When the last Soviet leader learned a lesson in economics
One of my summer reads is “Gorbachev: His Life and Times” by William Taubman. It’s garnered heaps of praise, and though I have not yet completed the lengthy tome, so far, so great. One of the big themes is an exploration of how the Soviet system ever produced someone like Gorbachev, much less let him rise to national leadership. One of Gorbachev’s close aides called him “a genetic error in the system.” As such, I am constantly on the lookout for events and experiences that may have helped open Gorbachev’s mind to a different sort of political economy.
And maybe one of those instances took place in the summer of 1953, just before Gorbachev married Raisa Titarenko. As Taubman writes:
Mikhail devoted part of the summer of 1953 to working, even harder than he had before, to bring in the Privolnoe harvest with his father. “That’s what a new work incentive can do,” laughed Sergei Gorbachev. Raisa loved beautiful clothes; in that sense, too, thought Gorbachev, “she was a real princess.” … By selling nine centners of grain over and above the amount owed the state, Gorbachev and his father collected the then astronomical sum of one thousand rubles, which Mikhail used to finance the wedding.
I believe this anecdote illustrates principle #4 in Harvard economist Greg Mankiw’s Ten Principles of Economics: People respond to incentives.