The under-performance of the early-war German economy

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
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stg 44
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Re: The under-performance of the early-war German economy

Post by stg 44 » 14 Nov 2020 01:04

wm wrote:
13 Nov 2020 19:02
stg 44 wrote:
11 Nov 2020 18:30
That's a pointless data point (and an incorrect number, 80% wasn't horse based), because it tells you nothing about actual hauling capacity. This book series debunks the horse issue
I believe the number was true in the last year of the war.
Horses are cute but nobody uses them today - for some strange reason. The Red Army wasn't modern either but at least had (big) friends.

But it doesn't matter - the point was that the statement "Germany should never have lost the war" was crazy considering how non-modern the Wehrmacht was (and the German fleet almost non-existent, the Luftwaffe vastly inadequate.)
Who said 'Germany never should have lost the war'? I think you're arguing against a strawman. And ignoring my point entirely.

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Re: The under-performance of the early-war German economy

Post by stg 44 » 14 Nov 2020 01:08

Mori wrote:
13 Nov 2020 19:16
stg 44 wrote:
13 Nov 2020 18:29
How do you account for the Overmans study not holding up to archival cross referencing?
viewtopic.php?t=226986
By definition Overmans doesn't, because it's a wholly different approach. It wouldn''t have much value if it ended up with exactly the same results as the archives :)
If the statistics aren't borne out by comparing his statistical approach to records when the reporting system was still functioning there is a problem with his statistical method. Plus his numbers have been widely criticized on this very forum among other places.
Mori wrote:
13 Nov 2020 19:16
The thread you refer to includes major errors because the author failed to understand the operational situation of the combat engagements. I know some (not all, far from it) of the operations he listed and I couldn't agree with the figures he kept. A case example is operation Grenade in Feb-March 1945, where he refused to believe there could have been 3 times more German casualties than American. Obviously he didn't even have a quick look at what the operation was about: a smashing US breakthrough which overran all German defenses between the Roer river and the Rhine.

And, if I may add, when I compiled German military losses (and only strictly military) for Feb-March 1945, I actually realized German records gave 20-30% more losses than what Allies estimated...

Yet that's not my point. My remark was only that the source you refered to, Nigel Askey, has unfortunately published pseudo-researched papers where he unintentionally revealed his lack of basic understanding of the subject matter.

So he is a questionable reference at best.
Sounds like you don't like the author's conclusions, so you're flailing about try to find any nitpick to try and discredit him rather than engage with the substance of his points.

Edit:
Just checked out the Askey pdf and you're not even presenting his argument against Overman's study. For the Ruhr pocket he's not claiming that German losses weren't 3x what the Allies were, he's saying that the Allies didn't kill more Germans in 4 months of combat in 1945 than the Soviets managed to do in all of 1944 when they managed to destroy multiple German armies, which is what the Overman's study claims. He's also pointing out that the unrepresentative sample, which included all sorts of losses outside of combat including from non-combat related illnesses and issues whether said soldier actually died during the war, was then used to figure out losses per year, which does not match up to the accurate combat loss reports per front.
viewtopic.php?t=226986
However, there were also critical voices, namely that of Swedish military historian Niklas Zetterling, who argued that Overmans’ sample may not be reliable, [bt]hat some of his assumptions (especially the one that the absence of information about an individual’s fate in a sample file necessarily means that said individual died during the war) are unrealistic[/b], and that his claims about the inaccuracy of the German casualty reporting system, at least before 1945, are untenable.[8]
Thereafter O. estimates that of the 1,230,045 deaths (only Eastern and Western Front, without Italy, without deaths in captivity etc.) about two-thirds occurred on the Eastern Front (p.265). This would however mean that in 1945 about 400,000 soldiers were killed in the West alone – a glaringly high number not even remotely confirmed by any other source (for the Ardennes Offensive one must assume a maximum of 20,000, for the Ruhr Pocket 10,000 dead). In total the number of deaths on the Western Front in 1945 was probably less than 100,000.

