all my life my teachers have told me that ww2 pulled america out of the great depression. can somebody please explain this to me economically?

Millions of men joined the military, thus reducing unemployment at home. Millions of women, most of whom had never even considered working before, got jobs as well, either to compensate for the income their husbands were no longer bringing in while overseas, or out of a sense of patriotism to help contribute to the war effort. Also, more jobs became available, especially in manufacturing and related industries, due to the increased demand.

Of course, no one points out that it was the Fed's policies of easy money in the 20's that led to the rampant speculation which caused the Depression in the first place, and was worsened by Hoover's signing of the Smoot-Hawley Tariff Act. Further, it was FDR's policies of increased government spending and welfare programs, wage and price controls, and general micromanaginging of the economy (essentially the same "central planning" that was a failure for our soon-to-be archenemy, the Soviet Union) that ensured the Depression would last into the mid-40's, instead of simply allowing for the market to correct itself and return to normal after a few tough years-- but doing nothing wasn't politically expedient.

Also no one mentions that since Hoover was the one who started this micro-managing of the economy, FDR originally ran on a platform of smaller government, lower taxes, and a balanced budget. When he was governor of NY, he was adamant that if there were to be any kind of "Social Security" program, it must be undertaken by the states, as the Constitution wouldn't allow the federal government to do such a thing. Fast forward to him needing to get re-elected three times, and suddenly he, like most politicians, changed his tune to save his career.

I could go on for hours about FDR. Progressivism really started with Wilson, but FDR brought us the nanny state that is bankrupting us today. He was a great communicator, and a strong leader in war, but his domestic policies make him one of the worst presidents we've ever had. You won't ever hear that, though, because he is so beloved by those who are blinded by his mythology and refuse to examine exactly where his policies have brought us.

PLEASE read "Recarving Rushmore" by Ivan Eland. One of the best books I've ever read. You'll enjoy arguing with your friends about why John Tyler was one of our best presidents, and why Lincoln definitely was not.

The war itself did not pull America out of the Depression, nor did it help the economy directly. If anything, war generally hurts the economy because it makes things that are not of particular use. What reversed the trend of the Depression was the sudden creation of demand via massive bouts of spending. It happened to be on the military-industrial complex, but this didn't have to be the case. It simply happens that war tends to be one of those things that mobilizes public support for the massive spending that was needed.

The US enjoyed a tremendous comparative advantage after the war, owing to many of the other large economies of the world being either wrecked or in isolation (ie the Communist bloc). Coupled with the US refusing to demobilize and continuing to produce goods for the military-industrial complex, the economy was finally on solid footing and could produce goods on a wider scale.

A bit aggressive, but very solid.
Not so sure about John Tyler.
Although a lot of people got jobs, everything was rationed - it's hard to say ''the economy is better''.

Turn Prophet,

I fully agree that war is not good for the economy (what's our ROI for the past decade in Afghanistan and Iraq, right?), but are you making the case that "stimulus" spending (as it's called today) is good for the economy? Just want to clarify.

Adaptation,

I say that Tyler was one of the best because, when assessing how anyone performs any job, the most important criteria on which to judge them is whether they performed their job duties, and how well they performed them. In most occupations, bosses generally like to see employees who are ambitious and eager to take on more responsibility. But when it comes to public servants, it's definitely not a good thing to go above and beyond the responsibilities of the office.

The legislature was intended to be the dominant branch of government; that's why they have far more responsibilities, and why the executive and judiciary are listed second and third, after the legislature, in the Constitution. Unfortunately, we've allowed our presidents to assume many more powers than they legally have, and it's been to the overall detriment of the republic.

It's great to have a strong president. But it takes a strong man to uphold his oath and not exceed his authorized powers, even when it may be accepted, and sometimes even popular, to do so.

Hell, I'd say William Henry Harrison was our best president ever-- he wasn't alive long enough to screw anything up!

Enjoying this thread already, guys.

what about all the new jobs created by the increasing demand for oil?

could one argue that the economy was saved in spite of the progressive reforms. rather it was saved via untapped US oil deposits? then once we passed peak production and had to begin importing oil then the economy started to suffer again.

WW2 in itself did not pull America out of the great depression. It was massive government stimulation that pulled us out of the great depression. So Turn Prophet is 100% correct when he says, "What reversed the trend of the Depression was the sudden creation of demand via massive bouts of spending. It happened to be on the military-industrial complex, but this didn't have to be the case."

IOW:

Source.

An excerpt from "Understanding Power: The Indispensable Chomsky", chapter 3, pg 70-76, further elaborates on this topic (link to footnotes at bottom):

WOMAN: What's been the point of the arms race, Dr. Chomsky?

