The failure of the German war machine during WWI is attributed mainly to the wrong decisions which the German High Command made throughout the war. According to the mainstream literature the defeat of the Marne in the autumn of 1914 has been the first error in a chain of errors, which the Germans made during the four year conflict. However, although the above criticism is correct it is incomplete. Throughout the war years there was an immense shift of economic resources from the civil sector of the economy to the military sector of the economy. The problem is that there was not an optimum use of these resources.
The paper has to address three main issues: The first is associated with the quantity of the defence production, which although it was the biggest across all belligerents, it was a hidden story of failure rather than success, since a waste of resources in the production process occurred.The German defence industry was an immense oligopoly, which practically throughout the war, acted either as a monopoly or a cartel. Thus a small number of firms were able to set prices, production levels and qualitative characteristics. In order to maximise their own profit the above companies ignored the military bureaucracy and even the politicians. Thus defence production could have been higher, if there was some competition in the economy.The second point of the paper is associated with the quality of the defence equipment, which was not superior, when compared to that of the allied defence industries. Thus with limited exemptions the German weapons were not superior to the Allied ones. The third point demonstrates that the Allies and especially the UK and the USA (which after all had immense resources compared to the Central Powers) had used them slightly better compared to the Germans.We realise that even nowadays the defence industry across the globe is a monopoly or an oligopoly. Obviously not many firms produce defence articles across states. However the more they are the better it is because in case of wars (as the experience of WWI has demonstrated) a handful of companies can make
Keywords: Economic History, Total War
