this post was submitted on 12 May 2025
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MeanwhileOnGrad
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It's normal for a war economy to "grow". When a government is buying all the tanks, guns and bullets it can, that's absolutely amazing for the economy as a whole. Government spending increases generally drive growth (never mind that this just drives debt up and can send your country into a spiral)
Inflation, usually as a result from the former, also makes numbers go up. And if you ~~intentionally undercount~~ accidentally underestimate inflation, it goes up even more! You can always increase interest to keep up (if you dont have massive debt from the former).
You reduce exports of cheap raw materials and start using them yourself to make expensive war materials that look great on your books (but which don't actually make your country any money, unlike the raw materials).
Getting more soldiers is great for employment numbers, and industry will also need more people. Governments competing with industry drives wages up (and government reserves down).
War generally requires new infrastructure, which is great for countries that have neglected it for decades (unfortunately getting bombed tends to make said improvements rather short term, and only to places nobody wants to go).
So as long as you're not collapsing under debt (and if you can steal from private citizens, you can keep going for a bit) and your civilian industry hasn't quite collapsed yet (Russians excel at suffering) and you haven't undergone population collapse (15 and 70 make for great soldiers, right?) your economy looks great to anyone not looking too closely.
All of your points are great, but if you looked beyond monetary value, many industries that used to produce things that increase the welfare of your citizens are now used to wage war.
A weird but well known example in history was sewing machine companies that switched to producing automatic weapons in times of war. Their profits might have increased, but the people couldn't buy new sewing machines. So while on paper the country's GDP might be bigger, more people are wearing rags because they can't access better clothes, making them de facto poorer.
Exactly! that's the entire point. On page 2 of the summary it looks great on paper, but if you actually start looking at the reports, you're going to see it's actually getting worse and worse.
I love your example, and it's a great way to show the difference between spending and investing. Buying a an expensive gun is spending money looks good right now but it doesn't DO anything. Buying a cheap sewing machine is investing, maybe not much, but over time you'll add value to the entire economy.