Was the Great War a Watershed ?

Topics: World War I, World War II, Macroeconomics Pages: 43 (15718 words) Published: March 26, 2008
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Codes JEL :
Was the Great War a Watershed ?
The economics of World War One in France
Pierre-Cyrille Hautcoeur
Université de Paris I Panthéon-Sorbonne (Matisse)
and DELTA (joint research unit CNRS-EHESS-ENS)
This paper has been prepared for a book edited by M. Harrisson and S. Broadberry on The Economics of World War One, forthcoming at Cambridge University Press. Abstract
This paper presents a broad, quantitatively documented, overview of the French economy during World War One, trying to answer the question of whether the war was a turning point in French economic history. It first describes the various shocks the war imposed to the economy, from invasion to labour and capital mobilisation. It then studies macroeconomic policies, especially the finance of both the budget and the balance of payments deficits. It then turn to government interventions in the economy, suggesting they were less important than frequently asserted, and showing thanks to two quantitative tests that the economy probably adapted to the war more spontaneously than usually believed. It ends with some remarks on the effects of the war on future growth, arguing that the main problem for France resulting from the war was the change in the international political and monetary environment. 2

Nous présentons une tentative de synthèse macroéconomique quantifiée sur l'économie française pendant la première guerre mondiale en cherchant à évaluer dans quelle mesure la guerre représente un tournant majeur pour l'économie française. Nous étudions d'abord les chocs que la guerre impose à l'économie, depuis l'invasion d'une partie du territoire jusqu'aux effets sur la demande de travail et de capital ou sur la balance des paiements. Nous étudions ensuite la politique macroéconomique, spécialement les voies empruntées pour financer les déficits budgétaires et extérieurs. Nous examinons ensuite les interventions directes de l'Etat dans l'économie, suggérant qu'elles furent sans doute moins importantes que ce que l'on affirme parfois, et montrant par deux tests quantitatifs sommaires que l'économie s'est sans doute adaptée à la guerre plus spontanément que l'on ne croit habituellement. Nous terminons par quelques remarques sur les conséquences de la guerre pour la croissance postérieure, en soutenant que le problème principal de la France est le changement de son environnement international à la fois politique et monétaire.

1. Introduction1
The dominant view is that the “Great War” represented for France the end of an economic and social era considered sometimes with nostalgia in France and with condescension abroad : not only the Belle Epoque, but the entire 19th century as an era in which economic liberalism was compensated by a strong State which guaranteed the “equilibrium” of a well balanced economy of “moderate” industrialisation, symbolised by the image of its “three pillars”, agriculture, manufacturing and services, being of similar size, or the same for the urban and rural areas. Another view, mostly developed by economic historians, highlights the rapid changes of the French economy and society before the war : dynamic industrial change was under way, best symbolised by the automobile and aircraft industries ; complex firms in manufacturing or financial services were developing rapidly, whose mere size contradicts the view of “garden-like France” ; social change and workers’ movements were important and relatively well integrated in increasingly democratic politics. This view, when comparing the Belle Epoque with the 1920s, leads to an emphasis on the continuity that dominated in terms of technology and organisation at the firm level and even in the private economy as a whole. But it was not sufficient to modify the dominant view, maybe because the War introduced to new economic phenomena and policies, gave to the State a much increased role in macroeconomic management, and started a long period of...
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