Chomsky: Well, there are a lot of things, it's served a number of crucial functions. Remember, any state, any state, has a primary enemy: its own population. If politics begins to break out inside your own country and the population starts getting active, all kinds of horrible things can happen-so you have to keep the population quiescent and obedient and passive. And international conflict is one of the best ways of doing it: if there's a big enemy around, people will abandon their rights, because you've got to survive. So the arms race is functional in that respect-it creates global tension and a mood of fear.

It's also functional for controlling the empire: if we want to invade South Vietnam, let's say, we have to be able to make it look as if we're defending ourselves from the Russians. If we're not able to do that, it's going to be a lot harder to invade South Vietnam. The domestic population just won't accept it-it's costly, it's morally costly if nothing else, to do these things.

The arms race also plays a crucial role in keeping the economy going-and that's a big problem. Suppose that the arms race really did decline: how would you force the taxpayers to keep subsidizing high-technology industry like they've been doing for the past fifty years? Is some politician going to get up and say, "Alright, next year you're going to lower your standard of living, because you have to subsidize I.B.M. so that it can produce fifth generation computers"? Nobody's going to be able to sell that line. If any politician ever started talking that way, people would say: "Okay, we want to start getting involved in social and economic policy-making too."

In fact, that danger has been very openly discussed in the business literature in the United States for forty or fifty years.1 Business leaders know perfectly well what every economist knows: that spending for civilian purposes is maybe even more efficient, more profitable than spending for military purposes. And they also know that there are any number of ways to have the population subsidize high-technology industry besides through the Pentagon system-business knows that perfectly well, and it also knows the reasons against it. They remain what they always were.

If you take an economics course, they'll teach you, correctly, that if the government spends n dollars to stimulate the economy, it doesn't really matter what it's spent on: they can build jet planes, they can bury it in the sand and get people to dig for it, they can build roads and houses, they can do all sorts of things-in terms of stimulating the economy, the economic effects are not all that different.2 In fact, it's perfectly likely that military spending is actually a less efficient stimulus than social spending, for all kinds of reasons. But the problem is, spending for civilian purposes has negative side effects. For one thing, it interferes with managerial prerogatives. The money that's funneled through the Pentagon system is just a straight gift to the corporate manager, it's like saying, "I'll buy anything you produce, and I'll pay for the research and development, and if you can make any profits, fine." From the point of view of the corporate manager, that's optimal. But if the government started producing anything that business might be able to sell directly to the commercial market, then it would be interfering with corporate profit-making. Production of waste-of ex¬pensive, useless machinery-is not an interference: nobody else is going to produce B-2 bombers, right? So that's one point.

The other point, which is probably even more serious from the perspective of private power, is that social spending increases the danger of democracy-it threatens to increase popular involvement in decision-making. For example, if the government gets involved, say around here, in building hospitals and schools and roads and things like that, people are going to get interested in it, and they'll want to have a say in it-because it affects them, and is related to their lives. On the other hand, if the government says, "We're going to build a Stealth Bomber," nobody has any opinions. People care about where there's going to be a school or a hospital, but they don't care about what kind of jet plane you build-because they don't have the foggiest idea about that. And since one of the main purposes of social policy is to keep the population passive, people with power are going to want to eliminate anything that tends to encourage the population to get involved in planning-because popular involvement threatens the monopoly of power by business, and it also stimulates popular organizations, and mobilizes people, and probably would lead to redistribution of profits, and so on.

MAN: How about just reducing taxes, instead of sending all this money into the military-industrial complex?

Chomsky: You can't reduce taxes much-because what else is going to keep the economy going? Remember, it's been known since the Great Depression that anything like free-market capitalism is a total disaster: it can't work. Therefore every country in the world that has a successful economy is somewhere close to fascism-that is, with massive government intervention in the economy to coordinate it and protect it from hostile forces such as too much competition. I mean, there just is no other way to do it really: if you pulled that rug out from under private enterprise, we'd go right back into the Depression again. That's why every industrial economy has a massive state sector-and the way our massive state sector works in the United States is mainly through the military system.

I mean, I.B.M. isn't going to pay the costs of research and development-why should they? They want the taxpayer to pay them, say by funding a N.A.S.A. program, or the next model of fighter jet. And if they can't sell everything they produce in the commercial market, they want the taxpayer to buy it, in the form of a missile launching system or something. If there are some profits to be made, fine, they'll be happy to make the profits-but they always want the public subsidies to keep flowing. And that's exactly how it's worked in general in the United States for the past fifty years.

