Freedom’s Forge is a book about how Bill Knudsen and Henry Kaiser won World War II. The two American businessmen fought and won a heroic struggle against incompetent bureaucracy, corrupt unions, backwards military, and an indecisive president to mobilize the American industrial base to produce all of the tanks, ships, planes, and magnesium goop1 that propelled the Allies to victory. Balaji might argue that all history books (unless they are blockchain-powered, of course) are propaganda books, but clearly some are more politically motivated than others. Some books try, or at least pretend to, present an objective analysis of what happened, but Freedom’s Forge does no such thing. It has clear heroes (American businessmen and free markets), clear villains (unions, New Dealers, and the Nazis who failed to adopt mass manufacturing and built airplanes by hand) and lots of stories about *insert military good here* production increasing tenfold in just a couple of years.
The basic story the book tells goes like this:
America has really good industrialists.
Some of the industrialists saw WWII coming early.
They were able to start an industrial mobilization early and ramp it up extremely well, utilizing their ingenuity and the magic of free markets, despite the rest of the country hating on them from all sides.
America outproduced everybody else and won WWII.
By the way, a lot of the industrialists really were quite selfless and took a dollar-a-year salary while working for the government.
More specifically, it focuses on Bill Knudsen, who corralled manufacturers to produce wartime goods and Henry Kaiser whose face2 launched3 a thousand4 ships.
As far as a WWII myths go, it’s as good as any. The Soviet version is that the war was won through the sacrifice of the Soviet soldier. The British version is that the war was won through moral superiority and Spitfires. Industrialists and free markets winning the war seems like a fitting myth for America.
Reality, as always, is complicated, and a good objective analysis of why the Allies won WWII would probably take 8 tomes and the answer would be “loss of Roman virtue”.
My problem with Freedom’s Forge is that it doesn’t make its central claim very well. If you claim that free markets are superior to fascist/communist regimes in producing wartime supplies, you should really put some side-by-side figures. The only comparative claim the book makes is that at the peak, the US produced more tanks, airplanes, ships, etc. than the Axis powers combined. That’s certainly a great data point, but I’d like to know how much of that was the free markets’ doing, and how much of it was geography and demographics. Let’s take a look at some numbers to see if the Freedom’s Forge central claim stands up to some very mild scrutiny.
Comparing population is a bit tricky, since some countries had pretty large colonies/occupied territories/dominions etc. a lot of which were not industrialized. For example, Japan’s mainland population in 1939 was only around 72M people, but it controlled territories home to over 300M people. Here’s the global overview:
However, the US had much higher GDP per capita than the Axis countries - for geographic, historical, and, possibly, economic-system-related reasons. The total GDP of the US in 19385 was $824B compared to German’s $351B, Japan’s $232B, and Italy’s $144B. So, going into the war, the US had GDP 13% higher than the Axis powers combined. Moreover, the US mainland was never bombed, unlike the Axis territories, so it shouldn’t be at all surprising that the US was able to manufacture more things than the Axis powers combined. But perhaps the US vastly outproduced other war participants? The book doesn’t tell us any comparative numbers, so let’s turn to Wikipedia. Specifically, I’m going to look at aircraft - some countries fought a primarily land-based war, others - a primarily naval war, but everybody wanted aircraft. Here are some statistics about aircraft produced by the different combatants:
The numbers look… Pretty similar? All three countries are within 10% of aircraft per billion of pre-war GDP to each other. The USSR is significantly behind if you look at aircraft per million of population, but it’s hardly surprising, given that the whole period of 1900-1939 for the country was one disaster after another, and it came into the war with a much worse industrial base than the US or Germany.
Now, perhaps the US mobilized its resources faster than the other countries? It would be fair to say that Germany and the USSR had had more time to prepare for war than the US did. Mark Harrison of Warwick University (who has the best faculty page I’ve ever seen) has helpfully done an analysis of how quickly the different countries mobilized their economies during WWII.
