The War Economy
During the Second World War, the economy of the United States experienced one of its most productive and rapid growth periods ever. This was due in part to the centralized planning of the economy and the replacement of dispersed private authority with centralized authority. This broader rationalization of economic life also led to social life becoming more and more dependent on government-controlled enterprises.
During the Second World War, the United States had a centrally planned economy. Private owners and businesses complained about the government’s control of prices, investments, and materials. Despite these complaints, the large majority of wartime investment was financed and directed by the federal government.
The planners who organized the war economy hoped to use private investment to expand industrial capacity. However, business owners saw public ownership as a mortal threat. They were convinced that public ownership would monopolize key resources and control wages.
The planners’ response to this threat was to move to more centralized planning as a pragmatic response. They created a War Planning Board, whose members were appointed by the President. They also started to collect macroeconomic data, which was later used to guide macroeconomic policy.
However, the government planners knew that the routine coordination of production could break down in a high-pressure environment. For example, they could not ensure that there would be enough aluminum to build a bomber factory. A more explicit planning process was needed to make sure that aluminum would be available.
The federal government owned about a quarter of the country’s industrial plants in the early post-war years. The system eventually passed into private hands. After the war, the military turned more and more to private contractors.
The history of industrialization involves a rapid redirection of resources, a bottleneck, and coordination problems. The planners’ response to this crisis was to replace the dispersed private authority with a centralized authority.
Traditionally seen as a means of addressing social problems, the social economy is a way of organising economic activities based on local roots, through participatory governance. These organisations involve citizens in activities and provide opportunities for them to actively participate in local projects. They also act as a catalyst for social transformation, reshaping societies to more inclusive models.
Social economy organisations have been a key part of the COVID-19 response. They have provided solutions that have helped address critical issues at the local level, such as the rebalancing of the economy’s resilience. They have also demonstrated the value of local networks and shared information.
Social economy organisations have demonstrated the ability to quickly act during a crisis. Some have used special access schemes to provide financial support to social enterprises. They have also used their collective resources to develop activities that would otherwise have been difficult to undertake. This includes taking advantage of digitalisation opportunities, such as sharing information or forming partnerships with local authorities.
The social economy has also demonstrated its capabilities by identifying social innovations. For example, the SOS Medecins organisation provided free doctor home visits and medical checks. This helped alleviate pressure on the health service. They also provided 1 500 healthy meals to the vulnerable in schools in Quebec.
In addition to identifying the most important and useful functions, social economy organisations have also shown how they can address market failures. For example, in some countries, the social economy has been able to delay the payment of social security contributions or local taxes.
The post-1940 period was the most rapid economic growth in U.S. history
During the post-World War II period, the United States experienced the fastest economic growth in history. The economy expanded at a rate of 223 percent in real terms. This growth was the fastest in the nation’s history and marked the period when America’s economy recovered from the Great Depression.
From 1939 to 1944, output in many American manufacturing sectors increased dramatically. The rapid increase in industrial productivity reflected a shift in workers from less productive activities to more productive jobs in industry.
By 1945, many sectors were firmly oriented towards defense production. Materials such as steel, aluminum, and rubber were in short supply. Moreover, many businesses had large unfilled orders for peacetime products.
By June 1946, the annual rate of inflation was 28.0 percent. The Office of Price Administration attempted to curtail inflation by maintaining prices at March 1942 levels. While this attempt was not entirely successful, it meant that many Americans enjoyed a stable quality of life.
The war also spurred the establishment of the organized labor movement. This movement became a powerful counterbalance to the government. Government spending declined from 55 percent of GDP in 1944 to 16 percent in 1947. Meanwhile, private spending grew at a rapid rate.
In addition, government revenue grew from eight percent of GDP in 1938 to twenty percent in 1945. The federal government’s tax revenues dropped by 11 percent in 1947.
The Second World War was an economic success story
During the Second World War, the United States experienced one of the most impressive economic booms in its history. Large-scale investment in factories, plants, and equipment was the order of the day. The federal government played a central role in the vast expansion of productive capacity.
The big kahuna in this story was the creation of a large middle class through the introduction of new fringe benefits. This was not only a good thing for workers but also for consumers who could afford the latest products. In the past, workers could rely on health insurance coverage as their sole employee benefit. Now, this was a contentious topic for society at large.
The big gizmo was the creation of the National War Labor Board, which facilitated labor disputes. The board sought to break the anti-unionism of the nation’s major industries. This included a big league effort to organize the machinists of Bridgeport.
This was not the only time Connecticut was hit by a large scale strike. The state’s largest was at the GE plant in Bridgeport, where 25,000 workers walked off the job. The company had a big presence in nearby New York City, and the presence of a local union had a ripple effect throughout the state.
There were no shortage of other gimmicks, ranging from small scale to big. Some examples include the creation of the shortest route to work, a state tax rebate for surviving families, and the creation of a new middle class.