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Re: The under-performance of the early-war German economy

Post by Mori » 14 Nov 2020 10:39

stg 44 wrote:
14 Nov 2020 01:08
Edit:
Just checked out the Askey pdf and you're not even presenting his argument against Overman's study. For the Ruhr pocket he's not claiming that German losses weren't 3x what the Allies were, he's saying that the Allies didn't kill more Germans in 4 months of combat in 1945 than the Soviets managed to do in all of 1944 when they managed to destroy multiple German armies, which is what the Overman's study claims.
My reference to "x3 German losses" wasn't either Askey pdf or the Ruhr pocket:
- It wasn't Askey but the other AHF thread you pointed (which, incidentally, Askey also quotes as a reference...).
- It wasn't the Ruhr pocket but operation Grenade, which took place before the Rhine crossing.
Last edited by Mori on 14 Nov 2020 10:53, edited 2 times in total.

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Re: The under-performance of the early-war German economy

Post by Mori » 14 Nov 2020 10:53

stg 44 wrote:
14 Nov 2020 01:08
If the statistics aren't borne out by comparing his statistical approach to records when the reporting system was still functioning there is a problem with his statistical method.
I will not discuss whether the reporting system was still functioning, or whether it was extensive and reliable, all statements that can be questioned. That's because this reporting system can be relevant for other matters, e.g., what data generals had when taking decisions.

But Overmans didn't care about the reporting system because he didn't limit his research to army personnel but compiled total losses whatever the uniform. That was a breakthrough in understanding German casualties. Army reporting systems were limited to soldiers in combat units. Overmans showed it was a poor proxy to total German casualties.
He's also pointing out that the unrepresentative sample, which included all sorts of losses outside of combat including from non-combat related illnesses and issues whether said soldier actually died during the war, was then used to figure out losses per year, which does not match up to the accurate combat loss reports per front.
Yes, that's Overmans: he included all casualties and didn't care whether they were from an artillery shell, a bomb dropped by a strategic bomber during a furlough, an accident while loading explosives in a truck, typhus or other sickness. He didn't care what the uniform of the victim was, which was a fundamental point to assess late war German casualties (when the US army sorted its PoW from April 1945, it realized less than 15% were soldiers from regular units).

What's the issue?
Last edited by Mori on 14 Nov 2020 13:27, edited 3 times in total.

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Re: The under-performance of the early-war German economy

Post by Mori » 14 Nov 2020 10:58

stg 44 wrote:
14 Nov 2020 01:08
Sounds like you don't like the author's conclusions, so you're flailing about try to find any nitpick to try and discredit him rather than engage with the substance of his points.
Sounds like you don't like my conclusions, so you're flailing about try to find any nitpick to try and discredit me rather than engage with the substance on my point on basic statistics / representative sample / confidence level.

More to the point: I did lose confidence in the Askey paper when I realized Askey really thought he knew about statistics while showing his complete ignorance of the most elementary statistics science.

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Re: The under-performance of the early-war German economy

Post by Politician01 » 14 Nov 2020 13:31

Yes - German war economy in the 1939-1941 period was quite inefficent and could have done much better if properly mobilized. IMO there were several reasons for this:

1. No proper central organization until 1942, no proper push to maximise production until the Stalingrad catastrophe. There were a lot of wasted resources a lot of wasted manpower a lot of inneficent production methods and the constant quarrelling between Gauleiters, factories, firms ect

2. Hitlers orders switching the priority of armaments production between Army and Navy and Air force

3. In the 39-41 period a sizable part of the German economy was still constructing consumer goods. For example in 1941 some 79 000 flats/apartmens were built in Germany and still some 49 000 in 1942 (quoting from memory)

4. It was believed that the production was sufficent. After all the Germans were constanly winning. I recall a passage (From Murray Luftwaffe?) where a German Luftwaffe General marveled at all the aircraft that were to be built, asking: "What are we going to do with all these fighter aircraft"?

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Re: The under-performance of the early-war German economy

Post by stg 44 » 15 Nov 2020 04:24

Politician01 wrote:
14 Nov 2020 13:31
I recall a passage (From Murray Luftwaffe?) where a German Luftwaffe General marveled at all the aircraft that were to be built, asking: "What are we going to do with all these fighter aircraft"?
IIRC it was Jeschonnek responding to Milch when he offered him something like double the fighters in the next year and Jeschonnek responded with something like "I don't know what I would even do with that many".

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Re: The under-performance of the early-war German economy

Post by historygeek2021 » 13 Apr 2021 06:23

If you read Volumes I, IV and V of Das Deutsche Reich und der Zweite Weltkrieg (DRZW), Germany consistently failed to produce armaments in the quantity believed to be needed by Hitler and the military leadership, not just during the war, but from the moment he became chancellor. Up until the end of 1941, Hitler and the German leadership blamed inadequate military production on (1) lack of raw materials (and lack of foreign currency) and (2) lack of manpower.

