The War That Ignited the Future

On a September morning in 1945, photographer Richard Peter wandered through the streets of Dresden, capturing the devastation caused by British and American bombings. His photo, "View from the Town Hall Tower," symbolized the war's violence. World War II slaughtered civilians and unleashed unprecedented devastating forces.

Yet the war's destruction coincided with economic expansion. Allied powers could count on solid manufacturing systems, leading to an overall 20% increase in global production. The war mobilized vast resources and created full employment. This paradoxical situation saw the war acting as a catalyst for economic growth and technological innovation. The United States' GDP almost doubled.

The Allied powers, especially the United States, benefited from increased military spending, notwithstanding the compression of civilian consumption, while inflation was controlled through rationing and price controls. The war effort required a radical solution to the crisis, based on the activation of enormous resources by the states involved and the introduction of sophisticated programming and planning. The knowledge and technical skills that supported the formation of fixed capital played a driving role in the postwar recovery processes of national economies, even those most afflicted, such as Germany and Japan.

The war had a depressive impact on international trade, foreign investments and the primary sector, with the exception of areas like the US's Midwest and Australia, which instead experienced improvements in cultivation techniques and productivity, spurring research into alternative technologies. 

The war saw an unprecedented increase in the war manufacturing industry. The United States, for example, increased its military spending from 1% in 1939 to 42% in 1944. The effort to maximize production was impressive, but once the German strategy of a "lightning war" (Blitzkrieg) had failed, Allied economic superiority became evident, at least in terms of quantity. The warring countries possessed an impressive capacity to rapidly increase overall output and of certain sectors in particular. Germany trebled its production of armaments in less than three years, while the Soviet Union increased output by two and a half times between 1940 and 1944. The United Kingdom increased the production of aluminum — which was increasingly used in the war industry — by 50% during the course of the war, and trebled the volume of valves used in the radio communication sector.

Increased industrial output was facilitated by an adequate manufacturing structure and temporary suspension of traditional market mechanisms. Governments developed unprecedented competences in controlling prices, rationing and undertaking measures to compress private consumption in favor of military spending, accumulating valuable knowhow for postwar future “mixed” economic policies, the logical outcome of a philosophy that viewed planning processes — whether more or less formalised and implemented via direct government regulatory action — as an important part of catching-up and anticyclical intervention to support economic growth and development.

The war drove technological and scientific innovations. Countries like Japan and Germany aimed to produce high-quality armaments. The aviation industry, in particular due to the new warring techniques based on long-distance massive bombing, saw significant technological advancements. The field of propellants, building materials and navigation instruments led to the development of modern commercial aviation and passenger planes. Other sectors, such as electronics, computers and communications, also benefited from military requirements. Many of these innovations studied and introduced during the war would, once the war ended, become fundamental components of the new technological paradigm of the third industrial revolution. Indirectly, they constituted a key component of the globalization process which progressively took place after the end of the conflict, literally exploding after the end of the Cold War.

Innovations were not only touching the field of pure technologies — equally important was the impact of other fundamental “enablers” of the integration process which followed that devastating hegemonic conflict: the creation of institutions of global governance, as the International Monetary Fund (IMF) and the World Bank, both designed at the Bretton Woods Conference in 1944.

The war indeed brought unimaginable material devastation and spiritual violence. However, it also stimulated unprecedented innovative energy, for both good and evil. Moreover, it brought mankind so close to the depths as to make the willingness to cooperate for shared prosperity the only possible alternative to desolation. A grave lesson for the present, by the way.