Global Economy w/o WWII

With Japan, I think it's important to remember the oil embargoes didn't really start until 1940, and that TTL, they're not going to make it worse with a Nazi alliance that same year, and FDR is unlikely to run for a third term. So if there is a Pacific War, it'll probably be later in starting...
 
Say WWII doesn't happen (any equivalent, if it happens at all, being a lot smaller) -- this likely means no Bretton Woods, a very different balance of power, etc. How does the global economy develop differently?
Without the military expenditures of WWII, all of the major "Capitalist" economies collapse and turn to Socialism.
 
Without the great European war hanging over everyone's head, would the great powers allow Japan to take over China? I imagine that Europe would either stop Japan (not necessarily through direct armed conflict though) or else cutting up big chunks of China for themselves.
 
Without the great European war hanging over everyone's head, would the great powers allow Japan to take over China? I imagine that Europe would either stop Japan (not necessarily through direct armed conflict though) or else cutting up big chunks of China for themselves.

Britain was withdrawing from China at this point, as was everyone else. I suspect you'd see more pressure on Japan, along with an attempt to woo them back o the table. What happens depends on whether or not you view the Japanese as history's Kilrathi.
 
I'm quite skeptical about the inevitability of "collapse" in its absence, but it definitely had a role in breathing life and reshaping it to a great degree, especially as the labour question goes:

The labour question was not an afterthought in the Second World War. It was the greatest question of all. The victors in the national struggle were those who best mobilised their domestic workers and so best equipped their armies. The net impact of the war on the working class was that more of them worked much harder, and got paid less. Even in the biggest and most successful wartime economy, the US, personal consumption fell from 72 percent of output in 1938 to 51 per cent in 1945.

At the same time, the numbers in work grew by ten million and hours increased by a quarter. All of that excess production was going somewhere: it was going to fight the war. The sheer waste is beyond our wildest dreams. But the waste was not hurting everyone. Business, especially, US business, was reborn through the war effort. Like business across the globe, they needed new markets for the great amount of goods they made. The war fixed that.

Destructive as it was, the war laid the basis for new industry. Plants created in Detroit and Dagenham, the Urals and Silesia during the war would lay the basis for the post-war boom. 'A Nazi public utility like Volkswagen, or private utility like Daimler-Benz, laid down plant and equipment in the 1930s (and early 1940s) that would form the basis for post-war growth', says Mark Mazower.1 Even in Soviet Russia 55 percent of the national income was given over to war production that would be the basis of industrialisation after.2

Before one shot could be fired in the Second World War the bullets and the rifles, the uniforms, the trains and lorries to carry the soldiers, the steel to supply the munitions factories, the coal to furnace the steel, the oil to power the engines all had to be made, dug and drilled by another army, the industrial workforce. In the decade from 1935 to 1945 the warring nations turned their factories into engines of destruction. Between 1933 and 1936 US armaments spending rose from $628 million to $1.161 billion, by 1942 government awarded $100 billion to US business in military contracts.3 The growth in output was phenomenal. Aircraft production was more than twenty times greater in 1944 than in 1935. To get this much out of industry, factories had to be placed under military discipline – not just in the Fascist countries, but in the democracies too.
 
WWII expenditures substituted, in the U.S., for New Deal expenditures which were politically difficult to sustain.

FDR's first retreat from the New Deal was in 1936-37, in a misguided attempt to honor his dubious campaign promise to balance the budget. The result was a brief but severe depression in 1937-38.

Only the resumption of massive Federal expenditures restored growth and reversed high unemployment by 1939. But how much longer could such policies be justified? Nearly indefinitely - in wartime. In peacetime, much less so.

By some statistics, the whole of American expenses in the Second World War were funded entirely out of economic growth. There was no reduction in consumer spending (even adjusted for inflation). Unlike every other major combatant, the U.S.A. maintained its standard of living throughout the war - while funding England and Russia in addition to its own armed forces. By the end of the war, American GDP was nearly double what it had been before the beginning of its military expenditures.

Before WWII, the USA was the wealthiest Power, militarily puny but nominally an equal of Britain and France. By the end, it produced half the economic output of the world and was the superpower, the arbiter of all fortunes. The Second World War created America As We Know It.

And otherwise? A gradual, erratic retreat from government spending; declining spending and declining taxes; a permanent economic malaise of the post-Cold War kind we now know well, but taking effect before America's huge growth spurt. No doubt we'd still be better off than Russia, a bit; better off than China and Japan, surely, since their growth depended on our markets. But the USA would not be a superpower, and would not have reached the standard of living it boasted in 1970.
 

I can see that as a point for a slower US recovery, and for a world w/o US economic dominance -- but I'm less convinced the US would have a lower standard of living than OTL as late as 1970. In the long run, wouldn't strong international markets more than make up for the absence of WWII stimulus?
 
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