So for example, in the 1950s computers were not marketable, they just weren't good enough to sell in the market-so taxpayers paid 100 percent of the costs of developing them, through the military system (along with 85 percent of research and development for electronics generally, in fact). By the 1960s, computers began to be marketable-and they were handed over to the private corporations so they could make the profits from them; still, about 50 percent of the costs of computer development were paid by the American taxpayer in the 1960s.3 In the 1980s, there was a big new "fifth generation" computer project-they were developing new fancy software, new types of computers, and so on-and the development of all of that was extremely expensive. So therefore it went straight back to the taxpayer to foot the bills again-that's what S.D.I. [the Strategic Defense Initiative] was about, "Star Wars." Star Wars is basically a technique for subsidizing high technology industry. Nobody believes that it's a defense system-I mean, maybe Reagan believes it, but nobody whose head is screwed on believes that Star Wars is a military system. It's simply a way to subsidize the development of the next generation of high technology-fancy software, complicated computer systems, fifth-generation computers, lasers, and so on.4 And if anything marketable comes out of all that, okay, then the taxpayer will be put aside as usual, and it'll go to the corporations to make the profits off it.

In fact, just take a look at the parts of the American economy that are competitive internationally: it's agriculture, which gets massive state subsidies; the cutting edge of high-tech industry, which is paid for by the Pentagon; and the pharmaceutical industry, which is heavily subsidized through public science funding-those are the parts of the economy that function competitively. And the same thing is true of every other country in the world: the successful economies are the ones that have a big government sector. I mean, capitalism is fine for the Third World-we love them to be inefficient. But we're not going to accept it. And what's more, this has been true since the beginnings of the industrial revolution: there is not a single economy in history that developed without extensive state intervention, like high protectionist tariffs and subsidies and so on. In fact, all the things we prevent the Third World from doing have been the prerequisites for development everywhere else-I think that's without exception. So to return to your question, there just is no way to cut taxes very much without the entire economy collapsing.

MAN: I'm a little surprised to hear you say that the Pentagon is so important to our economy.

Chomsky: There's hardly an element of advanced-technology industry in the United States that's not tied into the Pentagon system-which includes N.A.S.A., the Department of Energy [which produces nuclear weapons], that whole apparatus. In fact, that's basically what the Pentagon's for, and that's also why its budget always stays pretty much the same. I mean, the Pentagon budget is higher in real terms than it was under Nixon-and to the extent that it's declined in recent years, it's in fact had the effect of what they call "harming the economy." For instance, the Pentagon budget started to decline in 1986, and in 1987 real wages started to fall off for skilled workers, in other words for the college-educated. Before that they'd been declining for unskilled workers, and they started to go down for the college-educated a year after the Pentagon budget began to drop off a bit. And the reason is, college-educated people are engineers, and skilled workers, and managers and so on, and they're very dependent on the whole Pentagon system for jobs-so even a slight decline in military spending immediately showed up in real wage levels for that sector of the population.5

Actually, if you look back at the debates which went on in the late 1940s when the Pentagon system was first being set up, they're very revealing. You have to examine the whole development against the background of what had just happened. There was this huge Depression in the 1930s, worldwide, and at that point everyone understood that capitalism was dead. I mean, whatever lingering beliefs people had had about it, and they weren't very much before, they were gone at that point-because the whole capitalist system had just gone into a tailspin: there was no way to save it the way it was going. Well, everyone of the rich countries hit upon more or less the same method of getting out. They did it independently, but they more or less hit on the same method-namely, state spending, public spending of some kind, what's called "Keynesian stimulation." And that did finally get countries out of the Depression. In the Fascist countries, it worked very well-they got out pretty fast. And in fact, every country became sort of fascist; again, "fascism" doesn't mean gas chambers, it means a special form of economic arrangement with state coordination of unions and corporations and a big role for big business. And this point about everyone being fascist was made by mainstream Veblenite-type economists [i.e. after the American economist Veblen] right at the time, actually-they said, everybody's fascist, the only question is what form the fascism takes: it takes different forms depending on the country's cultural patterns.6

Well, in the United States, the form that fascism took at first was the New Deal [legislative programs enacted in the 1930s to combat the Depression]. But the New Deal was too small, it didn't really have much effect-in 1939, the Depression was still approximately what it had been in 1932. Then came the Second World War, and at that point we became really fascist: we had a totalitarian society basically, with a command economy, wage and price controls, allocations of materials, all done straight from Washington. And the people who were running it were mostly corporate executives, who were called to the capital to direct the economy during the war effort. And they got the point: this worked. So the U.S. economy prospered during the war, industrial production almost quadrupled, and we were finally out of the Depression.7

