic management impinged; these must be accounted for. Another thing you cannot do is treat it as a comparative entity vis-a-vis other economies. These faced different circumstances, which as in the German case, impinged on the result to a greater or smaller degree. In the end, you can't escape froom these things if you want to make a viable historical explanation.
No?! Well it does in the terms that Albert Speer seems to define it. Since these along with some other things are touted by him as being improvements that went along with his management of the war industry through his department. This argument seems a little semantic, since we are basically talking to a great extent about how much Albert Speer's "reforms" impacted the German war industry.
Management? Adminstration? What terms do you prefer?
Well, that shows that this is not merely a question of nomenclature. The heart of the issue with Speer and his version of events is exactly that it emphasises management, administration or whatever we call it in order to account for results that can convincingly be to a considerable extent attributed to factors that do not fit comfortably under any of these headings - for instance, the heavy investments in productive capacity made during the early war years, the outcome of the power tug for manpower between the economy and the Wehrmacht, the extent and ramifications of forced labor, the choice to concentrate on standardised models of weaponry and the general priorities determined by people and staffs well outside Speer's remit. None of these things are wholly and simply questions of management of the economy in
any sense of the word - they all involve decision makers with other concerns besides, and they all respond also to needs other than those of the economy. They are not, in short, economic management decisions and that alone. Surely if the Speer case is a lesson for anything, it is for the dangers of subsuming complex phenomena under general headings that sound convincing but ultimately belie realities.
Emphasis mine. Is it is the case that capital investment was being underutilized, as exampled by the fact that German factories continued in single shift production? If so, it seems to me that this is an example of "management practice" where more could have been done with less capital investment. Simple material shortages don't seem to account for this, since this is really a matter of where you deliver your stuff.
Again, I don't know the details of shift structure, but if so that's the first I hear of it. But in any case, that would be a simplistic conclusion. There is, for example, not much point in running double shifts if you lack the raw materials or electric power to run production on a 24/7 basis. Or if you lack the labor for doing so. Again, that would pose a question rather than provide an answer.
The essence of the argument is that capital investment is a form of war mobilization. I grant the right people have to redefine parameters, and such is useful, often. But, the discussion here seems to revolve around what constitutes war mobilization. Most people mean to say by war mobilization the production of tanks planes and ships, and putting men under arms.
Well, I would go so far as to say that any generally analysis of the German war economy that omits capital investment is automatically irrelevant, and completely useless. It is such a dominant and obvious factor in that economy for at least half the war that it is simply impossible to achieve even a basic adequate description of it without considering it. Also, it is not only an indisputably limiting factor on output early in the war, but also the better part of the explanation for the higher output late in the war.
Be that as it may, when I say "tangent" i mean it. A tangent does not necessarily mean that we have another "overly monolithic explanation" what it can mean, and does mean in the context of the article I highlighted, is that we have more information. We can debate for the better part of a fortnight whether or not the German war industry was inefficient because it was over-capitalized in the wrong industrial sector based on excessive projections of manpower and resource availability and whether or not this constituted mismanagement, or simply a strategic planning error, but its seems to me that regardless of whether or not Germany would have gotten more benefit out of more efficient use of existing capacity (more shifts at factories) or that major capital investment was needed sustain the war effort that was "more or less comparable, relative to their resources, to that of the other combatant countries," the fact is that they were unable to do so, until 1943, 4 years into the war, and this exhibits major structural and systemic problems on many levels, even if you assert that capitalization is war mobilization.
Well, I note that you are still assuming that it was inefficient, and that the issue consists in explaining why. As far as I can see, there is not really much of a case for considering it particularly inefficient. Certainly it was
inadequate relative to what Germany needed, but that is an entirely different issue. You can say the same for almost any aspect of the German war effort, and what that reflects is fundamentally the inescapable limitations of German resources.
If they did not fully realize the potential of labour efficiency until 1941, this is still a very serious problem, one that the USSR may not have had to contend, regardless of capitalization -- a problem with very positive results in my view. Even in their "banner year" 1944, it seems they substantially under-produced the USSR, despite having 30% more GDP, based in conventional estimates.