Here are the results of Harrison’s analysis:
The number we are most interested in is b - the rate at which the countries were able to mobilize. By that measure, the US does seem to outperform everybody else, though if you are making the argument that free markets vastly outperform everybody else, the proximity of USSR should be concerning to you, given that USSR was actually fighting a MASSIVE war in its territory at the time.
An argument could be made that the US has had to repress production of consumer goods a lot less than countries with other economic systems, but again, the US had a huge geographical advantage, it’s hard to compare the number of refrigerators produced between a country that is actively being invaded and a country whose civilian population is largely insulated from the war.
So, while I’m absolutely willing to accept the argument that overall larger industrial production was one of the (if not the single) most important factors in Allies winning the war, the idea that free markets are superior in mobilizing wartime production is subject to debate. Now, I’m the first to admit that my analysis is super rudimentary, but Freedom’s Forge doesn’t present any comparative analysis whatsoever to support its thesis, which I think is a major failing of the book. I believe that free markets are superior, and, as such, I’d love nothing more than to see some good evidence for it, but Freedom’s Forge does not deliver any.
However, there is a better way to read Freedom’s Forge - not as a book of historical analysis, but as a source of inspiration. It’s full of stories that go roughly like this:
Henry Kaiser: What do you know about steel plants?
Associate: Nothing, you?
Henry Kaiser: Absolutely nothing! How delightful! Now let’s go out and build a big-ass steel plant.
Associate: I’ll get right on it.
And then they toast to industry, and then actually go and BUILD THE BIG-ASS PLANT IN MERE MONTHS. The book is absolutely packed with stories like this. And that, I think is pretty valuable. If you are a budding young industrialist, you will find plenty of example of people building factories in record time, and even assembling a ship in 5 days. Is it a good idea to inspire young industrialists right now? I think it’s an excellent idea, given that over the past few decades we have outsourced a huge portion of our industrial base to our main geopolitical rival, and are now forced to deal with all of the issues arising from it, from rising income inequality to supply chain breakdowns. I’m sure there are degrowth people who would argue that deindustrialization is a good thing, but I don’t even consider it a position serious enough to argue with.
There is, however, one place where Freedom’s Forge falls short, even as a source of inspiration - its discussion of the cost-plus accounting that was pushed through as part of WWII procurement reforms. Cost-plus accounting was probably helpful in mobilizing industry during the most horrific war the world has ever seen, but we didn’t abolish it after the war. Instead, we got stuck with a military industrial complex that has all of the incentives in the world to waste taxpayer money. It’s probably the largest example of regulatory capture in the world, to the point where it’s been denounced even by Dwight Eisenhower and contemporary dynamic military industrialists, like the founders of Anduril. I feel like discussing the rise of cost-plus accounting and not mentioning its unintended consequences once goes beyond promoting an ideology and borders on dishonesty. That being said, Occam’s Broom perfectly explains why an author who works for a think tank funded by the military industrial complex might not, you know, point out the original sin of the said complex.
That failing aside, the book is full of industrial/military anecdotes that can be both educational and exciting. My favorite ones included:
Knudsen leading GM to outsell Ford.
Kaiser jumping off a moving train to secure a road-building contract.
Everything about the World Fair.
LeMay’s rethinking of American bombing tactics in the Pacific.
B-29s “Battle of Kansas” giving Tesla’s “production hell” a run for its money.
Should you read Freedom’s Forge? If your goal is to understand the world better - it’s safe to skip it. If your goal is to get inspired to BUILD BAD-ASS FACTORIES IN RECORD TIME AND UNDER BUDGET WHILE ALSO MAKING MONEY FOR YOURSELF - it’s a great read, and you’ll likely enjoy it.
Main ingredient of incendiary bombs that incinerated large parts of Japan.
Factories.
Built.
Two thousand, seven hundred and fifty one, but who’s counting.
In 1990 dollars.