Lederer examines how modern war transforms the economic process, distinguishing the profitability of individual transactions from the reproduction of society’s material wealth. He brackets judgment on war as a whole and treats economic mechanisms as one component of a larger political and military reality.
Der Krieg selbst ist eine Tatsache sui generis, in welcher das Ökonomische nur eine, allerdings durchgreifende, Komponente bildet.
English translation: The war itself is a fact sui generis, in which the economic constitutes only one component, though a pervasive one.
This distinction informs his criticism of prewar predictions of economic collapse. Such predictions assumed that peacetime institutions would continue operating under wartime disruption, underestimating the state’s capacity to subordinate economic relations to military purposes. Whereas earlier rulers financed military enterprises, the modern state mobilizes the population and resources of the whole economy.
Daher erscheint seine Aktion nach außen hin nicht in Form der Unternehmung, sie ist nicht mehr ein finanzwirtschaftliches, nicht mehr ein Geldproblem, sondern es wird die Naturalsubstanz der ganzen Volkswirtschaft für den Krieg mobilisiert.
English translation: Hence its action does not appear outwardly in the form of an enterprise; it is no longer a problem of public finance, no longer a monetary problem, but rather the substance in kind (Naturalsubstanz) of the entire national economy is mobilized for the war.
Money, contracts, wages, and profits persist, but their existence does not mean that war remains governed by private enterprise. The state sustains economic activity insofar as it serves military success. Lederer makes this hierarchy explicit:
Der Staat würde folgerichtig den ganzen ökonomischen Prozeß opfern, wofern dies die einzige Möglichkeit des Erfolges im Kriege wäre.
English translation: The state would consistently sacrifice the entire economic process, if this were the only possibility of success in the war.
The essay accordingly distinguishes stabilizing monetary circulation from reorganizing production. Expanded note issuance, emergency lending, gold controls, and moratoria respond to the initial retreat from credit into cash. They preserve exchange without ensuring the availability of goods. Mobilization, interrupted trade, shortages, and altered demand require a restructuring of production. Military orders subsequently absorb factories and workers, reverse unemployment, and spread apparent prosperity beyond armaments production. Lederer criticizes the state for failing to accelerate this adjustment.
Modern warfare is industrial in its material organization, but Lederer does not equate this dependence with an industrial interest in causing war. He argues that capitalist interdependence generally favors peace. Nevertheless, armies’ manufactured requirements make productive capacity a condition of military endurance. Industrial wealth enables a state both to sustain warfare and to exhaust its resources more thoroughly.
The resulting boom must therefore be examined beneath its monetary appearance. Armaments producers receive incomes, while their products leave ordinary commodity circulation. Military consumption supplies no economically exchangeable equivalent. Civilian production must support both the diversion of resources and the purchasing claims generated by military expenditure. Inflation expresses this divergence between monetary claims and available goods, rather than merely a technical disturbance in currency management.
War loans can absorb purchasing power and defer its exercise through future interest payments, but they cannot restore consumed resources. They also offer interest-bearing assets when ordinary investment opportunities contract. Lederer’s account of capital values clarifies why abundant financial claims need not demonstrate material prosperity:
Nun sind aber Kapitalwerte nur auf Basis einer fortschreitenden Volkswirtschaft realisierbar, also wenn sich mehr Einkommen in Kapital verwandeln will, als umgekehrt.
English translation: Now capital values are realizable only on the basis of an advancing national economy, that is to say, when more income seeks to be transformed into capital than the reverse.
The consequences become especially visible at the transition to peace. Worn machinery, interrupted development, depleted livestock, and consumed investment materials leave diminished productive substance behind apparently intact financial claims. Indemnities might permit a victorious country to replace losses through imports, but would shift rather than eliminate the burden. Public creditors’ incomes ultimately depend on postwar production. The reassurance that expenditure remains within the country overlooks both destroyed goods and the future demands attached to money.
Private enrichment can thus coexist with collective impoverishment, while debt service sharpens distributional inequalities. Increased postwar output may represent additional exertion to repair losses, not wealth created by war. Reconstruction requires coordinated investment, employment for returning soldiers, and adaptation to altered demand without disproportionately reducing mass purchasing power. Lederer extends the case for public coordination beyond wartime supply administration to rebuilding productive capacity. His concluding perspective raises a broader possibility: the demonstrated subordination of economic interests to military ends suggests that other collective purposes might likewise direct economic organization.
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