1. What exactly is "the full potential of labour efficiency"? This I find a maddening aspect of much argumentation in this field, analytically speaking. People seem to assume that if signs exist that everything is not perfect, that means someone is being inefficient. As if there was some universal standard of perfect efficiency that could confidently be expected from everyone under all circumstances, unless someone fouled up. The issue need to be put in terms of what the actual resources and limitations of the German war economy were, what aims it employed for, what problems it was subjected to and who they were caused by and how effectively they managed to deal with that. On those terms, the German war economy was as far as I can see reasonably efficient, and there is no striking absence of failure to take advantage of obvious major potential that needs to be explained.
2. The Soviet Union did NOT outproduce Germany. Not in 1941, not in 1944. Certainly it produced more tanks, aircraft and howitzers. It also however produced a lot less motor vehicles, naval vessels, submarines and a copious number of other items. Basing comparison exactly on the items on which the Soviet war economy was overwhelmingly focussed while omitting many who were important in the German neccessarily makes the comparison pointless. Also, the point of capital investment comes into the picture here as well. You might have noticed that the peak year of Soviet tank production was 1942, which, I would bet, was also the year where they had the largest superiority over German tank production? Which sort of illustrates the cruciality of the early-war German capital investment, as well as the fact that the USSR didn't do much of it. This of course means that the USSR already possessed the requisite capacity at the outbreak of war while Germany was still developing it, but again, that is not a question of the efficiency of war economies but of fundamental facets of German and soviet industrial development broadly speaking in the preceding decades.
The need to efficiently mobilize manpower to existing infrastructure, and the necessity of increasing capital investment are very much part and parcel of the same picture, and neither contradict my assertion that the issue is not so much one of "policy" as per Galbraith, but that Germany "could not mobilize, (in key sectors, in the traditional sense of the word: produce tanks planes, and ships) in the same way that the USA and the USSR were able to do, regardless of the amount of [war time] capital investment."
Broadly sort of agreed, but a few points. 1) In order to assess that, you need a broader basis of measure for Soviet war production - which on any such measure did not outproduce Germany. The overall volume of German aramanents output was higher, as it should be. Secondly, this reflects above all deep-seated, general and long-term structural differences in the three countries' economies. The US had had generally significantly superior productivity to all of the European economies, and had been in that position for many decades prior to the war. Hence, that gap does not really reflect any particular shortcoming in the management of the German war economy, rather a long-standing relative structural inferiority in the European and general economy at large. The USSR on the other hand had recently (but well prior to German rearmament) industrialised consciously along lines focussed on military requirements, and as such had achieved an industrial basis capable of large outputs of a relatively narrow range of items. In the actual situation in which it ended up, this turned out to be well-suited to requirements since it faced a major land campaign and could also fill its gaps through lend-lease. But again, this is tradeoffs, governed by factors that go way beyond mere economic management. 3) Not REGARDLESS of capital investment. CI was not enough to overcome the basic inferiority of resources the German were struggling against, but the situation would have been drastically worse without it.
The last because it seems clear that capital investment was underutilized based on what I know: manpower.
Er, as someone engaged in research on exactly that point, I would have to say that the overwhelming factor connected to manpower was that there simply was far too little of it. There were panicky descriptions of the situation in this area as early as 1940-41, and it was a major problem from day 1 of the war. Certainly there was room for more efficient use of manpower, including in the army, but that is comparatively marginal. Considering that German decision-makers obsessed over the manpower issue for the whole duration of the war and the enormous energy expended on dealing with it, it seems rather strange to envisage that there was here any major untapped potential that was not associated with severe difficulties or penalties.
The point is that they could not do it, regardless of what position you take on the issue of capitalization. Where they capitalized for example, aircraft or tank production, might be a moot point. It might simply have been impossible.
Well, that depends on what "it" is, exactly? If you mean equal the economic output of its bloc of adversaries, or anything remotely close to it, that certainly was completely impossible yes.
On the other hand the Soviet Union was able to survive what can only be described as one of the most horrific disasters in military history for reasons that I am sure everyone here is aware of to one extent or another, because they were basically able to lose all their stuff and replace that within a year. Apparently, the Soviet Union did not need capitalize, in order to fight the war, that part of their "war mobilization" was already in place.
As per above, yes. Certainly the USSR was, relative to its overall economic resources, extremely extensively prepared for war. But then, what Stalin had to work with in the twenties is not the same thing that Hitler had to work with in the thirties.
cheers