During 1941, Hitler began to realize that Germany's craft system of manufacturing was not conducive to mass production. German machine tools were not designed for assembly line mass production. The military's "cost-plus" contracts not only gave manufacturers no incentive to reduce costs, they also subjected weapons manufacturers to tedious inspections by Wehrmacht bureaucrats that slowed production. At one point in DRZW Vol. 5 there is a comment from a senior German official that the best thing that could happen for the economy would be to send the Wehrmacht's armaments inspectors to the front line.

All three problems were addressed during the war. Germany's conquests enabled it to plunder occupied territories for raw materials and slave labor. Germany no longer needed to manufacture exports to get raw materials (or foreign currency) from countries that it had conquered. And Speer eliminated the cost-plus contracts and replaced them with fixed price contracts, giving manufacturers an incentive to reduce costs. He also cut down on the number of variants of equipment, and boosted his numbers by failing to put the finishing touches on many items (e.g., paint).

Tooze's claim that Germany was headed in this direction anyway is bunk. There would have been no armaments miracle without plundered resources and slave labor from conquered lands. And the old craft/cost plus system of manufacture had to be done away with in order to mass produce armaments. Tooze has a narrative he wants to push and he selectively presents only those facts that support his narrative. A much more objective, far clearer presentation of the history is given in DRZW.

Also note that the Soviet Union dealt with the craft manufacture vs mass production issue before the war, with the Soviet leadership ruthlessly stamping out the old craft manufacture system and imposing assembly line mass production on the country in the 1930s. This enabled them to mass produce those tens of thousands of light tanks and aircraft that the Germans destroyed in the opening phase of Barbarossa. Mark Harrison says the experience of mass producing those poor weapons allowed the USSR to mass produce much better weapons at much greater efficiency during the war.

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Re: The under-performance of the early-war German economy

Post by ljadw » 13 Apr 2021 06:50

I prefer to believe Tooze and German economists as Scherner and Budrass than a Nazi as Speer who lied after the war to save his neck .
There was already an armaments miracle BEFORE the war ,without slave labor and plundered resources .

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Re: The under-performance of the early-war German economy

Post by KDF33 » 13 Apr 2021 23:55

The answer is very straightforward: between the end of 1941 and the end of 1943, Germany roughly doubled its workforce assembling armaments and ammunition.

That's pretty much all there is to it. The fabled 'under-performance' was due to comparatively low inputs, not a lack of productivity.

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Re: The under-performance of the early-war German economy

Post by Boby » 14 Apr 2021 15:13

There was no need. In 1939-1941 Germany was not fighting a war of attrition.

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Re: The under-performance of the early-war German economy

Post by TheMarcksPlan » 15 Apr 2021 19:52

”KDF33” wrote: between the end of 1941 and the end of 1943, Germany roughly doubled its workforce assembling armaments and ammunition.
Where are you getting your data? Here’s USSBS on industrial employment:

Image

…gives 22% delta to all Wehrmacht-directed industrial employment between mid-41 and mid-43. For metalworking, Wehrmacht share increases by 32%. Can’t imagine the table would increase another 51% (to double over 1941) by end 1943. If it did, productivity during latter ’43 would have declined because armaments index was static in latter ’43.

Here’s USSBS on employment in “Group A”:

Image

…19% delta total Group A employment between end 41 and end 43, 20% delta to Wehrmacht share.
”KDF33” wrote: The fabled 'under-performance' was due to comparatively low inputs, not a lack of productivity.
This is Tooze’s book-jacket blurb thesis but in the text even he backs away from it:
The sudden upsurge in German armaments production was far from miraculous. It was due to perfectly natural causes: reorganization and rationalization efforts begun long before Speer acceded to power; the ruthless mobilization of factors of production; the coming on stream of investments made earlier in the war; and a deliberate sacrifice of quality for an immediate increase in quantity.
…so even Tooze recognizes that rationalization was part of the story; he just doesn’t want Speer to get credit for it.

Aside: On Twitter I discovered something about Tooze that might explain his IMO distracting obsession with debunking Speer: he lived near Speer while the slave-driver was alive and free, going to school with one of his grandkids. So this really is personal for Tooze – understandably so.

Tooze’s peer economists uniformly find deficient early-war German productivity (see Scherner cited in OP). Overy, IIRC, finds >2x higher productivity between ’44 and ’41 (I don’t have the book at hand).

