In my readings of history, I must admit that I am puzzled by modern war (in an economic sense). Take the case of Great Britain: it is said that the major collapse (of GB as a world power) after WWII, was in the main caused by its financial exhaustion-it had just come through a 6-year war , and had expended all of its reserve wealth .
Yet, where did this wealth go? Aside from payments to foreign suppliers (mostly raw materials), British factories had paid out hndreds of billions of pounds in wages, and there had been (virtually) zero nemployment during the war years. So can it be said that this wealth was “lost” to the country? It was merely recycled-the working and middle classes got more of it.
Now compare the UK with Germany: Germany was totally wrecked (unlike the UK, where most of the industrial plant was intact). Germany started with wrecked factories, ports, railroads and mines, and over 5 million dead. Yet, within 15 years, German industry was going along fine-exports were high and increasing, and most of the infrastructure had been rebuilt.
What didn’’ GB recover even better than Germany did?
Two things right off the bat:
The US spent piles of money to rebuild Germany (Marshall Plan, I think). The motive was to make sure that there was no reason for (West) Germany to rise up again as it did after WWI.
Great Britain spent huge amounts of money on war materiel that was, in the course of things, destroyed. Also, Britain did suffer significant damage from air raids, etc. during the way, and had to pay for those repairs. Finally, Britain pretty much went from an empire to a small group of countries, mostly just the ones in the British Isles.
I’m sure you can find more scholarly and detailed answers, but these are the ones that pop out to me.
Roddy
Yes, but GB received MORE in Marshall Plan Aid than WEst Germany did.
In addition, much materiel supplied (by the USA during the war), was on “lend/lease”, and was never paid for.
Because it was all spent on stuff thet blew up.
What was the total cash value of all the British aircraft shot down?
What was the total cash value of all the British tanks destroyed?
Ships sunk?
Guns blown apart?
Equipment lost?
Men killed?
And even the stuff that wasn’t destroyed is dead end. A battleship is a very useful thing to have when killing Nazis is an important thing, but once you’ve run out of Nazis to kill, it’s a multi-million dollar pile of useless.
The British spend bazillions of pounds on stuff that was either destroyed, or could only be used to destroy. It’s dead end spending.
As to why Germany ended up stronger economy, there’s a number of reasons - it’s not justr explainable by the Marhsall Plan and such things. Germany, for one thing, did not initially maintain a large armed forces, which the United Kingdom did - even smaller than its wartime peak, the UK was maintaining a hell of a lot of punching power during the Cold War.
postwar Germans were rebuilding, working and generally prospering in the usual German fashion. Postwar British were going on strikes, dealing with government imposed rationing / price ceilings and similar controls, looking for what else to nationalize Nationalization - Wikipedia and moving into council flats.
I don’t have the stats on levels of welfare dependency, criminality and alcohol consumption in Britain after 1945, but do look at where these trends led by this year of grace 2011. A Clockwork Orange, incidentally, was written in 1962.
I’ve heard a theory that explains West Germany’s success after WWII, though I can’t say whether it’s credible or not. The theory is that West Germany benefited because the destruction of the country during the war was nearly total. The basic logic is this: the war wiped out almost everything in Germany: the government, the political parties, most of the economic system and many of the corporations, the unions, much of the media, and so forth. Consequently there was no power structure left after the Nazis were removed. Thus there was none of the bad things that come with a power structure: corruption, graft, institutionalized discrimination, partisanship, gerrymandering, good-old-boy networks, and so forth. Hence West Germany prospered.
(East Germany, of course, was a different story.)
I’m sure it will infuriate a lot of Dopers to even suggest this, but might it be possible that GB going all Socialist after WWII had a timy bit to do with it?
Did Germany do better than Britain in the years following WW2? Does anyone have any figures to back this up? I can’t find any GDP figures earlier than 1970. This graph File:GDP per capita big four Western Europe.PNG - Wikipedia suggests they were on roughly the same economic footing by 1970, and are on roughly the same footing today.
