The Economic Influence of War Has war been a necessary aspect of economic development?

Interrelationships between subjects The events of history have often been influenced by man’s attempt to improve his economic status or position These same events cause impact on the natural environment and have directly affected natural processes and systems There is a direct relationship between historical events, geographical change and economical development

Economic aspects of WW1 Australia entered WW1 in 1914 Before the war Australia’s economic activity was founded on agriculture and natural resource production (such as wheat) The war disrupted international shipping and the channelling of materials to war production meant that many imports to Australia were reduced or no longer available Australia began expanding its own secondary manufacturing industries as a result (including steel production, focused in Newcastle)

War causes economic change The need to fuel the ‘war machine’ produced a degree of economic prosperity and industrial progress Consequently towns developed in areas where steel production could take place and the landscape was changed when huge quarries where cut into the environment (Geographical impact) Companies like BHP – Broken Hill Proprietary (Company Limited) were founded during this time The IWW (Industrial Workers of the World or ‘Wobblies’) opposed how the capitalists profited from the war and appeared to exploit the lower or middle classes

More WW1 economic factors Issue of supplying troops – weapons, uniforms, food, equipment and necessary training Transport (including equipment for horses) and medical resources (including hospitals) The Commonwealth borrowed millions from Britain and the people (through War Bonds) In order to gain more revenue, the Government in 1915 initiated a deliberate policy of controlling inflation, through regulation of gold and inflating the value of money By 1917-1918 the Commonwealth was collecting millions in income tax – another economic change produced

Impact on Australians Increased taxes and a decrease in consumer goods reduced the standard of living of most Australians during WW1 A great deal of resentment developed between the workers and their bosses (e.g. Strikes – 1916 coal miners in NSW) Unions became stronger and many industries joined in protest Government passed laws to deregister striking unions – that influenced the war effort Central Wool Committee – established price for the wool clip, no natural process of supply and demand – Government controlled

More impacts on Australians... Government established an Australian Wheat Board that controlled the wheat supply Britain was buying Australia’s dairy, metals, wheat, wool etc to supply the war The Commonwealth dominance over the States was accelerated by World War One as the commonwealth by necessity was required to play a greater role in the economy to ensure that Australia could successfully prosecute the War. One of the long-term lasting effects of World War One on Australia was an increase in the powers of the Commonwealth Government at the expense of the States especially in the area of control over the national economy.

Impact of WW2 on the world WW2 caused the loss of millions of lives, having an enormous impact on countries’ economies Germany was divided in to four quadrants (US, UK, France and Soviet Union) Influenced the development of a welfare state (e.g. UK) Communist takeover of China and Eastern Europe Creation of Israel Division of Germany, Korea (later Vietnam)

Economic Organisations WW2 United Nations (replaced League of Nations – laws and security for economic development) World Bank (Loans to developing countries) World Trade Organisation (Regulates trade between countries) International Monetary Fund (Oversees the global financial system)

Technologies influencing economy Nuclear fission Communications for intelligence Electronic computer Jet engine Medical – Penicillin Industry – machinery and production equipment and materials (e.g. Synthetic rubber)

Biggest economic change A previously multipolar world was replaced by a bipolar one The two most powerful victors – The United States and Soviet Union became superpowers American policies based on capitalism and free trade increased their position out of the two Recent economic development (India, Brazil, China, Middle East etc) has seen the world return to a multipolar system

Economic impact in Australia The war was a huge boon to the Australian economy. As many Australian primary products were purchased as could be produced, and secondary industries manufactured many new items for the Services. Rationing and restrictions meant that there were few consumer goods available, so personal savings rose. Man powering and essential industries also meant that there was near-full employment.

Legacy of WW2.... One of the main effects of the war was to start the 'migration revolution' of post-war Australia. The Australian Government had fears of another invasion, and believed that we had to 'populate or perish‘ – which had economical benefits as well. Migrants from traditional sources were not available in large enough numbers so Australia started accepting refugees and displaced persons from the northern and eastern European countries. This was the beginning of the end for 'White Australia' and the start of modern multiculturalism. These developments also strengthened our trade relationships with Asian countries

Is war good for the economy? The Australian economy received a huge boost from the war, as most consumer goods were restricted, meaning that people could not spend on stuff that they didn't really need. Strict rationing of food also meant that people spent less. This helped the Australians' personal savings rise greatly. Secondly, man-powering and essentials industries meant that there was close to full employment, of course accelerating the economy. Japan and China’s economic development required resources and Australia had the resources and was taking in workers to harvest these resources.

Is war good for other economies? Although the Japanese economy was severely damaged and dislocated by the bombing/blockade during WW2, important foundations were laid for post-war growth. The heavy industry sector expanded at the expense of light industry, inflation destroyed the fortunes of the industry magnates and helped create an equitable society The industries and engineers who had made machine guns, aeroplanes and optical sights during the war converted to the production of sewing machines, motor vehicles and cameras fuelling post-war economic growth.

Another perspective... "Why did [Franklin D.] Roosevelt want the war [World War II] so badly? He wanted it for the same reason every American president since that time has wanted a war, and that is to prevent the US economy from slipping deeper and deeper into economic depression. Counting the Cold War, the United States has been in a continual state of war for the past 60 years, and there is no end in sight. Without war, I do not believe our economy can survive."

Negative economic factors Wars are expensive (in money and other resources) Destructive (of capital and human capital) Disruptive (of trade, resource availability, labour management). Large wars constitute severe shocks to the economies of participating countries (producing poverty, starvation, crime and displacement or refugees).

Negative economic impacts... High inflation Capital depletion The global North-South divide - a stark feature of the world economy - is exacerbated by war. The dozens of wars currently in progress worldwide form an arc from the Andes through Africa to the Middle East and Caucasus, to South and Southeast Asia. In some of the world's poorest countries, such as Sudan and Afghanistan, endemic warfare impedes economic development and produces grinding poverty, which in turn intensifies conflicts and fuels warfare.

Is war essential for economic development? Now consider how you will research this issue... Is war essential for economic development?