We can see the productivity gap merely by comparing the armament index increase from end ’41 to end ’43 (122%) against the Wehrmacht employment delta (19-32% in the above-reproduced tables).


IMO this is a field in which Tooze has done much harm by advancing an ideologically-motivated viewpoint. There is simply no way to reconcile the headline output and employment figures with supposed even productivity, yet many intelligent folks have bought the story because Tooze is intelligent and a good writer.
”HistoryGeek2021” wrote: And Speer eliminated the cost-plus contracts and replaced them with fixed price contracts, giving manufacturers an incentive to reduce costs.
Okay now let me pivot to defending Tooze’s corrections of GSWW v.5, which are important.

From WoD:
As we have seen, authorized profits under the existing guidelines were not in fact calculated as a percentage of costs, but as a percentage of capital employed.43 And the cost accounting guidelines were certainly strict.44 From the point of view of the new rationalization agenda, the essential flaw of the pre-Speer system was not that it allowed producers to inflate costs and prices as they liked. Nor was it devoid of incentives to efficiency. Once a price had been agreed, it was fixed and contractors thus had every incentive to cut costs.45 … Where the system clearly did sacrifice efficiency was in failing to require the less efficient producers to meet the prevailing 'best practice price'. P.565
Unlike Tooze, GSWW’s authors are not trained economists nor lawyers. They therefore did not understand that to really grasp a contractual arrangement you have to look at contract terms; you can’t accept a generalized description.

Tooze goes on to cast great doubt on the generally accepted productivity metrics, calling them a “statistical illusion” in both WoD and “No Room for Miracles” (cited/linked in OP). Tooze is absolutely right that the older narrative is overstated – Speer juiced his stats by, e.g., selecting January 42 as his baseline. But Tooze is not correct that productivity did not increase, as Scherner recognizes and as demonstrated by topline output/input stats (see above).

”HistoryGeek2021” wrote: At one point in DRZW Vol. 5 there is a comment from a senior German official that the best thing that could happen for the economy would be to send the Wehrmacht's armaments inspectors to the front line.
You’ll hear similar sounds from America. Businessman and their government allies always complain about regulation.

One thing is true though: Georg Thomas, sainted in some simplistic accounts of German war economy for his “armaments in depth” slogan, was disastrous for one primary reason: He stated that profits wouldn’t matter in war. Thus Germany’s concept was closer to Soviet than American – we knew somebody had to get rich if he wanted to win.
”HistoryGeek2021” wrote: Germany no longer needed to manufacture exports to get raw materials (or foreign currency) from countries that it had conquered.
Capital goods exports declined only 20% by ’42.

Image

Some of this is questionable political/prestige decisions by Hitler; some is trade with Sweden/Turkey/SU for raw materials.
”HistoryGeek2021” wrote: Germany's craft system of manufacturing was not conducive to mass production.
Overrated significance. From “Flexibility and Mass Production at War: Aircraft Manufacture in Britain, the United States, and Germany, 1939-1945” by Zeitlin:
The received contrast between craft traditionalism and mass production modernism in wartime aircraft manufacture is misleading from the German as well as the Allied perspective.

German aircraft manufacturing techniques "corresponded rather closely with American practice," including the use of "moving belts, with the work along them carefully planned at definite stations"; the main difference was that "operations were broken up among buildings in the same location or dispersed over a wide area" as a defensive measure against bombing attacks.

like their British and American counterparts, German aircraft manufacturers devised innovative techniques for realizing some of the benefits of large-scale production without excessive loss of flexibility
-----------------------------------
”HistoryGeek2021” wrote: He also cut down on the number of variants of equipment
Again overrated. From Zeitlin:
In both Anglo-Saxon powers, similarly, frequent design changes demanded a substantial measure of adaptability in aircraft manufactur ing methods. In the United States, as we have seen, aircraft firms modified standard line-production techniques to obtain greater flexibil ity, while in Britain a large proportion of aircraft components were turned out in batches small enough to make bench methods more economical than full mass-production tooling
---------------------------------
”HistoryGeek2021” wrote: Germany consistently failed to produce armaments in the quantity believed to be needed by Hitler and the military leadership
This happened in literally every country though. The U.S. cut its army size by 60% in late ’42 for mainly these reasons (see “feasibility crisis” and 90-division gamble).

