S2 Ep36: The economic history of World War 2

Episode Summary

Executive Summary: This episode previews a VoxEU book on the economic history of World War II, arguing that the war was not only a military conflict but a profound economic and social turning point. It highlights economists’ wartime roles, the development of national accounts, wartime inequality, famine, and the war’s long-run effects on politics, health, and attitudes to welfare and sanctions.

Main Topics: The war as an economic, not just military, conflict (Priority: 5/5): Mark Harrison frames WWII as a struggle where deterrence, sanctions, bombing, and resource allocation were central to outcomes, with effects that still shape politics and society. Economists’ wartime roles and innovation (Priority: 5/5): Alan Bollard explains how economists helped finance war, manage rationing, identify bottlenecks, and develop methods that later shaped modern economic measurement and planning. National accounts and wartime measurement (Priority: 4/5): The episode links Keynes’s wartime work on estimating output gaps and war finance to the emergence of national accounts and macroeconomic measurement. War as a great leveller of inequality (Priority: 5/5): Walter Scheidel argues WWII sharply reduced income and wealth inequality across much of the world through taxation, inflation, controls, conscription, and labor market changes. Famine and civilian suffering (Priority: 5/5): Cormac Ó Gráda describes WWII famines as a massive civilian catastrophe driven by requisitioning, occupation, dislocation, and policy failure, especially in the Soviet Union and Bengal. Long-run consequences for health and life chances (Priority: 4/5): The episode discusses how prenatal and early-childhood exposure to war and famine affected later health, education, and earnings, based on Dutch and other evidence. Legacy for modern policy: sanctions, deterrence, welfare state (Priority: 4/5): Speakers connect WWII lessons to contemporary sanctions policy, deterrence failures, and the postwar expansion of the welfare state and social safety nets.

Key Arguments: WWII remains economically important because it demonstrates how deterrence can fail and how sanctions can escalate conflict rather than coerce compliance. Economists were active participants in wartime governance, not peripheral observers; they helped manage finance, rationing, currency controls, and strategic resources. Keynes’s wartime work helped push the development of national income accounting by making the economy measurable for policy and war planning. Wartime economic planning and total war conditions made the state far more capable of mobilizing resources, which influenced postwar public policy and welfare expansion. WWII was a uniquely powerful equalizer of wealth and income across many regions due to taxation, inflation, wage controls, nationalization, and full employment. Civilian deaths from famine were enormous—roughly comparable to battlefield deaths—and were often caused by policy choices, requisitioning, and occupation rather than only shortages. The effects of wartime deprivation lasted beyond the war through health outcomes, educational setbacks, and intergenerational political and social attitudes. The book aims to combine traditional topics like blockade and bombing with newer questions about political norms, nationalism, colonial aims, and the war’s hidden legacies.

Data Points: Estimated famine deaths in WWII: 15–20 million - Cormac Ó Gráda estimates deaths from famine during the war across Europe and Asia Leningrad blockade deaths: Up to 1 million - Deaths in the city during the siege, described as about a third of those who remained Length of Leningrad blockade: Up to 3 years - The blockade persisted until fully lifted in 1944 Bengal famine deaths: Up to 3 million - Approximate deaths in Bengal during the 1943 famine linked to wartime policy failure Japanese top 1% income share: 20% to 6% - Walter Scheidel cites a collapse in the share of income held by the highest earners in Japan during the war Canada top 1% income share loss: About half - The richest lost roughly half their income share during WWII Britain top 1% income share loss: About one-third - The richest lost around a third of their income share during WWII United States top 1% income share loss: About one-quarter - The richest lost around a quarter of their income share during WWII Netherlands famine deaths: About 20,000 - Used as a natural experiment for studying fetal origins and later-life health impacts Time since first interest in topic: 40 years - Mark Harrison notes the field has expanded greatly over four decades

Pivotal Quotes: "This is not going to be a conventional thriller because we already know the outcome." — Mark Harrison: Opening explanation of why WWII economic history still matters despite the known military outcome "World War II was very different than wars before because it was a question of total war... also very, very importantly from famine." — Cormac Ó Gráda: On why civilian starvation is central to understanding the war's human cost "The Second World War was truly unique as a leveling force." — Walter Scheidel: On the war’s global impact on reducing inequality

Implications: The episode suggests WWII offers enduring lessons on sanctions, state capacity, inequality, famine prevention, and the hidden long-term effects of mass violence—useful for understanding current conflicts and welfare policy.