On estimating the warmaking potential of the world's regions

[Guaporense]

In that case if the nation is capable of fielding armed forces in the same proportion to their labor force the labor force multiplied by the combat effectiveness will yield an estimate of aggregate warmaking potential.

Yes, thats what I used so far, it is overall a more reliable estimate, but do note that efficiency and skill are two different things.

The Soviets weren't less effective, it was a large military complex, their per capita equipment value was overall lower. They were more proficient in conducting modern warfare than most participants, actually only Germany, USSR and Japan mattered in terms of military effectiveness during WW2 (pure militarized systems). Of the Democracies, France mattered, but it was knocked out in 1940. Every other system was undermilitarized and/or inexperienced in warfare (we could add the British Empire or Poland into the list, Finland was forced to be effective but they did not possess the manpower nor the war industry to lead prolonged wars, Italy never made a coherent decision).

The US and UK had achieved the same degree of military mobilization as Japan and the Soviet Union in terms of military expenditures/GDP taking into account net imports.

Germany was very weird since their nominal military expenditures reached 3/4 of GDP by 1943 and even more in 1944 but that's was thanks to massive support they had from occupied territories.

This is the economic principle of diminishing returns: if you increase your military expenditures per soldier by 100% it will not double the soldiers' effectiveness.

Correct, munitions increase beyond necessary levels has also diminishing returns.

3 superpowers instead of 1

Germany, too large for Europe, too small for the world.

Well, in both World Wars almost all German losses were caused by European armies: In WW1, out of 1.8 million killed, only 40,000 were caused by the US, while 98% were caused by other European armies. In WW2, up to December 1944, 97% of German KIA were caused by European armies.

It's nice to remember that despite being the largest economy in Europe, German GDP was only about 20% of Europe in 1913 and in 1937, while population wise it was about 14%. Germany declared war on most of Europe in WW1 and WW2 and predictably, lost both times: Germany was just not large enough to dominate Europe in the way the US dominates the Americas.

The US for instance fought several expansionist wars in the Americas and since it was the only real power on the whole continent it stablished itself as the absolute hegemon of the continent. Germany tried to do the same for Europe but that continent was a bit harder to tame.

WW1 and WW2 were essentially European Civil Wars. They are "World Wars" because the world was extremely Eurocentric: Europe was the center and the rest was periphery (with the US also emerging as part of the center after WW1, but only as the new center after WW2), so a big war that happened at the center affected the whole periphery, hence, the whole world. For instance, Japan tried to conquer Asia by taking advantage of the mess in Europe, as the Great Powers were all fighting each other, Japan, being the only relatively "modern" country in Asia at the time had an enormous military advantage over China, even though China was 7 times bigger in terms of population.

[Stiltzkin]

That is basically what the sentence summed up, I was also quoting Kissinger.
http://www.atlantic-community.org/app/w ... ermany.pdf

[Guaporense]

Oh no. Photobucket erased all my pictures from here.

[Michael Kenny]

Oh no. Photobucket erased all my pictures from here.

Every cloud...............

[Guaporense]

Industrial Productivity and GDP

It is estimated that US industrial productivity was much higher than British or German industrial productivity, yet, GDP per capita estimates show much smaller levels of difference (essentially, US and UK had the same per capita income in 1910 but US manufacturing productivity was twice of the UK's), how was that possible?

Well, if we measure aggregate industrial production we might get an idea:

Industrial labor forces in US, UK, Germany and France around 1910 in thousands of workers:

UK ---------- 8,870
US ---------- 10,502
Germany --- 10,733
France ------ 6,230

Note that Germany's data doesn't include workers in craft production nor construction.

Estimated levels of productivity for 1910, UK = 100:

UK ---------- 100
US ---------- 194
Germany --- 122
France ------ 88

Industrial output relative to UK in 1910:

UK ---------- 100
US ---------- 229
Germany --- 148
France ------ 62

My GDP estimate relative to UK in 1910:

UK ---------- 100
US ---------- 218
Germany --- 126
France ------ 65

They broadly match. So European countries compensated their lower levels of industrial productivity by allocating a larger fraction of their labor forces into industry to achieve relatively similar levels of industrial output per capita.

[Guaporense]

One interesting thing is the relative economic strength of the United States relative to the largest economy of the world outside of the US:

1913 - Germany/US = .58
1937 - Germany/US = .45
1950 ------ USSR/US = .35
1970 ------ USSR/US = .44
1996 ----- Japan/US = .43
2016 ----- China/US = 1.15

It shows how big a change in the world's balance of economic weight China's rise has.

