Capitalism in WWII: The Arsenal of Democracy

American industrial might defeats the Axis and sets the course for decades of prosperity

In 1940, President Roosevelt faced a history-defining decision: should he involve the United States in the escalating global conflict? The First World War had left the country reeling. Isolationism and nationalism reared its head, exacerbated by the hardships of the Great Depression. However, across the Atlantic, fascism had taken hold in Germany and Italy, where Hitler and Mussolini were bolstering arms at a rapid pace. After the fall of France, it seemed the United Kingdom was the only major power left standing between the Axis and control of Europe—and beyond.

To support the allies—without directly committing American troops—President Roosevelt sought to jumpstart production of war materials, transforming the United States into the “Arsenal of Democracy.” In the true spirit of a leader of one of the strongest capitalist governments in the world, he summoned the country’s top businessmen to the White House to advise him on how to pivot manufacturing to support the cause. Over 18 months, factories ramped up production and shifted their outputs. Refrigerators became airplanes. Silk dresses became parachute canopies. Typewriters became carbine rifles. By December 7, 1941, when the United States declared war on the Axis Powers, the American economy was mobilized for war.

The following four years saw unprecedented industrial, economic, military, and scientific advancements. Inventions and innovations included jet engines, the programmable computer, hand-held radios, radar-guided amphibious landing crafts—and the atomic bomb. Unemployment was at an all-time low of 1.2 percent as women, minorities, and the disabled received meaningful work. By the end of the war, the United States was producing two-thirds of all Allied military equipment and our military had become strongest, most technologically advanced forces in the world. $183 billion of arms had been manufactured: a staggering 86,000 tanks; 2.5 million trucks and half a million Jeeps; 286,000 warplanes; 8,800 naval vessels; 5,600 merchant ships; 434 million tons of steel; 2.6 million machine guns; and 41 billion rounds of ammunition.

As William Knudsen, president of General Motors and Roosevelt’s wartime director of production management put it, “We won because we smothered the enemy in an avalanche of production, the like of which he had never seen, nor dreamed possible.” By harnessing the principles of capitalism and the powerful free market economy, the United States became a world superpower, turned the tide of the Second World War, and ensured prosperity for global generations to come.