The story seems to be based on a satire cartoon: https://skeptics.stackexchange.com/questions/22375/did-a-soviet-nail-factory-produce-useless-nails-to-improve-m

The story seems to be based on a satire cartoon: https://skeptics.stackexchange.com/questions/22375/did-a-soviet-nail-factory-produce-useless-nails-to-improve-metrics https://skeptics.stackexchange.com/questions/22375/did-a-sov... Certainly the practical issue of what to use as performance indicator is a deep one, at least if one wishes to have a system that efficiently satisfies the needs of the population rather than their stated wants. Today we could probably build some decent abstract indicator out of a myriad of detailed statistics, but the soviets didn't have much IT infrastructure in place and had to make do with simpler indicators. The linked memoir has the following summary of how the planned economy worked in practice: > The Soviet manager’s success indicator was a measure of gross output, such as weight, quantity, square feet, or surface area. [...] The Soviets experimented by adding other indicators, but in the end a gross output indicator always determined the manager’s success or failure. > Soviet managers were as autonomous as their market counterparts. They set their own plan targets by disguising their productive capacity and overstating their resource needs. Soviet planners served primarily as supply agents for enterprises, endeavouring to supply the enterprises with sufficient inputs to fulfill their gross output targets. The system of material supply could seldom perform this task, and Soviet factory managers made barter arrangements with one another and produced their own inputs. This activity led me to the conclusion that the Soviet economy, like a market, was organized polycentrically and not hierarchically as a planning system. The “central plan” was little more than the summation of the factory manager's individual plans. I would caution that this account seems like it overstates the actual independence of the managers, no doubt there were many political restrictions on their freedom of action in practice, but the general account that the plan essentially comes from the low level managers seems sound.