How would British economy looks like without ww1?

Thomas1195

Banned
Well, British economy had been declining since 1880. By 1910, it was surpassed by Germany. Although still behind Britain in agriculture and services regarding productivity, Germany's industrial productivity was 27% higher than Britain (1). But, during the years between 1911-1914, there had been signs of a resurgence, as growth rate became faster during 1900-1909.

What if ww1 never happened? How would its economy develop?

Would Britain's economy become resurgent and could again rival Germany as Europe's leading economy, or would it continue to lag behind, with the gap in industrial productivity accelerating and Germany's GDP per capita and total productivity surpassing Britain by around 1930s-1940s (2). Note that the first world war had totally caused German's productivity growth to fall far from its pre-war trend (2).

(1): http://www2.warwick.ac.uk/fac/soc/economics/staff/sbroadberry/wp/gerserv4.pdf: see Table 1.
(2): http://personal.lse.ac.uk/ritschl/pdf_files/KETCHUP.pdf : see figure 2 in Appendix.
 

hipper

Banned
Well, British economy had been declining since 1880. By 1910, it was surpassed by Germany. Although still behind Britain in agriculture and services regarding productivity, Germany's industrial productivity was 27% higher than Britain (1). But, during the years between 1911-1914, there had been signs of a resurgence, as growth rate became faster during 1900-1909.

What if ww1 never happened? How would its economy develop?

Would Britain's economy become resurgent and could again rival Germany as Europe's leading economy, or would it continue to lag behind, with the gap in industrial productivity accelerating and Germany's GDP per capita and total productivity surpassing Britain by around 1930s-1940s (2). Note that the first world war had totally caused German's productivity growth to fall far from its pre-war trend (2).

(1): http://www2.warwick.ac.uk/fac/soc/economics/staff/sbroadberry/wp/gerserv4.pdf: see Table 1.
(2): http://personal.lse.ac.uk/ritschl/pdf_files/KETCHUP.pdf : see figure 2 in Appendix.

Your first source casts doubt on your basic premise

Fremdling (1991) found industrial value added per employee in Germany to be lower than in Britain just before World War I when converted to a common currency using a purchasing power parity adjusted price ratio. It is likely that Hoffmann’s (1965) estimates of capital income, used by Fremdling (1991), are too low.3 However, whereas it is possible to see how this could be consistent with a small German labour productivity advantage in manufacturing before World War I, it is difficult to see how it could possibly be consistent with a German productivity lead of the order of magnitude suggested by Ritschl (2004b).
 

Thomas1195

Banned
I myself believe that Britain would continue to decline relative to Germany. There are lots of reasons.

One of them is education. Specifically, German education system was much superior, especially scientific and technical education.
Specifically, in 1908, the entire Britain only produced 300 students in applied science. Meanwhile, in Germany, the number of chemical students alone was 400.
https://books.google.com.vn/books?i...nepage&q=british population 1870 1914&f=false

This is significant because the new industries like chemical or electrical were scientific-based and required lots of systemic R&D that need to be carried out by professional scientists and engineers.

Besides, the proportions of apprentices and employees receiving vocational training were higher in German industry.

Your first source casts doubt on your basic premise

Fremdling (1991) found industrial value added per employee in Germany to be lower than in Britain just before World War I when converted to a common currency using a purchasing power parity adjusted price ratio. It is likely that Hoffmann’s (1965) estimates of capital income, used by Fremdling (1991), are too low.3 However, whereas it is possible to see how this could be consistent with a small German labour productivity advantage in manufacturing before World War I, it is difficult to see how it could possibly be consistent with a German productivity lead of the order of magnitude suggested by Ritschl (2004b).
Most sources I have read gave a conclusion of a German lead in manufacturing, with a much bigger emphasis on heavy industries (like the second link).

The second source also made forecast of hypothetical trends (the straight lines).
 

Deleted member 94680


"Again, it is interesting to compare actual developments to the extrapolated trends from the pre-World War I period: Had both German and British aggregate pro- ductivity continued to grow at their average pre-war trends, Germany would have caught up to Britain already by the mid-1930s, not just in the 1960s." http://personal.lse.ac.uk/ritschl/pdf_files/KETCHUP.pdf section II, para 4

So, this is referring to the total output as opposed to the relative rates of increase? Germany's economy in toto would catch Britain's by, say, 1935 absent WWI? Your reference to decline would be to the rates of expansion, rather than total output?
 

Deleted member 94680

So if you asked the question and provided the link to the academic study that seems to answer the question, why ask the question in the first place?
 

Thomas1195

Banned
So if you asked the question and provided the link to the academic study that seems to answer the question, why ask the question in the first place?
They are just my opinions, and I used the studies to support them. But I also expect another viewpoint.
 

Deleted member 94680

They are just my opinions, and I used the studies to support them. But I also expect another viewpoint.

Fair enough.

I for one can't imagine, minus WWI, that Britain would countenance Germany to be the only nation with a science and technology education system at the level it did. Sooner or later, once the benefits became apparent across the board, British universities would begin pursuing that aspect of the educational spectrum.

Also, to state that there would be no WWI would suggest Anglo-British relations are better than OTL. Someone would gain the benefit of a German scientific education and bring its model to Britain.
 

Thomas1195

Banned
Also, to state that there would be no WWI would suggest Anglo-British relations are better than OTL. Someone would gain the benefit of a German scientific education and bring its model to Britain.
This must not be too late. Actually, IOTL, Haldane was that person. However, Britain had already lagged behind by a generation.

