Land production targets as defined in Ruestungsprogramm B were largely met: the Heer of June 1941 was better armed than in 1940 and the doubled number of armored divisions was coupled with a doubled number of Mark III, IV and Czech 36- and 38-ton tanks. The tank industry received plenty of resources and advanced organizationally. The war economy’s preparations for Barbarossa were not in incompetent hands and lessons had been learned.

Then why was there an apparent productivity contraction? On revised data production and workforce are paralell, but there is still underperformance in 1941. There were two minor general factors which did harm production, the logistical disarray of eastward troop movements and drafting of workers, but the culprit is the Luftwaffe’s industrial base, which received the greatest number of workers in France-Barbarossa. A new worker does not raise production on the day he enters his factory: there is a delay and in aircraft construction it is very long, at least six months, and so his entrance produces the statistical illusion of productivity decay, and later down the line, the illusion of a boom that took place just now. Land and naval output grew more than their respective workforces. Furthermore, through 1941 the Luftwaffe went through difficult technological decisions, waiting for new designs and then facing disappointments and rolling back production when it did put into production two of them, the Me 210 and He 177, they proved to be still not ready; thus there was no heavy commitment to any design. All things considered, there was no productivity collapse in the early war economy nor was its output too small.

Then comes 1942. Speer’s thesis is that the 42-3 boom was efficiency-driven and caused by high-level economic reforms.
One such reform was of the price system for armaments, which began in late 1941 but is considered one of the conditions for the “Speer miracle”.
Since the Sudeten crisis the pricing of public contracts was determined by the LSOe system. Prices were set by estimated costs plus a profit margin (normally 5%) calculated not over costs but over capital employed. Once agreed, prices were fixed and the industrialist could increase his profit by cutting costs. It is false that this system did not use the profit motive to pressure industrialists to improve.
In 1940 Todt modified it to “stimulate the appetites” of businessmen: in the case of ammunition, the lowest-cost producers were given standard prices, but as a whole prices were not standardized through the whole board.
Under the new system producers were paid in standard prices and profits they made by reducing costs were theirs to keep. The pressure to innovate was nothing new. The only improvement was in standardization and reduced need for bureaucratic oversight, but a less standardized system was appropriate for the early war, when new producers were entering the arms market and authorities needed flexibility to reach all of them.