Luck Run Amok—Part 2

Incentives and Exploitation

Karl Marx popularized the utopian creed: “From each according to his ability, to each according to his needs.” In this idyllic world, everyone works for the good of society, with the fruits of their labor distributed freely—people taking what they need, and only what they need. We know how that worked out. When rewards are unrelated to effort, being a slacker is more appealing than being a worker. With more slackers than workers, not nearly enough is produced to satisfy everyone’s needs. A common joke in the Soviet Union was, “They pretend to pay us, and we pretend to work.”

Under the Soviet communist system, from 1921 to 1991, the central planning agency Gosplan concocted 5-year economic plans that were to be achieved by production quotas for individual businesses. Because the emphasis was on quantity, rather than quality, consumer products were generally poorly made. For instance, Soviet televisions had a reputation for overheating and catching fire.