The Economics of World War I

Published by EH.NET (January 2006)

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Stephen Broadberry and Mark Harrison, editors, The Economics of World War I. Cambridge: Cambridge University Press, 2005. xvi + 345 pp. $80 (cloth), ISBN: 0-521-85212-9.

Reviewed for EH.NET by Stanley L. Engerman, Departments of Economics and History, University of Rochester.

Intended as a companion volume to The Economics of World War II: Six Great Powers in International Comparison, edited by Mark Harrison (1998), The Economics of World War I succeeds admirably in describing behavior during World War I and its immediate aftermath in nine different nations involved in the war. The nations covered include five Allies — France (Pierre-Cyrille Hautcoeur), the United Kingdom (Stephen Broadberry and Peter Howlett), Russia (Peter Gatrell), Italy (Francesco Galassi and Mark Harrison), and the U.S. (Hugh Rockoff); three Central Powers — Germany (Albrecht Ritschl), Austria-Hungary (Max-Stephan Schulze), and the Ottoman Empire (Sevket Pamuk); and one neutral — the Netherlands (Herman de Jong).

The essays, each by first-rate scholars, draw heavily upon recent quantitative data — there are 143 tables and 13 figures — and each also has an extended bibliography, including many recent books and articles, as well as references to official sources. The editors appear to have imposed a heavy hand in having these studies deal with similar issues in a similar manner, making cross-country comparisons easy. In addition to the country studies there is an essay-length “Overview” that places the war and the nations in perspective. The volume would be a quite useful reference work, in addition to its importance as a description and analytical interpretation of the impact of warfare.

The basic presentation for each country draws heavily upon standard economic measures — GDP, agricultural and industrial production, labor supply, labor productivity, the trade balance, real wages, government expenditures, debt, money and prices, and various others — and the “Overview” provides comparisons for several of these. In wartime GDP increased in the UK, Italy, and the U.S., but declined in Germany, the Netherlands, Austria, Russia, France, and the Ottoman Empire, with the declines of the latter four being in the order of 30 to 40 percent. Not surprising, all nations had increases in the share of government spending in national income after 1913, ranging from doubling to between five- and eight-fold, with the wartime share being in excess of fifty percent in both Germany and France. In terms of population, territory, and output the Allies, including their colonies, were considerably larger than the Central Powers, 4.5 times larger for gross output. Several essays include a measure of the “costs of the war,” following the 1920 procedures of E.L. Bogart, including material destruction as well as human losses. The largest costs were borne by France and Germany. In addition there are some concluding discussions of the legacy of the war, which include analysis of ideological and economic factors, often noting the major enduring changes in government taxation and expenditure policy. Many other issues are covered, some general, some specific to particular countries, including the effect of blockades on neutral nations, reparations, and the impact of the decline of the Ottoman Empire after the war.

The general conclusions of the editors are not surprising — “that the outcome of global war was primarily a matter of the levels of economic development of each side,” that “war is, in general, a negative-sum activity,” and, as shown also in World War II, “peace is better than war.” Since war clearly utilizes resources and kills people, the negatives are obvious, while presumably the benefits, including the political effects, could be achieved by other means. Even if one may raise questions about these conclusions of the editors, all of the essays are written clearly, present considerable data, and are analytically sophisticated. This is a superb collection on a very important topic, and will repay reading by all economic historians.

Stanley L. Engerman is John Munro Professor of Economics and Professor of History at the University of Rochester.