Today, Russia spends 4.1% of its GDP on its military; America spends 3.5%; and China spends 2.1%. (Saudi Arabia, at 10.4%, and Israel at 5.2% are the two biggest spenders by ratio.) They are essentially on pre-war footing, demobilized.
To what extent could today’s superpowers match the mobilization of the WWII-era US and USSR?
According to the Center for Economic Policy Research (CEPR), about one-third of military spending is on personnel. The remainder is on equipment and operations, both of which are highly demanding on the economy’s manufacturing and energy sectors. At the outbreak of World War II, manufacturing and energy accounted for approximately 30% of the American GDP. From that basis, America spent 40% of its GDP on war. As a first approximation, therefore, the maximum extent to which an economy can be mobilized for defense spending might be 133% of its manufacturing and energy GDP.
At present, manufacturing and energy make up 41% of China’s GDP, 30% of Russia’s GDP, and 20% of America’s GDP. Therefore, the maximum mobilization we would expect their economy to achieve would be 54% for China, 40% for Russia, and 27% for America.
Wait, you ask — Why can’t we just “build more factories?” Because it’s very difficult to rapidly grow manufacturing. The fastest large-scale improvement I have found in looking at data is a 3% increase in the share of manufacturing per year for a major economy. Achieving this during wartime, when manpower is diverted into uniform and infrastructure is under attack seems unlikely. A nation can rapidly convert its peacetime manufacturing to wartime manufacturing, but it cannot rapidly build manufacturing capability where none existed. I assume that maximum mobilization might increase by at most 1% per year from their present level.
Even when taking advantage of pre-existing industrial infrastructure, mobilization is never instantaneous. In its best year, the US was able to mobilize from 10% to 35% (1941 to 1942), and the USSR was able to mobilize from 20% to 55% (1942 to 1943). That suggests the absolute best possible mobilization is a 3.5 increase annually. It’s not clear to me that any of today’s great powers could match those, due to the vastly increased complexity and fragility of our supply chains. Therefore I assume that actual mobilization can at most double yearly, until the maximum mobilization is reached. Therefore I estimate the following:
In one year, America could achieve 7% mobilization; in two years, 15% mobilization; in three years, 30% mobilization; in four years 31%; in five years 32%.
In one year, China could achieve 5% mobilization; in two years, 10%; in three years 20%; in four years 40%; in five years 60%.
In one year, Russia could achieve 8% mobilization; in two years, 16%; in three years, 33%; in four years 44%; in five years 45%.
Now, in considering what mobilization as a percentage of GDP means, we need to be sure we are comparing apples to apples. A comparison of nominal GDP won’t do. At a minimum we need to use Purchasing Parity Power (PPP) adjusted GDP. But even that might understate the relative capabilities.
In a July 2017 white paper by the Heritage Foundation called “Putting Defense Spending in Context: Simple Comparisons are Inadequate,” the authors found:
For the equivalent investment in terms of U.S. dollars, China and Russia respectively have 1.7 times and 2.5 times the purchasing power within their domestic markets… Due to differences in purchasing power across economies, then, two countries could hypothetically field the same size and quality force at dramatically different spending levels.
For example, the Chinese Yuzhao-class landing platform dock (LPD) costs approximately $300 million to build and is most similar in terms of displacement and capability to the U.S. San Antonio-class LPD. However, the purchase price of the San Antonio-class LP exceeds $1.6 billion per unit…
In the March 2015 article “China’s Military and Growing Political Power,” the CEPR notes:
Using exchange rates comparisons significantly understates the Chinese military spending. A much more realistic assessment is obtained using PPP terms… China’s military budget was 18% of that of the US using market exchange rate comparisons, but 33% of the one of the US using PPP exchange rates…
The correct exchange rate with which to compare military spending would be a price or unit cost ratio of military services in each country… We use market exchange rates as a measure of relative military equipment costs facing each country… For relative operations costs, however, we use PPP exchange rates as a reasonable proxy… Finally, relative personnel costs are obtained using manufacturing wages, either gross or net of on-costs, since this represents the social opportunity cost of military employment.
This low relative military costs exchange rate implies a real value of China’s military spending of 40% of the US in real terms – larger than the level implied by using PPP rates of 33%, and much larger than the market exchange rate based figure of 18%.
Thus the best estimates are that in relative terms, we have to scale up China’s GDP by (40%/18%) = 220% in order to get an accurate picture of its potential mobilization. Unfortunately CEPR did not provide a similar ratio for Russia, but we can approximate it by multiplying Russia’s PPP multiplier (250% of nominal GDP) by (40%/33%) = 120%, for a total multiplier of 300%.
This is not a pretty picture if you like the Star-Spangled Banner. China’s military-effective GDP is already almost 200% the size of America’s military-effective GDP, and its effective military spending is 130% of our own! Meanwhile, Russia — currently mocked in the mainstream press as an economic weakling — is maintaining an effective military budget of 30% of America’s. Given that the US tries to maintain military power across the entire globe, while Russia only needs regional dominance, this should make us very uneasy about our relative capabilities.
It gets worse when we consider mobilization over time. Much, much worse. US deindustrialization has virtually crippled our large-scale mobilization, while China has become an Arsenal of Authoritarianism. Below I have tabulated each nation’s expected Mobilization Ratio and used that to calculate its Effective Military Spending (EMS) per year of World War Next.
The longer the war goes on, the worse it looks for America. In year one, America is able to spend 64% of China and Russia’s defense budget. By year five, America can only spend 26% of its rivals’ defense budgets.
The Tree of Woe’s detailed research backs up the previously observed historical analogy, which is to say that the USA and its European allies today are in much the same position that Germany and its allies were during WW2. Neither the superior quality of German and Japanese manufacturing nor the superior quality of German troops were sufficient to even begin to make up for the massive advantage in manpower and manufacturing enjoyed by the USA-USSR-UK alliance.
The Sino-Russian alliance alone dwarfs the manpower and manufacturing capacities of the NATO alliance, even if NATO’s prospective allies in South Korea, Japan, and Israel are included. And if the rest of the BRICSIA nations – who are already aligned with Russia in this global conflict – are included in the equation, the conclusion is even more heavily stacked against the Were-West.
The key is this: manufacturing capacity can be repurposed during wartime, but it cannot be constructed from scratch.
This mobilization math explains why the neocons and their pets presently presiding over the European nations have been so desperate to “win the war in Ukraine”. The Empire That Never Ended’s chances in the proxy war between Kiev and the Donbass republics were considerably better than its odds in either a regional war or a global war, although as we’ve seen, the proxy war has already been won by the two former Ukrainian republics.