There are many other structural weaknesses of British industry, which I think would make Britain continue to lag:

- British firms were mostly small or medium firms (especially in heavy industries) that cannot afford to carry out large-scale R&D, which is vital for scientific-based industries like chemical and electrical engineering.

- The general consensus agreed that British industries were slow to adopt new technology. They stuck too long to labour-intensive practices, and was slow to adopt mass-production techniques. A classic case was Leblanc vs Solvay, and maybe synthetic dye. Only in Britain did the likes of United Alkali could survive.

- Britain focused too much on old, low-tech industries like textile and clothing, steam engine or shipbuilding, while neglecting new ones like chemical or electrical engineering.

- R&D in British firms was typically carried out on the shop floor in a rather ad hoc manner with little direct application of scientific expertise, and tended to lack systemic in house R&D operation. The state did not support industrial R&D. During the first decade of the 20th century, British firms only spent 0.5 million pounds per annum in R&D, which was a joke compared with massive research laboratories of Bayer, BASF...

- The electricity supply system was chaotic, as different regions had different electrical standards.

- The outdated laissez-faire policy of governments, which was only changed as a result of the ww1. You know, this means the government would not bother to engage in things like road construction and infrastructure development.

IOTL, the First World War exposed the problems above and show that how far Britain had lagged behind Germany in industry and technology, thus forced the governments to change their approach towards a more interventionist policy set, firstly with the Liberal Party.
 

Thomas1195

Banned
The worse scenario for Britain is that its economic relative decline would reach a point where Germany could afford to outbuild RN while still maintaining a large army.

Germany could also economically cripple British Empire by creating 100+ Afghanistan (funding and encourage colonial independence movements and revolutions). They can start with Ireland in 1914, shipping weapons to both factions (well, they can even test chemical weapons).
 

Deleted member 94680

The worse scenario for Britain is that its economic relative decline would reach a point where Germany could afford to outbuild RN while still maintaining a large army.

Possibly, but OTL it was always a choice between the Army and the Navy. Domestic production would be a driver, especially with such a strong SDP presence.

Germany could also economically cripple British Empire by creating 100+ Afghanistan (funding and encourage colonial independence movements and revolutions). They can start with Ireland in 1914, shipping weapons to both factions (well, they can even test chemical weapons).

That's just laughably ASB.
 
This is a really intriguing question, although I think it is kind of a pity that the way it is framed is so focused on an Anglo-German Rivalry.

How does this impact international finance, which was and is so important to The City? Does the gold standard maintain it's position/for how long? According to Keynes in his 'Economic Consequences of the Peace' he goes on about how you can basically order anything and get it at your doorstep, or travel the word without a passport. Does this continue, and what does that mean for the Empire? What does this do for the trade unions, which I assume got a lot more powerful during the war? How does this impact economic activity/relations between GB and the Commonwealth (I have no idea what this looked like in the run up to the war, other than a general idea of trade)? Oh, and no crippling war debts, that's a big deal.

I have minimal knowledge of what the Imperial economy looked like immediately before the war, so any answers would be greatly appreciated.
 

Thomas1195

Banned
I have minimal knowledge of what the Imperial economy looked like immediately before the war, so any answers would be greatly appreciated.
Before ww1, Britain was the global financial and trading centre. Its agriculture was productive, but too small. However, its industry sector had lagged behind US and Germany both in output and technology (well, by 1870, the ascendency of the US could never be prevented unless there were population disasters, so I did not bother to put them in), especially in new industries like chemical and electrical engineering. Various structural weaknesses of British industrial sector had been mentioned above. As industry dominated economic growth in this era, Britain was surpassed.

The service sector at that time could not be a big growth driver like in late 20th century, because it was not a standardized, high volume sector. Besides, the inferior level of British workforce would slow the adoption of new technology in services, such as telephone or office machinery.
 

Thomas1195

Banned
That's just laughably ASB.
Not, not really ASB. There could be German versions of Lawrence of Arabia. Britain had vast colonies, and independence movements could be triggered in regions such as India, South Africa and Egypt.

And they can realistically sell weapons to Irish factions in 1914 (without ww1 there would be a civil war in Ireland following Home Rule).
 

Thomas1195

Banned
Regarding the US, it would continue to surge ahead Britain with an even greater pace than Germany, because the US was the only place where mass production techniques were fully utilized at that time.
 

Thomas1195

Banned
Here is the summary of my own views:

- British macroeconomic environment would be much more stable due to the absence of heavy debts and mass unemployment.

- It would continue to be the key if not foremost global financial and trading centre for decades.

- The move towards protectionism would be delayed or even butterflied away.

- It would not lose lots of markets to Japan and the US because of the war.

However, since the war provided lots of lessons, there would be negative developments without the war:

- Educational reforms might be delayed. IOTL, the war made them realized the importance of professional technicians and scientists.

- The standardization of electrical standards would be delayed, which would make electrical industry retarded for much longer.

- The move to state intervention and Keynesianism would be delayed at least until something like a Great Depression occurs. In other words, no or minimal state involvement in road construction, infrastructure development, and R&D. One consequence might be that the quality of roads would be worse than IOTL, which might affect the development of motor industry.

- The new industries like electrical engineering and chemical would be retarded for much longer due to the absence of state intervention and of German patents (which IOTL were acquired after Versailles). But they would still grow faster than the rest of the industrial sector. But British industry would still concentrate on producing and exporting old, low-tech products to less developed markets.

- The adoption of modern mass production techniques would be slower due to the absence of lessons from the war. In other words, lots of British "factories" would remain outdated craft cottages.

- The trend of rationalization would be delayed, which means British industrial structure would be still dominated by small and medium businesses, which tended to be amateurish and inefficient.
 
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