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The Concept of Economic Potential for War*

Published online by Cambridge University Press:  18 July 2011

Klaus Knorr
Klaus Knorr
Affiliation:
Princeton University
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Extract

TOWARD the end of the Second World War, Field Marshal Rommel confided to his diary that, once the German U-boats were beaten in the Battle of the Atlantic, and the swelling stream of American soldiers and supplies could reach Europe, Germany “was doomed to inevitable defeat at any place which was accessible to the Anglo-American transport fleets.” Not everyone will agree with this assertion of the prominent role played by sheer masses of military manpower and matériel in deciding the outcome of World War II. It is suggestive, however, that the fortunes of that war turned in close association with the changing ratio of munitions production by the Axis powers and the United Nations.

Type
Research Article
Information
World Politics , Volume 10 , Issue 1 , October 1957 , pp. 49 - 62
Copyright
Copyright © Trustees of Princeton University 1957

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References

1 Liddell Hart, B. H., ed., The Rommel Papers, New York, 1953, p. 507.Google Scholar

2 U.S. War Production Board, Bureau of Planning and Statistics, World Munitions Production, 1938–1944, Document No. 21 (mimeographed), Washington, D.C., July 15, 1944, p. 33.Google Scholar

3 Cf. Brigadier General Giffin, S. F., USAF, “A New Future for World War II?” World Politics, IX, No. 2 (January 1957), pp. 280–86.CrossRefGoogle Scholar

4 For an extensive discussion of this conceptual problem, see Knorr, Klaus, The War Potential of Nations, Princeton, N.J., 1956, pp. 40Google Scholar–47 and passim.

5 Since the Korean War ended, United States expenditures on defense have hovered around 10 per cent of the GNP. The figure selected for limited war is more arbitrary. At the height of the Korean War, American expenditures on external security were about 14 per cent of the GNP. While it is possible that a very limited military action might be fought without any boost in the defense budget, it is also possible that a prolonged limited war on a larger scale might claim more than 18 per cent of the GNP. At the height of the Second World War, the major industrial belligerents devoted from 40 to 50 per cent of their GNP to warfare.

6 Thus, in the United States, the main effect of high taxes on executive behavior hasbeen observed in the methods of executive compensation (deferred compensation plans, stock options, untaxable fringe benefits and perquisites, etc.). These loopholes in the tax system have protected incentives and preserved the ability and effort to save. Keith Butters, G. J., “Taxation, Incentives, and Financial Capacity,” American Economic Review, Papers and Proceedings, XLIV (May 1954), pp. 504–19.Google Scholar

7 However, there is considerable evidence that high and steeply progressive income taxes are entailing harmful long-run effects in Great Britain. Although there, too, business executives have found legal ways of evading stringent tax rates, these loopholes have not offered relief, and hence protection of incentives, to other highly skilled occupations. The difficulties encountered in recruiting personnel for high civil service positions and the continuous emigration of highly trained technicians indicate the productivity losses which British taxes inflict on the economy.

8 This cutback was achieved by keeping investment in durable equipment and residential construction stable and by a sharp decline in business inventories.

9 The aftereffects of a reduced investment rate on economic growth will be relatively minor so long as the cut falls primarily on inventories and residential building. And even if the growth of the GNP is slowed down temporarily, this need not entail a relative decline of economic defense potential so long as the main adversary in limited war is the main adversary in any conceivable war and is likewise forced to accept a cut in investment.