-------------------------------
”HistoryGeek2021” wrote: Tooze has a narrative he wants to push and he selectively presents only those facts that support his narrative. A much more objective, far clearer presentation of the history is given in DRZW.
The reason I started this thread is because NOBODY has, IMO, a completely accurate picture of the early-war German economy. One cannot pick this or that side in the argument; further research is needed into many questions. At the broadest level, GSWW provides an outline for empirical research by actual economists – something its authors couldn’t provide. Some of that is being done by Scherner, Budrass, etc. But as I’ll show in another post downthread, even Scherner’s work has some glaring flaws.

What one shouldn’t do is as Tooze does: pick a narrative about the German war economy that suits your goals (for Tooze, anti-Wehrabooism and anti-Speer). That said, one can reject Tooze’s broad narrative and recognize his mistakes while gleaning important things from his deep, detailed scholarship on certain issues (in his articles at least as much as in WoD).

I am advancing my own view: That “Blitzkrieg theory” of radical under-mobilization must be rejected, while a softer version of under-mobilization can’t be ignored. Critically, under-mobilization related to both input quantity and rationalization, as each measure faced similar political constraints (these are not conflicting narratives, as the Overy-Millward debate suggested). Political constraints were easily shoved aside, however, once the magnitude of the Eastern Front became apparent in winter ’41-42. Again, everything about WW2’s course depended on Hitler not taking the Soviet Union seriously.

…of course to make that entire case I’d have to write my own book.
https://medium.com/counterfactualww2
"The whole question of whether we win or lose the war depends on the Russians." - FDR, June 1942

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Re: The under-performance of the early-war German economy

Post by KDF33 » 18 Apr 2021 04:18

TheMarcksPlan wrote:
15 Apr 2021 19:52
Where are you getting your data? Here’s USSBS on industrial employment:
By inference from various sources. Having since looked deeper into it, my previous assertion was AFAICT excessive. I'd evaluate the increase in the armaments workforce between 11/30/1941 and 11/30/1943 to have been on the order of 50-60%. That is still massive, and along with normal*, compounding productivity gains is sufficient to explain the increase in output during 1942-44.

*By normal I mean the kind of productivity gains you would find in any other nation's industry, mostly via 'learning by doing'.
TheMarcksPlan wrote:
15 Apr 2021 19:52
…gives 22% delta to all Wehrmacht-directed industrial employment between mid-41 and mid-43. For metalworking, Wehrmacht share increases by 32%. Can’t imagine the table would increase another 51% (to double over 1941) by end 1943. If it did, productivity during latter ’43 would have declined because armaments index was static in latter ’43.

Here’s USSBS on employment in “Group A”:

[...]

…19% delta total Group A employment between end 41 and end 43, 20% delta to Wehrmacht share.
Well, we need to define what sector best accounts for 'armaments' production. IMO, the lack of precision on that issue is a major flaw with the existing literature, a flaw that has often contributed to obscuring rather than clarifying the sequence of events.

You've actually greatly contributed to clarifying the issue for me. This table was my starting point: it shows the Germans employed 2,280,000 workers in the final assembly of armaments (including ammunition), rising to 2,825,000 if we include 'special components', i.e. powder and explosives, gunsights, electrical wiring for vehicles, and presumably other armaments-adjacent equipment such as barbed wire, field radios or radar systems.

If we exclude powder and explosives, we get 2,755,000 workers employed in the metalworking industry producing armaments and 'armaments-adjacent' equipment. Again using the previous table as our source, we see that a further 2,023,000 workers were employed in the 'non-armaments' metalworking industry (the 9 lines directly below 'II. Other Assembly', minus 'Processed raw materials'), to which we must add a further 215,000 workers producing 'Cast products' (5th line from 'III. Raw materials').

This shows a total of 4,993,000 employed in metalworking, which fits almost perfectly with the figures provided by the USSBS for the 3rd quarter of 1943, i.e. 4,761,000 for 5/31/1943 and 4,886,000 for 9/30/1943. That's a difference of just 4.6 - 2.1%, easily accounted for given that the former table includes data for territories annexed during the war, whereas the USSBS doesn't.

