War and Peace: Structural changes in the U.S. industries 1939–1958

Abstract

In his memoir published in 2002, George Dantzig, who had invented the simplex algorithm to solve linear programming problems, praised Wassily Leontief as a great pioneer for proposing a large but simple matrix model that represents the interindustry input-output structure of an economy. Input-output tables, which depict the transactions of goods and services between industries, have been intensively used to prepare the U.S. economy for World War II, and to eventually liberate Europe. This paper not only revisits the early development of structural analysis but also applies it to the 1939, 1947 and 1958 U.S. input-output tables using triangulation and dispersion indices as fundamental tools. The degree of integrity represented in the Leontief inverse significantly increased as the division of work progressed in the time of war to achieve maximum productivity. The structural changes ensured a smooth transition of the American economy from peacetime to wartime, and later, the fast rebuilding of European economies that had been completely devastated during the war.