Precisely because of their reliance on state action, war economies are deeply political systems. War economies do not suspend politics; they raise the stakes. As opportunities for empowerment and enrichment abound, novel distributions of benefits and burdens arise in which some groups acquire power and resources not just in excess but at the expense of others. Short-lived emergencies can temporarily bracket distributional questions from political debate, for instance over wages. But the longer warlike exceptions last, the greater the opportunities for subordinate groups to leverage their power. In the early 20th century, war production made labor unions more powerful in Britain, France, Germany, Italy, Japan, the United States, and elsewhere. Even when organized labor negotiated pacts of national unity with government and business interests, it put its power on display in the immediate postwar periods of 1918-1921 and 1945-1948, which witnessed the largest strike waves of the 20th century.
In this respect, the coronavirus lockdowns present a deeply lopsided situation. After decades of falling unionization, Western economies are confining much of their workforce to their homes while enormously increasing their reliance on a vital set of workers in the care, logistics, and retail sectors. Doctors, nurses, delivery people, postal and transport workers, grocery store employees, shelf stockers, sanitation workers and janitors, mechanics and tech employees, and farm hands are now, very clearly, the indispensable foundation of a functioning society. There is no precedent for the asymmetric mix of mobilization and demobilization of labor that we are witnessing right now. And as anyone currently working from home with children knows, the realms of office work, child care, and other forms of domestic labor are colliding as never before.
Invoking warlike sacrifice heightens the need for governments to balance rewards across boundaries of class, race, region, and age. The history of war economies offers lessons in the management of solidarity under such circumstances. Beyond pioneering forms of economic planning, resource mobilization, and industrial policy, war economies spearheaded many initiatives that directly promoted solidarity in the face of sacrifice. As millions volunteered to fight while civilians on “the homefront” manned factories, schools, and hospitals, states were able to create a new moral economy. Its central object of contempt was the figure of the war profiteer. Every society at war between 1914 and 1945 reserved a special hatred for individuals who reaped massive profits while others risked their lives and offered their labor.
The first tool against war-induced rent-seeking was excess profits taxation. Between 1915 and 1918, every major belligerent in World War I taxed the profits of private individuals and corporations. Wisconsin Sen. Robert La Follette denounced war profiteers as “the enemies of democracy in the homeland.” Excess profits taxation was even higher in the next war; by 1943, U.S. firms were taxed at a rate of 95 percent for every dollar they earned above an 8 percent rate of return on capital. President Franklin D. Roosevelt put it simply: “I don’t want to see a single war millionaire created in the United States as a result of this world disaster.”