Comment on my article from Manuel Garcia Jr.:
The period of open warfare (guns shooting), which includes the 1939-1945
interval labeled “World War 2″, began in 1931 with the Japanese invasion
of Manchuria, and ended in 1953 with the armistice ending the shooting
of the Korean War.
The period of 1931-1937 was one of intermittent warfare between China
and Japan, which developed into the total war of 1937-1945, known as the
Second Sino-Japanese War. By 1937, China was buying U.S. military
equipment (and even mercenary services, e.g., “The Flying Tigers”).
Japan, building up its military during the 1930s, bought oil and steel
from the U.S. until the embargo of these about a year before the Pearl
Harbor attack. The British also ordered military supplies from the U.S.
in the mid-late 1930s (e.g., aircraft; the P-51 was originally a British
commission); and the U.S. itself began a rearmament in about 1937 (e.g.,
concern over the exposure of the US-occupied Philippines to Japanese
expansion; and control of western Pacific sea lanes).
So, the U.S. had a steadily growing export business in steel, oil, and
military equipment during the 1930s. After about 1936, the rearmament of
the U.S. itself greatly increased the demand for these products. The
expanding crisis in Europe from 1937-1939 (Spanish Civil War, Munich,
anschluss, Hitler-Stalin Pact) added to American fear/isolationism, and
also saw increased British (and Continental) demands for US-manufactured
military supplies; and this export trade was organized in 1941 as the
Lend-Lease program (till 1945, and included the UK, USSR, China, France,
and Allied Nations).
There was steadily increasing demand for US industrial products and
military equipment and supplies for nearly a decade before the U.S.
itself entered the fighting of WW2. This economic stimulus moved the
country out of the Great Depression. Based on this history, it seems
fair to argue that the magnitude of this business (investment from
domestic and foreign sources) was the necessary stimulus to change the
economic state of the U.S. (end the depression), but it does not seem
necessary — from a strictly economic point of view — that the industrial
production stimulated by the new demand be primarily for war material,
and that there be wars raging to rapidly consume the output stream, and
maintain an continuing demand.
However, it may be hard to imagine a “peaceful” economic cycle of equal
magnitude and vigor that could have been devised to hoist the U.S.
economy out of the Great Depression and accelerate it into its Post-War
Boom of 1953-1971 (or 1977). It is interesting to note that the value of
the market represented by the New York Stock Exchange did not recover
its value at its 1929 peak (before the October crash) until 1953. In
this sense the Great Depression spanned from Hoover to Ike. The slowly
accelerating demand for U.S. steel, oil and arms during the 1930s lifted
the U.S. economy somewhat out of the 1933-1935 doldrums by the late
1930′s, when the stimulus of U.S. rearmament jolted it into a degree of
growth that could be thought of as ending the depression by the start of
U.S. participation in the fighting of World War 2 (1942). War
keynesianism had a Film Noir Period postwar recess, with a recession
during 1946-1949 during the short period of WW2 demobilization, prior to
its reactivation for the Korean War, and continuing thereafter.
As noted, the war keynesianism of the ~1938-1945 period finally
generated enough wealth by 1953 to restore the market value to its 1929
pre-crash level. Twenty-five years is a long time to wait for your stock
portfolio to recover from a crash. Perhaps the sting of this, plus the
revelation of how an economy could be hyper-stimulated by war (the
amphetamine of the economy?), are what has caused the political-economic
management class of the U.S. to maintain the Pentagon capitalism we have.
Comment by Manuel Garcia, Jr.
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