The things we can learn from Soviet economic development are how not to think and act. In his latest book, Why Success Always Starts with Failure, underground economist Tim Hartford tells the story of Peter Palchinsky, an engineer who couldn’t help but tell the truth. In the 1920s, Stalin wanted to demonstrate the triumph of Soviet Communism by building the world’s biggest dam—The Lenin Dam on the Dnieper River in the Ukraine—and a new city—Magnitogorsk—in a remote area of Russia.
The Soviets assigned Palchinsky to advise them on these projects. Well, he couldn’t help himself. First he warned that the Dnieper was too slow and that the proposed reservoir would swamp thousands of homes and much prime farmland. Palchinsky didn’t get any points when he pointed out that the reservoir would be so large that “simply growing hay on the land it had covered and burning it in a power plant would have generated as much energy as the dam did.”
Palchinsky also cautioned his Soviet masters about Magnitogorsk, where they planned to build huge steel plants near vast iron-ore deposits. He was worried about the living conditions for the workers and whether enough coal was available to fire the plants. Palchinsky’s reward for doing his job? He disappeared from his Leningrad apartment in 1928.
The Soviets could have learned much from Palchinsky, and perhaps so can we. Here are Palchinsky’s principles:
1. seek out new ideas and try new things;
2. when trying something new, do it on a scale where failure is survivable;
3. seek feedback and learn from your mistakes as you go along.
As Hartford points out, these principles rested on Palchinsky’s belief that the real-world problems are far more complicated than we think. These problems “have a human dimension, a local dimension, and are likely to change as circumstances change.”
Palchinsky’s principles also challenged Soviet thinking. According to Hartford,
The Soviet failure revealed itself much more gradually: it was a pathological inability to experiment. The building blocks of an evolutionary process, remember, are repeated variation and selection. The Soviets failed at both: they found it impossible to tolerate a real variety of approaches to any problem; and they found it hard to decide what was working and what was not.
