The Debate

Historians disagree about the world wars. They don’t see eye to eye about how industrialization and capitalism affected both world wars. You recently read an article that explained some of the causes of World War I. These causes included militarism, alliances, imperialism, and nationalism. Industrialized nations were mass-producing goods. They needed raw materials to make the goods. They needed new markets to sell these goods in. To do this, these nations took over other areas of the world through imperialism. Most industrialized nations followed capitalism. Capitalism is an economic system. People own private businesses for profit. Governments get money from these private businesses through taxes. Still, governments did not regulate these businesses too much.

These governments were benefitting from the capitalist system. So why would they enter into a war with their European trading partners? War would only interrupt their businesses.

One argument is that they didn’t want to go to war at all. Many experts at the time thought war was a bad idea. The British journalist Norman Angell wrote that European powers would be ruined if they went to war. The nations of the world depended on each other economically. Today, we would call this globalization or interconnection. If Europe went to war, then the whole system would crumble. Experts and common people thought the war would cause Europe to suffer. So why on Earth did these nations declare war?

A different argument states that capitalists wanted war. They thought they could make money selling weapons and supplies. These critics had a point. Businesses made a fortune selling items for the war.

Another argument for capitalists wanting a war has to do with imperialism. Western nations had just been through a violent conflict. They were fighting over control of Africa and Asia. These nations were competing to become the biggest and most important empire. They also had factories that allowed them to make whatever they wanted in a short amount of time. All of this played out in the start of World War I.

Economic impact of World War I

The causes for the war are debatable. However, everyone agrees that the economic effects of the war were huge. Governments spent more money during World War I than in all the previous wars combined. Even now, it is one of the costliest wars in world history. Nations had to find a way to pay for the war. They often did this by borrowing money from the public and other nations. They also increased taxes and asked private businesses for money.

The winning countries were not hit so hard by the war. Germany, however, was hit hardest by far. The Treaty of Versailles helped end the war. The treaty made Germany responsible for the costs of the war. As a result, Germany experienced some of the harshest economic effects of World War I. Many of these effects would lead directly to World War II. Britain’s economy and reputation also suffered.

The United States was the economic “winner” of the war. Nations purchased goods and supplies from the U.S. during and after the war. The U.S. government was spending huge amounts of money on the war. Still, the American economy was strong for much of the 1920s.

For Russia, massive changes were ahead. Russia increased its war spending. It began industrializing. This led to the Russian Revolution and the creation of the new Soviet Union. The Soviet Union also began modernizing their military. These improvements helped about twenty years later during World War II.

Africa and parts of Asia were terribly affected by the war. European powers used their colonial territories in these areas to make products. African and Asian people were forced to fight in the war. After the war ended, the Central Powers lost their colonial territories. The Central Powers included Germany, Austria-Hungary, and Italy. The territories were given to the Allies. The British and French gained the most territories. Suddenly there were a lot more agricultural and mining projects in these areas. The European powers needed money to make up for their war spending.

Almost all industries were hurt by the war. This included international trade and shipping routes. The U.S. was not hit so hard, however. The country is close to Europe. This allowed the U.S. to sell products more easily to Europe. Still, most areas saw a decrease in trade. When trade routes were interrupted, places like New Zealand, Australia and South America were negatively impacted.

Conclusion

After World War I, the United States became a military and economic force. Industrial production was up. Life seemed to be pretty good everywhere in the West besides Germany. At the end of the 1920s, however, the global economy took a turn for the worst. The Great Depression struck. Capitalist nations were hit hardest. This caused many people to begin questioning capitalism. These changes would lead to new conflicts for the rest of the 1900s.