I suggest this might be similar to China and the US today. Everyone talks about how China’s economy is great while the US is bad. In reality the US has a GDP per capita of ten times China. People are comparing the growth in output, when really they should be comparing output.
Just a thought. I’d love to see some evidence either way.
The UK received more Marshall aid than Germany, but had almost twice as much war debt to America as was received in aid, while Germany had no debts to pay off.
Lend/Lease was a two-way street, in addition to a large chunk of it having to be paid in cash after the war raw materials were also provided to America, for example Canadian Uranium, and between Lend/Lease and early deals and the post-war deals Britain was also forced to give up the commercial technologies developed in the war, like jets, and to remove imperial preferences, and to liquidate the national gold reserves and foreign investments, and to allow convertibility between the pound and the dollar, and so on.
The UK did very well in the post-war years and continued to do well for decades.
Now, the UK DID decline as a world power, but that’s mainly because a nation as small as the UK couldn’t possibly have hoped to hold on to such a huge empire forever, even if two world wars hadn’t put huge strains on their manpower and financial resources.
The UK today has, what, 55 million people? Well, India and Pakistan (which made up Britain’s Indian empire) combined have about 1.5 billion people. See the problem? Just how long do you think 55 million people could hold on to1.5 billion people who didn’t want to be ruled by foreigners any more?
In the long run, the empire was doomed. The UK shed the empire about as painlessly as possible and carried on as a much smaller but still wealthy and powerful nation.
Great Britain experienced a good deal of decolonialization in the 20th century, which seems to be largely independent of WW2. A lot of the de-colonialization occurred in the 60s, 2 decades after WW2. Supposedly they didn’t want to fight to keep their colonies since it was a losing proposition. I don’t know if that is the same thing as their empire crumbling due to debt. I thought they just realized people were going to fight for independence, and it was best to sever the ties rather than embark in decade long civil wars all over the world.
By choosing to untie the ties rather than have them be chopped off, they managed to keep closer and less-bitter ties than those between some other ex-colonial powers and their (our) ex-colonies. Spain is in good terms with her ex-colonies now, but there was a lot of bitterness in between, and periods when our ex-colonies chose to ally with someone else simply on account of them being not-the-ex-metropolis.
Again, my question was “how does wealth “dissapear””? Great Britain expended hndreds of billions to fund the war-so did Germany.
My point is, this expenditure was not “lost” to the economy-it was cysled through the wage chain.
As far as I can see, war puts people to work, and the fact that the products of war (battleships, guns, tanks, bombers) are (essentially) worthless after the conflict is pretty much irrelevant.
The governement borrowed “wealth” and used it to manufacture stuff. This stuff became worthless 1946. The “wealth” was still there - in tanks - and so was the debt - in dollars.
Work only creates wealth if what is created is useful. At the end of WW2 Britain had a large quantity of stuff that was worth less than what was used to create it, thus lost wealth. Germany had much more lost wealth the Britain did but was able to organize and produce new wealth faster than Britain was for about fourty years.
As others pointed out, it’s not irrelevant because it’s basically the same reason you can’t fix the economy by paying people to dig holes and fill them up again. “Wealth” is not the same thing as “wages”. Wealth, in an economic sense, is created when raw materials are turned into goods and services people use. Money is just the mechanism in which information on relative value is exchanged.
Putting people to work isn’t useful unless those people are doing useful work. That’s great they have money, but they can’t buy anything with it because nothing useful is being made.
Even if your country isn’t at war, money that goes towards defense, even if it does provide a local benefit to certain industries, is money that could have been spent on health care, roads, schools and other goods or services that actually increase standards of living.
It may be helpful to know that the U.K. paid off the last of its W.W. II debt to the U.S. at the end of 2006. Some $83m (£45.5m).
Cite
The amounts are truly staggering. Oh and a large chunk of the U.K.'s W.W. One debt to the U.S. still remains outstanding.
Bri2k