The Undercover Economist - FT Magazine 29 April
The news makes such depressing reading these days, as it always does when there’s a war on. But amid all the gloom, a small, curious part of me can’t help wondering whether our military escapades in Iraq and Afghanistan will produce any unexpected consequences for our daily economic life.
It wouldn’t be the first time that a war has transformed the economy. When Honore Blanc, a French gunsmith, produced 10,000 muskets a year for Napoleon, he made sure that any faulty pieces could be replaced by standardised components rather than the usual handmade parts. It was a simple idea but an engineering miracle - and without it, mass production would have been impossible.
The first world war provided a more indirect impetus to the process of technological change. More than 30 years after Thomas Edison lit the streets of New York City, the electric dynamo hadn’t produced the new efficient manufacturers that many had expected. Although huge steam engines had been replaced by huge electric motors, factories were still set up the old way: workers were clustered around the monstrous engines because the equipment they used was powered by drive belts, which meant it needed to be close to the source of power. The result was, the workers were arranged according to how much power their equipment needed, rather than what would lead to the most productive flow of work.
The first world war changed all that, according to economic historian Paul David. In 1914, the US government all but shut its borders to immigrants. Manufacturers focused on improving training and hiring the best workers, instead of simply drawing on a boundless supply of cheap muscle. The well-trained workers, with new contracts and new chains of command, were capable of handling new responsibilities. They operated machines using power transmitted through electric cables, not drive belts. Factory floors could be reshaped and products made more quickly, and the US economy enjoyed astonishing productivity gains.
Yet another war spurred one of the most important innovations of the past 50 years: the shipping container…
Continued at ft.com.
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