HistoryGeek2021 wrote:Scherner is clear that the introduction of fixed price contracts was the most important factor in improving efficiency in aircraft production
Are you getting that from the order of words in the title? The authors are clear that learning effects were the central factor.
HistoryGeek2021 wrote:Tooze's analysis is interesting, especially the part about the industry accumulating substantial profits in the 1940-41 period, but I don't think it's a refutation of the inherent inefficiency of the cost-plus system that every other commentator has accepted.
It's a devastating refutation of the typically-quoted facts, if "capital plus" and not "cost plus" was the default contract rule (outside aviation). I'm locating Tooze's cites to investigate...
But Tooze doesn't properly analyze the implications. "Capital plus" is massive source of behavioral distortion, albeit different from "cost plus": it means that a firm that produces more from a set capital stock (e.g. by using double shifts) makes no more total profit (and may make less).
While "capital plus" retains incentive to produce cheaply, it also removes incentive to produce more
If true, this is MASSIVE, FUNDAMENTAL revision to our picture of firm-level behavior in Germany. I am very interested to explore it. We would expect a "capital plus" firm to have too much capital (exactly what we see) while using workers efficiently in war production (minimizing costs) and diverting the workers thereby conserved to other profit lines (again, exactly what we see).
As often with Tooze, his scholarship has here suggested something tantalizing. But its investigation would contradict his ideological goal so he doesn't follow up.
HistoryGeek2021 wrote:Tooze is a historian, not an economist.
He's an economic historian and is trained in economics/statistics; Mueller is not. https://adamtooze.com/bio/
Regardless, my point is that Tooze's analysis looks for quantitative evaluation of claimed causal effects whereas Mueller/GSWW don't. Mueller is content to narrate administrative phenomena and imply that they had statistically significant effects. While I find Mueller's implicit statistical effects plausible - I take them more seriously than does Tooze - nowhere in GSWW is there quantitative evaluation of the costs of polycracy generally and of its particular pathologies. Thus more research is needed.
What does that mean
HistoryGeek2021 wrote:It seems to me that the inefficiency was in the German government, not the German (and foreign) workers.
in quantitative or even specific narrative terms? Government officials obviously were not directly engaged in production; thus government inefficiency resided at the level of allocation, planning, etc. So to make the polycracy thesis stick (again I find it plausible but quantitatively under-proved), we'd need to show - for example - that workers/resources weren't where they should have been. Alternatively, we'd need to show that firms were using inefficient practices despite government orders otherwise.
There is some
quantitative support along these lines - most saliently the above-quoted Todt ministry report on firms not using war-allocated workers for war production. That large piece of evidence suggests that early-war productivity deficits may have related significantly - perhaps largely - to private firms' unwillingness to commit to war production, a phenomenon perhaps especially apparent between France and Barbarossa when everyone expected an imminent return to peacetime production.
To investigate further the firm-related inefficiency hypothesis, we'd need much more intra-firm data. Here there's a big lacuna. The NARA T-series, for example, contains an archive of documents for the Flick Konzern but not a great deal else. Chapter 19 of Economies under Occupation
(Boldorf and Okazaki eds), for example, contains the following description of the state of research:
Our knowledge about investments, profits and the conditions of the depreciation
allowance but also about the economic performance and the organization of
occupied factories is still surprisingly low. The study therefore focuses on three
relatively well-researched companies: the Flick concern, Krupp and the Gutehoffnungshütte (GHH).
...while the chapter is focused on occupied factories only, the research-dearth extends to company levels for all but the three named companies, while basically all large German companies were involved in occupied countries.
Company-specific research is a fruitful avenue; it's what underlies Budrass/Scherner/Streb article "Fixed Price Contracts etc." So far, however, such research has only been conducted by researchers seeking to debunk the Speer myth, one of the least-interesting topics in WW2 historiography.
HistoryGeek2021 wrote: I think the more useful figure is for exports of machine tools, Germany's primary export business (aside from coal). This figure falls almost in half from 1940 to 1942.
But it's still high in 1940-41, which is the only truly interesting under-mobilization period IMO (1942 being probably too late for industrial investment decisions to have averted German defeat).
HistoryGeek2021 wrote:This is just the aircraft industry.
HistoryGeek2021 wrote:This is again, just the aircraft industry and doesn't say anything about Germany.
That's all we were talking about. Again, I agree that more research (especially firm-specific) is needed outside the aircraft industry.
HistoryGeek2021 wrote:The Allies produced 299,500 combat aircraft against only 65,000 from Germany. Clearly whatever they were doing was working a lot better than what the Germans were doing
That's far too gross a level of analysis to say anything interesting. A (value-based) delta to German wartime production of <1% could have decided the war (at least in the East) had it come in '40/'41. That delta isn't significant to statements like yours.
HistoryGeek2021 wrote:the German armaments/economic bureaucracy was such a mess, it would have been the biggest hurdle for Hitler to overcome even if he had ordered greater mobilization in 1940
I agree with you (with Mueller) on the mess point; disagree as follows:
- (1) that the mess has been sufficiently proven in its quantitative/causal effects,
- (2) that firm-level decisions based on short-war expectations seem at least as likely as "mess" to have had decisive impacts,
- (3) even granting messiness, clear dictates from Hitler nearly always had clear directional effects on Nazi bureaucracy and industry. https://en.wikipedia.org/wiki/Ian_Kersh ... 22_concept
As GSWW amply narrates, Hitler's signaled to the bureaucracy and to industry during '39-'41 that he did not prioritize absolute mobilization, that Gauleiter requests for leniency and business objections to rationalization programs (e.g. closure campaign) would be accommodated and would carry no adverse political consequences.
Clear signals from Hitler that he desired maximal mobilization - rebuffing Gauleiters, closing inefficient business, penalizing firm officers for mis-using workers - would have caused industry and bureaucracy to "work towards the Fuehrer" in pursuit of maximal mobilization as happened (at least to a greater extent than hitherto) after the 41/42 Winter Crisis. Whether they work towards a revised Hitler in a messy or efficient manner makes little difference.
HistoryGeek2021 wrote:Thus, even after the winter crisis of 41/42, Speer's scope of authority was limited. And this (the chaotic German government and Hitler's reliance on his friends), will be an obstacle in any ATL because it was an inherent feature of the German government on which Hitler's rule depended.
Can't emphasize enough that the minimal conditions for German victory are not eliminating aspects of Nazi dysfunction that persisted throughout the war, only eliminating earlier those barriers that Hitler successfully eliminated once he had to take the SU seriously. 1942 production levels were far short of the German production frontier yet 1942 levels in 1940/41 would have made defeating the SU a foregone conclusion.