Note that neither the number of workers producing for the Wehrmacht among 'A firms', nor even among 'metalworking industries', constitutes a good proxy for 'armaments workers'. Armaments were only a fraction of Wehrmacht procurement: Tooze shows as much here, with armaments constituting 'only' 56.2% of total sales to the Wehrmacht by the metalworking industries in the 3rd quarter of 1943.
TheMarcksPlan wrote:
15 Apr 2021 19:52
This is Tooze’s book-jacket blurb thesis but in the text even he backs away from it:
The sudden upsurge in German armaments production was far from miraculous. It was due to perfectly natural causes: reorganization and rationalization efforts begun long before Speer acceded to power; the ruthless mobilization of factors of production; the coming on stream of investments made earlier in the war; and a deliberate sacrifice of quality for an immediate increase in quantity.
…so even Tooze recognizes that rationalization was part of the story; he just doesn’t want Speer to get credit for it.
I'd argue that Tooze isn't narrow enough here. Although the other factors must have offered a small contribution, the increase is accounted more-or-less entirely by the first item on his list, namely 'the ruthless mobilization of factors of production'. The man primarily responsible for the upsurge isn't Speer; it's Sauckel.
TheMarcksPlan wrote:
15 Apr 2021 19:52
Tooze’s peer economists uniformly find deficient early-war German productivity (see Scherner cited in OP). Overy, IIRC, finds >2x higher productivity between ’44 and ’41 (I don’t have the book at hand).
1941 creates a statistical illusion, given that it saw (1) the re-tooling of the fighter aircraft plants, (2) the artificially-deflated production of ammunition and (3) the shutdown of army weapons production in the 2nd half of the year.

IMO, it completely messes up the time series and has lead generations of historians to conclude that latter years saw larger gains in productivity than actually occurred.
TheMarcksPlan wrote:
15 Apr 2021 19:52
We can see the productivity gap merely by comparing the armament index increase from end ’41 to end ’43 (122%) against the Wehrmacht employment delta (19-32% in the above-reproduced tables).
Yes, this is what most analysts have done and IMO why they missed the real underlying trends. As discussed in detail previously, and on top of the 1941 'statistical illusion', the data used to arrive at the employment delta is faulty: it isn't correlated to the production accounted for in the armaments index.

Now, here's my big claim: the vast majority of the increase in the workforce employed in the metalworking industries between the end of 1941 and 1943 went into the production of armaments. In the absence of more tables showing the exact breakdown for the years prior to 1943, we have no direct evidence of this. I would argue, however, that the indirect evidence is very strong and even allows us to roughly sketch the evolution of the 'armaments workforce' during the war.

First, let's take a closer look at who produced armaments within the metalworking industries. The USSBS has 7 categories for metalworking, items 8 to 14:

8. Foundries
9. Machinery, transportation and other industrial equipment
  • Further broken down as:
    (a) Construction steel, boilers and heating equipment, and railroad cars
    (b) Machinery (including locomotives)
    (c) Automotive industry
    (d) Shipbuilding
    (e) Aircraft
    (f) Government-owned armament enterprises n. e. c
10. Electrical products
11. Instruments and optical goods
12. Iron, steel and plated products
13. Other iron and steel products
14. Miscellaneous metal products

Tooze uses the same breakdown. Each sector's share of overall armaments production for 3rd quarter 1943 amounts to:

9. Machinery, transportation and other industrial equipment: 71.5%
12. Iron, steel and plated products: 17.0%
14. Miscellaneous metal products: 4.1%
13. Other iron and steel products: 2.6%
8. Foundries: 2.3%
10. Electrical products: 1.7%
11. Instruments and optical goods: 0.6%

The first 2 items account for 88.5% of German armaments output. That's where the armaments workers we're looking for would be concentrated. This point is buttressed when considering that shares in RM values across different weapons categories roughly track the share of workers assigned to each category.

.................................................................................................

A critical key datapoint that furthers our understanding is found in USSBS. Appendix table 23 provides the breakdown for subcategories (a) and (b) for '9. Machinery et al.', with data for July 1939 and January 1944. It shows:

July 1939: 35,000 workers producing armaments and 949,000 producing other equipment
January 1944: 427,400 workers producing armaments and 867,900 producing other equipment

According to Tooze's data, the other subcategories mostly produced armaments.

Here I'll make an assumption: that the share of workers employed in armaments production for '12. Iron, steel and plated products' varied in a corresponding manner to '9. Machinery et al.'. I'll also assume that all of the (limited) industrial conversion happened in fall 1939. I'll also assign a 100% share of armaments production to Machinery et al.'s subcategories (c) to (f), which overstates it but is realistically balanced by the fact that I exclude the (limited) armaments production from the other 5 categories.

