by A swedish kind of death
Thu Aug 2nd, 2012 at 03:16:32 AM EST
From time to time there has been discussion here on ET on the impact (if any) of lack of real resources when it comes to the current crisis. In short, the question can be posed as if there is an element of resource austerity driving the political austerity. To find the answer I had a look at history and found a recent enough example of resource austerity.
What is resource austerity?
First for a definition. Resource austerity is the condition when an economy can no longer get natural resources at the high quantities and low prices that earlier was the case. As such it is a gradual condition, so to find a situation where it is a really big factor we want dramatic cuts in access to resources or dramatic price increases.
Choosing an example - Sweden during world war two
As example I have chosen Sweden during world war two. This is based on the topic being familiar to me, The League of Nations providing statistical information for the period and Sweden not being at war (only prepared for war) so you get rid of the direct effects of war like destruction and looting. In the diagrams Switzerland will also be included for two reasons, it had a similar history and it often was on the same page as Sweden in the League of Nations statistical yearbooks. However, I will not discuss Switzerland much, as my knowledge there is limited.
front-paged by afew
Resources and rationing
Building on experience from world war one Sweden prepared rationing as soon as the war broke out. Rationing card A was sent out before any goods needed rationing and was then applied to coffee and tea. The rationing system was built on starting rationing before stocks run low to ensure confidence in the system.
Sweden was also to a large extent cut off from the world markets during the war, though some shipping continued allowed by the combatting powers. For households the following goods were rationed.
| Beredskapsmuseet - Föremål | | Beredskapsmuseet - Items |
| Kaffe, te, socker, tvätt- och rengöringsmedel, kakao, mjöl och bröd, fläsk, ost, sirap, risgryn, matfett, ljus, havregryn, korngryn, köttvaror, mandel, kryddor, makaroner, torkad frukt, ärter, grädde, potatismjöl, textilvaror, bönor, tobaksvaror, salt, soda, skor och ägg var de varor som ransonerades under 1939-1945. | | Coffee, tea, sugar, detergents, cocoa, flour and bread, pork, cheese, syrup, rice, cooking fat, light, oatmeal, barley, meat products, almonds, spices, macaroni, dried fruits, peas, cream, potato flour, textile products, beans, tobacco, salt, soda, shoes and eggs were the goods that were rationed during 1939-1945. |
Access to oil was so bad that all was reserved for military use while the public had limited access to transportation based on wood gas. Even so wood gas was prioritised to military government and public (busses) and commercial transportation (taxis, delivery trucks). Shale oil was also extracted. Cycling was promoted.
Coal (for heating) was also rationed and largely replaced by firewood. Unfortunately I have not been able to find a picture I was searching for with what looks like defense walls surrounding houses. On a closer look you see it is firewood. Sweden has huge forests.
After the war the rationing was released gradually to avoid shocks to industries with 1951 as the end date of the last rationing.
Output, unemployment and inflation
Now for the fun, the graphs! First industrial output where two series span the period. They are roughly similar.
As can be expected, lacking access to resources lower the production. Not shown in the graph is the composition, but from the source we can see that construction falls dramatically with 1940 only having 14% of the construction of 1939. It then climbs but only in 1944 is the pre-war level beaten. Wood and paper also takes a significant hit and stays low. Iron, steel and machinery on the other hand increases throughout the war. Food production decreases in 1940 but stays over the production of 1934 and 1935 through the war, so I would guess it is the weather.
Now let's have a look at unemployment. Unemployment (Sweden reports only full unemployment, so I choose that for Switzerland too) goes up in Sweden in 1940, but then starts to decrease in quite dramtic fashion (even more so in Switzerland).
So more people worked, but produced less. More labour, less resources in the mix.
Switzerland decreased unemployment even more so, but I can't really say anything there so I'll leave it for informed commentators.
And finally inflation:
Whoa, that is a rollercoaster. I think it is safe to say that faced with increased costs of imported goods, Sweden and Switzerland to a large extent let that show in inflation. Imagine how much economic austerity would have been needed to avoid that inflation.
Conclusion
Faced with real resource austerity Sweden (and probably Switzerland) increased labour in production, reducing unemployment while production shrinked. Inflation was high during the transition phase. This was of course a political choice, one made easier by the rise of the labour movement and a war going on just outside the border.
Oh yeah, allmost forgot. If real resources were the driver in this crisis going on right now we would see inflation pressure. We don't so I think it is safe to say that resources is not the prime constraint of the economy right now.