Alright, then the war ended: now what happens? Well, everybody expected that we were going to go right back into the Depression-because nothing fundamental had changed, the only thing that had changed was that we'd had this big period of government stimulation of the economy during the war. So the question was, what happens now? Well, there was pent-up consumer demand-a lot of people had made money and wanted to buy refrigerators and stuff. But by about 1947 and '48, that was beginning to tail off, and it looked like we were going to go back into another recession. And if you go back and read the economists, people like Paul Samuelson and others in the business press, at that point they were saying that advanced industry, high-technology industry, "cannot survive in a competitive, unsubsidized free-enterprise economy"-that's just hopeless.s They figured we were heading right back to the Depression, but now they knew the answer: government stimulation. And by then they even had a theory for it, Keynes; before that they'd just done it by instinct.

So at that point, there was general agreement among business and elite planners in the United States that there would have to be massive government funneling of public funds into the economy, the only question was how to do it. Then came kind of an interesting ... it wasn't really a debate, because it was settled before it was started, but the issue was at least raised: should the government pursue military spending or social spending? Well, it was quickly made very clear in those discussions that the route that government spending was going to have to take was military. And that was not for reasons of economic efficiency, nothing of the sort-it was just for straight power reasons, like the ones I mentioned: military spending doesn't redistribute wealth, it's not democratizing, it doesn't create popular constituencies or encourage people to get involved in decision-making.9 It's just a straight gift to the corporate manager, period. It's a cushion for managerial decisions that says, "No matter what you do, you've got a cushion down there" -and it doesn't have to be a big portion of total revenues, like maybe it's a few percent, but it's a very important cushion.10

And the public is not supposed to know about it. So as the first Secretary of the Air Force, Stuart Symington, put the matter very plainly back in 1948, he said: "The word to use is not 'subsidy,' the word to use is 'security.' "11 In other words, if you want to make sure that the government can finance the electronics industry, and the aircraft industry, and computers, and metallurgy, machine tools, chemicals, and so on and so forth, and you don't want the general public trying to have a say in any of it, you have to maintain a pretense of constant security threats-and they can be Russia, they can be Libya, they can be Grenada, Cuba, whatever's around.

Well, that's what the Pentagon system is about: it's a system for ensuring a particular form of domination and control. And that system has worked for the purposes for which it was designed-not to give people better lives, but to "make the economy healthy," in the standard sense of the phrase: namely, ensuring corporate profits. And that it does, very effectively. So you see, the United States has a major stake in the arms race: it's needed for domestic control, for controlling the empire, for keeping the economy running. And it's going to be very hard to get around that; I actually think that's one of the toughest things for a popular movement to change, because changing the commitment to the Pentagon system will affect the whole economy and the way it's run. It's a lot harder than, say, getting out of Vietnam. That was a peripheral issue for the system of power. This is a central issue.

In fact, I've been arguing for years with friends of mine who are campaigning for "conversion" of the economy from military production to social spending that they're basically talking nonsense. I mean, it's not that business has to be told "for this many jet planes we could have this many schools, isn't it awful to build jet planes?" You don't have to convince the head of General Motors of that: he knew that forty years before anyone started talking about "conversion," that's why he wanted jet planes. There is no point in explaining to people in power that "conversion" would be better for the world. Sure it would. What do they care? They knew that long ago, that's why they went in the opposite direction. Look: this system was designed, with a lot of conscious and intelligent thought, for the particular purpose that it serves. So any kind of "conversion" will just have to be part of a total restructuring of the society, designed to undermine centralized control.

And I mean, you're going to need an alternative-it's not enough just to cut off the Pentagon budget, that's just going to make the economy collapse, because the economy is dependent on it. Something else has to happen unless you just want to go back to the Stone Age. So the first thing simply has to be creating both a culture and an institutional structure in which public funds can be used for social needs, for human needs. That's the mistake that a lot of the "conversion" people make, in my opinion: they're just identifying what's obvious, they're not focusing enough on creating the basis for an alternative.

WOMAN: What is the hope, then, for dismantling the whole military system?

Chomsky: There have to be large-scale institutional changes, we need a real democratization of the society. I mean, if we continue to have domination of the economic and political system by corporations, why should they behave any differently? It's not that the people in the corporations are bad people, it's that the institutional necessity of the system is to maintain corporate domination and profit-making. I mean, if the Chairman of General Motors suddenly decided to start producing the best quality cars at the cheapest prices, he wouldn't be Chairman any longer-there'd be a shift on the stock market and they'd throw him out in five minutes. And that generalizes to the system as a whole. There is absolutely no reason why the people who own the economy would want it to be set up in a way that undermines or weakens their control, any more than there's a reason why they would want there to be a political system in which the population genuinely participates-why would they? They'd be crazy. Just like they'd be crazy if they opened up the media to dissident opinion-what possible purpose would there be in that? Or if they let the universities teach honest history, let's say. It would be absurd.