Now we can build an index of armaments workforce. Using USSBS data, we get:

11/30/1939: 1,024,000
11/30/1940: 1,330,000
11/30/1941: 1,501,000
11/30/1942: 1,966,000
11/30/1943: 2,239,000

Compare my inducted figure of 2,239,000 for 11/30/1943 to the primary source figure of 2,280,000 for 3rd quarter of 1943. That's a difference of 1.8%.

Note that even if the assumption that the 'conversion' part all occurred in fall 1939 is wrong, it would only make the increase steeper over the latter years.

By averaging the figures for each two end years, we can get yearly averages for 1940-43. We can now use Wagenführ's production index to track productivity gains. We get:

1940: 8.8 billion RM / 1,177,000 workers = 7,477 RM worth of armaments by worker
1941: 8.8 billion RM / 1,416,000 workers = 6,215 RM worth of armaments by worker
1942: 12.8 billion RM / 1,734,000 workers = 7,382 RM worth of armaments by worker
1943: 20 billion RM / 2.103,000 workers = 9,510 RM worth of armaments by worker
1944 (scenario 1) : 25 billion RM / 2,365,000 workers* = 10,571 RM worth of armaments by worker
1944 (scenario 2): 25 billion RM / 2,450,000 workers* = 10,204 RM worth of armaments by worker

Note that the figures for workers in 1944 are shakier estimates: for the first, I've simply added the 85,000 workers added that year to aircraft production to the official figure of 2,280,000 armaments workers for the third quarter of 1943. For the second estimate, I've arbitrarily doubled the figure of 85,000 to reflect guesstimated increases in the rest of the armaments sector. Given the large figures we are grappling with, however, either alternative shouldn't be widely off the mark.

Thus, actual productivity gains would be in the 35-40% range between 1940 and 1944. There's an apparent 'jump' in 1943, but this is, again, a statistical illusion: first, figures for 1941 are artificially deflated due to the Germans 'idling' a large part of their armaments industries and, second, so are figures for 1942 given the low base from which production rebounded combined with the disruptive conscription of German men producing armaments right after the setback in front of Moscow.

If we take the rates of increase of both 1944 scenarios over 1943 and average it over all years, we get:

1940: 7,477 RM
1941: 8,023 - 8,311 = average of 8,167 RM
1942: 8,608 - 9,238 = average of 8,923 RM
1943: 9,236 - 10,269 = average of 9,753 RM against 'real' figure of 9,510 RM (2.6% difference)
1944: 9,910 - 11,415 = average of 10,663 RM against 'real' figures of 10,204 to 10,571 RM (4.5 - 0.9% difference)

In a nutshell, these figures support the following narrative about the German armaments economy:
  • 1940: Rapid input gains and rise in production
  • 1941: Slowing input gains, as well as under-production due to deliberate German decisions, the latter leading to what looks like a ~24% drop in productivity
  • 1942: Rapid input gains and rise in production, but still what appears as a lag in productivity (~17%) due to low start base + early disruptions from the reorganizing of the armaments economy (i.e. German men drafted in the Wehrmacht in the first months of the year, replaced from spring by a large influx of foreign workers)
  • 1943: Still-significant input gains and rise in production, overall production now aligns with real underlying productivity
TheMarcksPlan wrote:
15 Apr 2021 19:52
IMO this is a field in which Tooze has done much harm by advancing an ideologically-motivated viewpoint. There is simply no way to reconcile the headline output and employment figures with supposed even productivity, yet many intelligent folks have bought the story because Tooze is intelligent and a good writer.
Even productivity, no. As discussed above, however, gradual productivity gains consistent with 'learning-by-doing', and comparable to what occurred among other belligerents, yes.
TheMarcksPlan wrote:
15 Apr 2021 19:52
You’ll hear similar sounds from America. Businessman and their government allies always complain about regulation.

One thing is true though: Georg Thomas, sainted in some simplistic accounts of German war economy for his “armaments in depth” slogan, was disastrous for one primary reason: He stated that profits wouldn’t matter in war. Thus Germany’s concept was closer to Soviet than American – we knew somebody had to get rich if he wanted to win.
Agreed on the first count. With regards to Thomas, I'd argue that whatever his failings were he can't have been 'disastrous' for Germany given that there is no evidence of there having been a disaster in the first place, at least compared to the situation of the other belligerents. The two issues that account for comparatively low early-war production were comparatively low labor inputs combined with the premature shift away from terrestrial armaments in 1941, neither of which has to do with productivity nor even with efficiency understood in the broadest sense.
TheMarcksPlan wrote:
15 Apr 2021 19:52
Overrated significance. From “Flexibility and Mass Production at War: Aircraft Manufacture in Britain, the United States, and Germany, 1939-1945” by Zeitlin:

[...]

