Monday, September 29, 2014

Red Plenty then a digression on motivation

I'd sort of been meaning to write about Red Plenty at some point, a book about the dream and reality of the Soviet economic planning system.  It was very well done and actually made me more sympathetic to the people who believed in Communism back in the day.   Well, it looks like Scott at Slate Star Codex has put together an excellent review that said everything I was going to say and more so just go read that.

One of the things I reconsidered after having read the book was the precise role of incentives in explaining the later problems with Soviet planning.

 In certain cases, Russians were very well-incentivized by things like “We will kill you unless you meet the production target”. Later, when the state became less murder-happy, the threat of death faded to threats of demotions, ruined careers, and transfer to backwater provinces. And there were equal incentives, in the form of promotion or transfer to a desirable location such as Moscow, for overperformance.

It wasn't that workers, managers, etc didn't have strong incentives to do their jobs - the problems were where those incentives were pointing.  If you want to know the details, well, you should go read Scott's review shouldn't you?

There's a certain danger economists sometimes fall prey too where they think of incentives purely in monetary terms.  There's a good reason for that, since many of the things they look at are more or less like that.  But there are circumstances where only looking at monetary incentives works and there are circumstances where it will leave you blind.

Everybody knows about Adam Smith's book The Wealth of Nations, but he also wrote The Theory of Moral Sentiments, and if he believed that "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner," he certainly recognized that it is from the benevolence of our parents that we ate as children.  Forces more complex than exchange govern our relationships with our friends, our family, and to an extent our co-workers.

Few people would choose to do exactly the jobs they have if money wasn't a concern.  But given a job, a lot of what we do from day to day is governed by wanting to get along well with our coworkers and bosses rather than directly from threats of firing or such.  At least that's what life is like in engineering and my experience of the service industry; perhaps if I worked as a laborer where the boss didn't think of me as his equal and could see how many watzits I was stacking things would be different.

Arranging equivalent exchanges is challenging since everything has to be explicit and discovering what equivalent means in each circumstance can be taxing.  So when you're dealing with a small group it makes more sense and is maybe more satisfying to work together communally.  But as groups get bigger, organization by consensus gets harder and you need new methods.  As was once said on twitter "Market exchange is a pathetically inadequate substitute for love, but it scales better."

I can certainly see wanting to replace the impersonal forces of the market with something better.  Back in the day if you didn't like how your tribe was run you could just leave, and tribes were run by consensus without the hierarchy or impersonal forces of the modern world.  Wanting to get to that sort of communism in the modern world makes perfect sense to me as a goal even if I would despair of ever accomplishing it.

But in the end, Soviet communism needed hierarchical impersonal forces to organize everything just as capitalism does.  Their system just wasn't as good at it.

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