Now, that doesn't mean that there's nothing we can do. Even within the current structure of power, there's plenty of latitude for pressure and changes and reforms. I mean, any institution is going to have to respond to public pressure-because their interest is to keep the population more or less passive and quiescent, and if the population is not passive and quiescent, then they have to respond to that. But really dealing with the problems at their core ultimately will require getting to the source of power and dissolving it-otherwise you may be able to fix things up around the edges, but you won't really change anything fundamentally. So the alternative just has to be putting control over these decisions into popular hands-there simply is no other way besides dissolving and diffusing power democratically, I think.

To check out the footnotes 1-11 from this excerpt, click here.

An excellent article (with lots of very informative cites) apropos to this discussion:

Free Market Capitalism and the Pentagon System

Yes, Mr. Chomsky, all of this government spending and control has truly been a great success for our nation.

Oh wait. We're bankrupt. Weird.

Enjoyed reading that Chomsky perspective, ty.

Another point that was not raised in this thread yet was that the American economy was the only major economy that was not damaged in some way by ww2. Europe, Japan, and Russia were all in ruins and the Americans were in a perfect position to sell them the goods required for rebuilding. Major programs such as the Marshall Plan were put in place to help rebuild Europe with the caveat that they had to use the funds to buy American goods.

Stopped reading here, as the Chomster appears to not understand the meaning of the word "empire".

Anyway, look at what the war did to the old superpowers; screwed them all into the ground, so it did. American hegemony was the only thing which could emerge from the ruble.

Yes, that was also a factor, a factor that U.S planners were well aware of and ready to take advantage of. This excerpt from a 1985 speech on American Foreign Policy covers this well:

It can be. It depends. When aggregate demand is low, the government can act as a sort of "buyer of last resort" in the same capacity that it (or whatever entity controls the money supply) can act as a lender of last resort. If unemployment is too high, adjustment of interest rates and government spending levels can reduce unemployment. This is pretty much what you were saying when you said that large scale military conscription reduced unemployment--the government could have just as easily hired those guys to build bridges and roads or whatever, but it's tough to mobilize support for that stuff relative to war, which is usually the way the State can get what it really wants and skip some of the customary procedure and debate. It's a temporary stopgap, but the goal is like jump-starting a car by introducing demand to get the ordinary economy flowing again.

Most economists (whether Neoclassical, Monetarist, Keynesian, Austrian, or Marxist) would agree, though, that maintaining the type of deficit needed to act as a buyer of last resort is not a good idea in boom times.

What's very interesting about the United States is it may actually be George Washington made that much clear from the very beginning:

Source.

An "infant empire" with imperial aspirations known all too well to a certain unfortunate lot which John Quincy Adams referred to as that "hapless race of native Americans, which we are exterminating with such merciless and perfidious cruelty". Certainly what's left of that "hapless race" will always be haunted by George Washington's viciously racist and ominous words: "the gradual extension of our settlement will as certainly cause the savage as the wolf to retire, both being beasts of prey, though they differ in shape."

Thomas Jefferson liked to refer to the U.S. as an "empire of liberty" going on to say to fellow founding father James Madison, "I am persuaded no constitution was ever before so well calculated as ours for extensive empire & self government." Of course, like Washington, Jefferson's conception of liberty was a bit limited:

Anyways, fast-forwarding to today, ..........

Please post current/recent affairs (see the forum sticky) to the politics forum, thanks!

Discussions of American "empire" in historical reference up to circa 1990 is welcome - start a thread if you wish.

christ, who told ILP about this forum?

^this

"the last time I checked wars only destroyed"

"if you staff every worker in the army or fleet we 'd have full employment -

I told Zeno that I would do my best to avoid posting in the History forum altogether in the future because him editing my posts tilts the **** out of me, so *hopefully* you won't be seeing much of me in the future. Although given that I'm responding to you, it appears "my best" is a pretty ****ty benchmark (sigh).

Don't be so impatient man. History teaches us that it is often the case that destruction takes time.

I agree with the historian Howard Zinn when he said the Pentagon system is "A kind of military Keynesianism...where by spending a huge amount of money on military contracts, the government was creating employment and was giving shots of 'drugs,' in the long run poisonous but in the short run sustaining the system." Or as Noam Chomsky put it, the Pentagon system has two tasks--"both quite anti-social":

Source.