Again overrated. From Zeitlin:

[...]

This happened in literally every country though. The U.S. cut its army size by 60% in late ’42 for mainly these reasons (see “feasibility crisis” and 90-division gamble).
I'd go further and say 'totally wrong'. I am more and more inclined to suspect that, if one were to actually produce a valid apples-to-apples comparison of the American and German armaments economies, one would find very similar levels of productivity. I suspect the same applies to the British and the Soviets, and even probably the Japanese. Not saying there were no differences, but IMO they probably had an impact at the margins and were dwarfed in importance by differences in raw inputs - primarily labor.
TheMarcksPlan wrote:
15 Apr 2021 19:52
The reason I started this thread is because NOBODY has, IMO, a completely accurate picture of the early-war German economy. One cannot pick this or that side in the argument; further research is needed into many questions. At the broadest level, GSWW provides an outline for empirical research by actual economists – something its authors couldn’t provide. Some of that is being done by Scherner, Budrass, etc. But as I’ll show in another post downthread, even Scherner’s work has some glaring flaws.

What one shouldn’t do is as Tooze does: pick a narrative about the German war economy that suits your goals (for Tooze, anti-Wehrabooism and anti-Speer). That said, one can reject Tooze’s broad narrative and recognize his mistakes while gleaning important things from his deep, detailed scholarship on certain issues (in his articles at least as much as in WoD).
I wholeheartedly agree. Tooze, although overreaching in his overall conclusion, is a gold mine of data and also presents solid arguments in many parts of his broader analysis.
TheMarcksPlan wrote:
15 Apr 2021 19:52
I am advancing my own view: That “Blitzkrieg theory” of radical under-mobilization must be rejected, while a softer version of under-mobilization can’t be ignored. Critically, under-mobilization related to both input quantity and rationalization, as each measure faced similar political constraints (these are not conflicting narratives, as the Overy-Millward debate suggested). Political constraints were easily shoved aside, however, once the magnitude of the Eastern Front became apparent in winter ’41-42. Again, everything about WW2’s course depended on Hitler not taking the Soviet Union seriously.
I essentially agree, save for the 'rationalization' part. I look forward to reading your reaction to the case I've laid above.
TheMarcksPlan wrote:
15 Apr 2021 19:52
…of course to make that entire case I’d have to write my own book.
I think you should. You're genuinely onto something.

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Re: The under-performance of the early-war German economy

Post by TheMarcksPlan » 18 Apr 2021 06:59

KDF33 wrote:I look forward to reading your reaction to the case I've laid above.
As I did yours. Might be delayed a few days, depending on life and the length of alleys I wander pursuing the questions you raise. Won't be a month between posts again unless the mods ban me again but in that case hit me up at my handle at gmail.

A preliminary:
KDF33 wrote:Now, here's my big claim: the vast majority of the increase in the workforce employed in the metalworking industries between the end of 1941 and 1943 went into the production of armaments.
I suspect so. I know I've argued somewhere that a delta to German labor force of X% would have had multiples of X% impact on weapons production, as this was a small field of overall German output.
KDF33 wrote:I think you should.
Any publishers reading this and want to make it worth my while?

I went far enough in Econ to know what I'd have to do and that it's not what I love to do. But I do love making a good argument and, as this is a necessary subsidiary piece of it, I might get around to it.
https://medium.com/counterfactualww2
"The whole question of whether we win or lose the war depends on the Russians." - FDR, June 1942

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Re: The under-performance of the early-war German economy

Post by ljadw » 19 Apr 2021 07:57

stg 44 wrote:
15 Nov 2020 04:24
Politician01 wrote:
14 Nov 2020 13:31
I recall a passage (From Murray Luftwaffe?) where a German Luftwaffe General marveled at all the aircraft that were to be built, asking: "What are we going to do with all these fighter aircraft"?
IIRC it was Jeschonnek responding to Milch when he offered him something like double the fighters in the next year and Jeschonnek responded with something like "I don't know what I would even do with that many".
And, Jeschonnek was not wrong .

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