Home > economics, state power, summaries > Summary of Milward’s “The Economic Effects of the Two World Wars on Great Britain” and Cooley & Ohanian’s “Postwar British Economic Growth and the Legacy of Keynes”

Summary of Milward’s “The Economic Effects of the Two World Wars on Great Britain” and Cooley & Ohanian’s “Postwar British Economic Growth and the Legacy of Keynes”

June 7th, 2010

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As early as the mid 1700’s, the British led the world in economic mass production. Britain had truly been the “workshop of the world,” and was the dominant economic figure of its time. However, starting with the First World War, many changes occurred in the British economy. The wars required the full effort of the production of the nation, and mobilized its manufacturing resources to provide for the war effort. This situation provides an interesting case of the dramatic effects of a nation’s economy becoming engulfed in war. Studying this case can lend insight into the effects of war on the international balance of trade, and also on a localized level.

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Economic change began with the First World War, continued through the second, and had lasting effects in the post-war era. Alan S. Milward details the changes during WWI and WWII in The Economic Effects of the Two World Wars on Britain. His book describes in detail the particular domestic and international impacts relating to the economic status of the UK. Thomas F. Cooley and Lee E. Ohanian investigate these impacts during the years after WWII in Postwar British Economic Growth and the Legacy of Keynes. They pay particular attention to the way the British government handled finance during and following the Second World War, and discover the lasting effects of its efforts. The two works complement each other, with Milward’s book and Cooley’s article providing an encompassing view of the large changes from these wars that affected Britain for a large portion of a century. They show that the wars caused Britain’s decline from international trade, while simultaneously economic status of the lower and working classes.

Milward argues that the two world wars caused numerous economic and social changes in Britain, most importantly Britain’s decline from status as the primary manufacturing exporter of the world, reform in social health services, and changes in income distribution. He formats his work in an extended essay structure, first addressing the importance of the changing interpretation of the history of the topic, and then discussing the separate domestic and international economic impacts of the war. His methodology is sound, calling on primary research by numerous individuals, and citing hard numerical data to support his claims.

Milward shows in the work that income distribution was changed in two distinct ways. First was the dramatic increase in income for agricultural workers in Britain. Efforts by German blockades in WWI forced the British government to incentivize increased crop production, causing 3 million additional acres of arable farmland at a time when the crops produced there were in high demand. This in turn caused a greater volume of domestic foods to be sold at higher prices, putting more money in the pockets of farmers. World War Two also saw an increase in their earnings. By the time of WWII, a law passed guaranteeing a minimum wage for agricultural workers, allowing their income to increase seven and a half times between 1938 and 1949.

The second change in income distribution was a result of rapid factory mechanization. Starting in WWI, unskilled laborers saw a constant improvement in their earning power. They saw higher employment levels and greater regularity and formality of employment. Additionally, the unskilled replaced the former jobs of many semi-skilled workers. These factors contributed to a reduction the income gap between working class individuals and the middle classes.

Milward points out the lasting effects of social health service reforms. Most interestingly was the WWI’s impact on the formation of Britain’s National Health Service. The increased levels of organization in the country due to the war prompted inquiry into the “ill-organized public effort” of medicine. He makes an interesting point that this lasting change allowed by a brief shift in political power brought about by the changing economic conditions of the war. In this way, a tremendous social impact was created due to the unique conditions of the war.

Perhaps the most important economic impact of the wars was Britain’s decline from the role of the world’s chief manufacturing center. WWII in particular caused a great change in the pattern of trade worldwide. Britain’s earlier economic powerhouse had relied on its ability to “continue to earn even in wartime conditions the wherewithal to pay for the imports which sustained its economy,” requiring the island to continue to export goods as well. The great draw on manpower for the wars meant that production effort shifted away from exports and trade in order to provide supplies. Decreases in foreign investment and pressure from German submarine attacks compounded the change. This manufacturing gap was filled by the United States, which provided manufactured war goods to Britain during both wars, and continued to provide commercial goods after the wars were over. In this way, Britain lost its foothold as the primary “workshop of the world.

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