[Guaporense]

Cross-checks on GDP estimates using output GDP estimates: I picked estimates of relative productivity between US, UK, Germany and France to estimate GDP using data on employment and relative productivity by sector. Here are the results compared to my previous estimates of GDP at the expenditure method:

1910 --------- GDP output method ------ GDP expenditure method
US/UK ------- 220.9 ----------------------- 217.7
Ger/UK ------ 128.1 ----------------------- 126.0
France/UK --- 67.1 ------------------------- 65.2

1939 -------- GDP output method ------ GDP expenditure method
Ger/UK ---- 162.6 ------------------------ 155.1

Discrepancies are generally small although they are bigger for the 1939 comparison. The reason might be because economies were highly volatile in the interwar period so national account data becomes less precise.

[Guaporense]

An alternative way of estimating GDPs is to use Maddison's time series but different benchmark values. For instance, in this case I am using the 1980 International Comparison Program benchmark relative per capita income levels for 1980 and using Maddison's time series data to project these values back to 1937:

WW2 1942 territories, 1937 GDP levels

Axis ------------------ GDP millions 1990 dollars
Germany -------------- 350,831
Italy ------------------- 151,514
Czechoslovakia ------- 41,578
Austria ---------------- 19,754
Netherlands ------------ 46,987
Belgium ---------------- 42,761
Norway ----------------- 14,267
Denmark --------------- 21,256
Poland ----------------- 46,031
France ---------------- 199,022
Finland ----------------- 13,130
Hungary ---------------- 26,339
Greece ----------------- 14,789
Japan ------------------ 134,807
Occupied-USSR ------- 147,266
Axis ------------------- 1,270,333

Allies
US --------------------- 832,469
USSR ------------------ 250,751
UK -------------------- 303,888
Australia --------------- 39,306
New Zealand ------------ 9,683
Canada ----------------- 57,368
Allies ---------------- 1,493,465

ratio Axis/Allies ------- 0.851

Using my direct PPP benchmarks yielded a ratio:

ratio Axis/Allies ------- 0.872

A difference of 2.54%, this difference can be explained by the fact the my PPP's and Williamson (1995)'s were constructed using consumer prices like coffe, rent, bread, tea, etc, which were relatively cheaper in Europe than stuff like cars, refrigerators and radios, which US's highly developed mass manufacturing industry could produce cheaply while those items were luxuries in Europe. Hence, US's GDP relative to Europe's in this estimate is 6.54% higher than in my estimate.

[Guaporense]

For comparison, in WW1 we got after Russia left and the US got in:

WW1
Central powers
Austria Hungary ---------- 122,385
Belgium --------------------- 33,407
Germany ------------------ 280,005
Occupied France ---------- 22,929
Central powers ----------- 458,726

Entente powers
France -------------------- 129,930
Italy ----------------------- 101,205
United Kingdom --------- 232,153
US -------------------------- 517,383
Australia ------------------- 24,861
New Zealand --------------- 5,781
Canada -------------------- 39,482
Central powers ------- 1,050,795

ratio Central/Entente ---- 0.437

using Williamson's PPP estimates:

ratio Central/Entente ---- 0.462

The difference is better than for 1937, at about 5.8% between direct benchmarks and time series projections. Well, it's 25 years earlier and hence away from the benchmark from 1980 so the differences should become greater.

Anyway, both methodologies agree that in WW1, Germany was in a much worse economic condition relative to it's enemies than in WW2.

[South]

Good morning Guaporense,

Do you know that during WWII, some US political subdivisions had rent control programs ? The WWII New York City rent control program is still used for selected rental units.

Cars in the US were rationed with priority to those of the civilian workforce needing one for their work. A medical doctor was eligible because the job required visiting their sick and injured patients at home and bus routes were not necessarily on the route. The car might not have had a spare tire in the trunk (British English: boot [?]).

It is difficult to use the categories you present because we see the unimportant and not what allowed for war making potential. The Soviet Union and China made necessary economic adjustments. Did not the other nations also ?

~ Bob
eastern Virginia

[Guaporense]

Consumer goods are the bulk of economic activity and measure the general size of economic activity, including the capital goods produced to provide these consumer goods: hence the country's true "warmaking potential". Although one needs to correct for per capita income to understand that agricultural economies like China had a large GDP on paper (China's GDP was about the same size as the UK) but couldn't affect the war significantly because their output was mainly agricultural subsistence.

Anyway, these GDP figures are essentially general economic history. "Warmaking potential" is something way more nuanced: the Soviet Union had greater warmaking potential than it's GDP suggested, which is why it was able to compete with the United States as a superpower even though it's GDP was only around 35-45% of the US's level.

