This week marked the 80th anniversary of the end of World War II in Europe. Looking back, the war meant multiple things for the continent. It was, of course, an event of unprecedented violence and destruction. But it was also a moment of international cooperation, mobilization, and solidarity—and an economic watershed for the world.

How big of an economic event was World War II? Who were the winners and losers of the war’s economic redistributions? And was the war the world’s largest-scale industrial policy ever?

This week marked the 80th anniversary of the end of World War II in Europe. Looking back, the war meant multiple things for the continent. It was, of course, an event of unprecedented violence and destruction. But it was also a moment of international cooperation, mobilization, and solidarity—and an economic watershed for the world.

How big of an economic event was World War II? Who were the winners and losers of the war’s economic redistributions? And was the war the world’s largest-scale industrial policy ever?

Those are just a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.

Cameron Abadi: How big of an economic event was World War II?

Adam Tooze: I think this is a moment when really talking about quantity and size and scale is important because it was just very, very big. I think that’s the thing to say. And it’s important to say that also as a corrective because folks will have heard in recent years people talking about war economies. It’s very current right now to talk about the need for Europe to go onto a war footing in its war with Russia. There was quite a lot of talk in the U.S. about that as well in the Biden presidency. Former U.S. President Joe Biden is a child of the war. He really liked references to World War II. Around COVID, there was talk of a kind of war economic situation and a resetting of the social contract, like what happened after World War II, around climate.

And if you actually know the basic parameters of 20th-century economic history, all of that seems a little bit silly, to be honest, because the scale of the mobilization for total war in World War II was like nothing ever seen before. It’s quite unique historically. It starts with World War I, where government spending as a share of GDP—the share of GDP measure is itself a product of World War I. Like when you do things on this scale, you need something very big to compare something else very big to, and you end up with GDP, gross national product, as your measure. In World War I, that ratio hovered between 30, 40. For some combatant countries, it went as high as 50 percent in bad times. In World War II, that shifts up a gear, it’s 40 to 60 percent of GDP among the combatant countries. So more than half of everything that’s being produced is going to the war effort.

So just look out in front of you and imagine the material world divided into one part, which is what you get to keep for civilian life, and the rest goes into the war effort. It’s absolutely dramatic. And there was conscious learning between these two phases. Modern macroeconomic policy in the sense we understand it shifted, our entire understanding of what the economy is shifted under the impact of these two conflicts. And World War II was where that really came home. The Keynesian revolution in economics is really better understood as a total-war evolution in economics which culminated in World War II, and it was all about managing the aggregate flows of demand, of production, of supply of labor, of supply of raw materials, of currency, of how to mobilize populations, how to carve off huge slices of populations so that they can actually serve. You know, tens of millions of men are mobilized, and women as well, in the war effort. Overwhelmingly men, though; it’s worth emphasizing that. And then at the other end of the spectrum, radical programs for the mass starvation of populations. We’ll say a lot more about that when we talk about the Holocaust. Deliberate efforts of starvation, not accidental, but deliberate efforts of siege and starvation applied in, say, the case of the German invasion of the Soviet Union to 30 to 40 million inhabitants of the Soviet cities of the western Soviet Union. And then also........

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