In January 1941 defense spending rose to triple what it had been during the previous six months. By July it quintupled, and December it jumped another twelvefold. America, the isolationist nation still at peace, was fast approaching Nazi Germany in its defense output. In 1942 it would roar past it… Before 1942 was out, the United States was producing more war materiel than all three Axis powers — Germany, Italy, and Japan — combined.
… It was all due to Knudsen and his team. They had created, in effect, an almost self-perpetuating mechanism that fed upon its own individual dynamic elements. Theorists of the science of complexity would call it emergence. Economists have another term: “spontaneous order.” It was the most powerful and flexible system of wartime production every devised, because in the end no one devised it. It grew out of the underlying productivity of the American economy, dampened by a decade of depression but ready to spring to life. Out of what seemed like chaos and disorder to Washington would come an explosion of innovation, adaptation, and creativity — not to mention hard work — across the country.
That was from Arthur Herman’s excellent book, Freedom’s Forge: How American Business Produced Victory in World War II.
In times of crisis, it is hard for government officials to resist the urge to take direct control of production. During Covid-19, the Trump administration received a lot of flak for not using the Defense Production Act to a much greater extent — and the production demand from Covid-19 is barely a blip compared to the challenges of peer conflict.
In World War II, there was an interesting twilight period before Pearl Harbor that kept coordination informal and voluntary. While certain price controls and profit caps were put into place later on, the market was able to function to a remarkable extent.
By the way, there was an interesting YouTube lecture I saw from Herman where he provided a pretty remarkable stat:
At General Motors alone, 189 senior executives died on the job. They died of heart attacks; died simply wearing themselves out from the kind of work stress environment in which they found themselves in trying to meet those wartime goals. This was a war of sacrifice not just sacrifice on the battlefield but also enormous sacrifices at home.
I reference and recommend “Freedom’s Forge” frequently. We are at similar circumstances today as those depicted in this book. Our country must wake up again and put to work our resources and talents before it is too late to preserve what has made us unique.