By the way, the 1980 ICP data includes price information of over 170 categories of goods, including capital goods and government services. While mine and Williamson's PPPs include price data on only 22 to 14 different goods. Hence, the 1980 ICP data is more complete although both types of estimation do not differ much:

GDP ratio of the ICP 1980 time series projection to 1913 relative to my estimate relative to the UK:

0.974 -------- Germany
1.010 -------- France
1.024 -------- US
1.021 -------- Japan
0.884 -------- Belgium
1.083 -------- Italy
1.036 -------- Netherlands
0.817 -------- Norway
0.851 -------- Denmark
1.024 -------- Canada

So the discrepancy margins are usually below 5% but since the 1980 ICP data includes much broader categories of goods it's accuracy is higher. Anyway, the discrepancies are small on average, only Norway, Belgium and Denmark have very big discrepancies.

In this case I might think we have overestimated their economic growth over the long run, hence Norway, Belgium and Denmark were richer than we though in 1913 relative to the UK. In my estimate, Belgium's per capita income is 96.9% of the UK's, in Maddison's it is 85.8%, still not that a big discrepancy but bigger than most other estimates, while Norway's per capita income is like 50% bigger in my estimate than in Maddison's.

[Guaporense]

Some estimate of military expenditures using the GDPs from the 1980 IPC project:

Military expenditures 1940-1944 ratio to 1937 GDP:

UK ------------- 2.67
Germany ------ 5.00
US ------------- 1.83
USSR ---------- 1.77 (1940)
Japan --------- 2.09

1937 GDP:

GDP millions 1990 dollars:

Germany ------------- 360,335
Japan ----------------- 134,807
US --------------------- 832,469
USSR ------------------ 420,091 (1940)
UK --------------------- 303,888

Military expenditures 1940-1944 to in 1990 dollars:

Germany ------ 1,800,728
Japan --------- 281,827
axis ----------- 2,035,037

US ------------- 1,525,880
UK ------------- 810,467
USSR ---------- 741,658
allies ---------- 3,078,005

The ratio of expenditures Axis/Allies is lower than GDP. Although if we exclude Italy, occupied Soviet Union and Hungary from the Axis, whose expenditures are not-included we get Axis territories with 63.3% of the Allies' GDP and military expenditures at 66.1% of the Allies' expenditures.

Still I think that Japanese expenditures at 18.4% of the US's might be slightly overestimated. German expenditures might be underestimated though. Yes, even though German munitions production was much lower than the US's that was because German expenditures on armaments were much lower in proportion to total military expenditures as well.

[Guaporense]

Steel output, 1937-1938

I picked steel output figures for the biennial 1937-1938, whatever year is higher:

thousands of tons
6,350 ------------ Belgium & Luxembourg
7,920 ------------ France
23,329 ----------- Germany
2,322------------- Italy
52 --------------- Netherlands
1,106 ------------ Sweden
12,984 ----------- United Kingdom
2,317 ------------- Czechoslovakia
665 --------------- Hungary
1,443 ------------- Poland
242 --------------- Romania
17,824 ------------ USSR
5,806 ------------ Japan
51,347 ----------- United States
1,425 ------------ Canada
385 --------------- China (Machuria)

These countries combined produced 131,754 thousand tons of steel in 1937 while world output in 1937 was about 137 million tons of steel.

Territories controlled by the Axis powers produced about 61,741 thousand tons of steel while territories controlled by the Allies produced 73,777 thousand tons of steel. That is, considering that the occupied parts of the Soviet Union produced about 10 million tons out of the 18 million. So the ratio of steel output between Axis and Allies was 0.837 compared to 0.851 for GDP.

[South]

Good afternoon Guaporense,

Ah ha ! So that's how Mao did it. His forces, to include the "locals" and areas under his control during the Chinese civil war relied on economic activity and thus their true "war making potential".

Only agricultural economies ? The Post WWI created oil nations join the farmers.

The distinction between the gross national product (GNP - total value at recent market prices of all goods and services produced by the economy) and the gross domestic product ( GDP - the GNP exclusive of external earnings) has more significance on oil countries because a large part of the profits accrue mainly to foreign owned oil companies and the money kept out of the "oil country". Look up: "net factor income". Next; review "war making potential".

I missed the correlation of economic activity, warmaking potential, Soviet GDP and the Soviet competitive position vis a vis the US. How did you price the Soviet nuclear arsenal ?

Do you really think price information - to include government services - is based on same / similar criteria ? Do you know the term from labor economics "ghost workers" ? Some US Government procured capital goods, eg an aircraft, is not purchased on the final cost of the aircraft but rather what was bought from and by constantly changing design requirements.

"Nothing vast enters the human mind without a curse." Socrates

~ Bob
eastern Virginia

[Guaporense]

South I am sorry but for me you are not making any sense, also I don't think you quite comprehend what I am saying. Do you have anything constructive to say?