Ten lessons from history for Europe’s rearmament
Most European countries have neglected their readiness for war. That undermines deterrence and can even bring aggression forward, warns economic historian Mark Harrison (University of Warwick) in a new Kiel Report. From two world wars, he draws ten lessons on how Europe can prepare its industry for war.
In the 1930s, the democracies threatened Japan and Italy with sanctions but were not prepared to back them up militarily. The aggressors read this as a sign of weakness. According to Harrison, the pattern repeated itself when Russia annexed Crimea and invaded Ukraine. Today, as Russia wages a full-scale war against Ukraine, Europe devotes only around one-third of Russia’s share of GDP to military spending.
“For thirty years I told my students that the economics of the world wars was history, because nuclear weapons would prevent long wars between great powers. I was wrong. Ukraine shows that wars of attrition are back,” says Mark Harrison, Professor at the University of Warwick (CAGE) and CEPR.
The Kiel Report “Industrial policy for defence: Lessons from history” starts with a basic question: why does arms production need the state at all, given that public money already creates a market for weapons? Harrison identifies two rationales, which form the first two of his ten lessons.
Lesson 1: Defence factories need public funding
Private firms are reluctant to build factories that may only be needed for a short time, or never. In World War I, Germany took two years to recognise the problem. When it launched a large factory programme in 1916, it was too late, and some projects were never finished before defeat. A modern solution is the capacity contract, under which the state pays defence firms a fee to build up production capacity beyond peacetime needs.
“No company will build a factory that may only be needed for a few months, or never. If governments want that capacity, they have to share the risk,” says Harrison.
Lesson 2: The enemy of mobilization is friction
In 1914, all great powers went to war with ammunition stocks meant to last a few weeks or months. Shortages soon spread to guns, uniforms, and food, and factories were overwhelmed by conflicting orders. Planning ahead reduces such friction, even if the plans themselves turn out to be wrong, the report finds.
Further lessons
Autarky is a delusion. Making an economy independent of foreign supplies looks like security, but in both world wars it raised the cost of war. Nazi Germany’s synthetic fuel made from coal tied up around half a million workers and was enormously expensive. Britain relied on allies and trading partners instead, and its war economy proved more flexible and cheaper to run.
There is no technological escape from attrition. In both world wars, leaders dreamed of a weapon that would end the killing quickly: poison gas and submarines in the first, long-range bombers, the so-called V-weapons and the atomic bomb in the second. None of them ended the war of attrition. At best, technological advantage sped up the exhaustion of the enemy. Ukraine shows that a war of attrition can be fought even under a nuclear umbrella.
Incompetence and self-dealing are luxury goods. Germany’s aircraft industry in World War II had abundant resources, yet it was so disorganised that it fell far behind. The military’s constant demands for higher quality and new modifications prevented long, efficient production runs. The economically superior Allies could afford such mistakes; their adversaries could not.
Gross Domestic Product (GDP) is back. Economic size sets the upper limit on what a country can put into a war. Japan put around 75 percent of its GDP into World War II, far more than the United States, but the US economy was nearly five times larger. Size loses its advantage only when one side is more committed than the other. In Vietnam, the US economy dwarfed North Vietnam’s, but North Vietnam was determined to fight at all costs, and that tipped the balance.
“Geopolitical rivalry is back, and so is GDP. Russia’s GDP is five times that of Ukraine on its own. But the GDP of Ukraine combined with its friends is many times that of Russia. Commitment is being tested as well as GDP,” says Harrison.
War is not the only risk. Industrial policy for war creates vested interests that are hard to remove. In Britain, the close ties between government and industry forged in wartime weakened competition and held back growth for decades. Still, Harrison considers these risks smaller than the immediate risk of renewed war between great powers.
“Europe will spend far more on defence in the coming years. The question is no longer whether, but how. The twentieth century is the largest laboratory we have for that question. Mark Harrison’s ten lessons belong on the desk of every defence ministry in Europe,” says Moritz Schularick, President of the Kiel Institute for the World Economy.
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Panel: Mark Harrison will present the report on October 14, 2026, 6 pm, at the Bundespresseamt in Berlin, together with Sönke Neitzel and Moritz Schularick, moderated by Anna Engelke (ARD). The event is organised by the Kiel Institute, the Deutsche Atlantische Gesellschaft, and the University of Potsdam.
