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We've all heard the story, which sounds for all the world like a typical urban legend. It goes something like this:

Once upon a time, there was a factory in the Soviet Union that made nails. Unfortunately, Moscow set quotas on their nail production, and they began working to meet the quotas as described, rather than doing anything useful. When they set quotas by quantity, they churned out hundreds of thousands of tiny, useless nails. When Moscow realized this was not useful and set a quota by weight instead, they started building big, heavy railroad spike-type nails that weighed a pound each.

The moral of the story, depending on who's telling it, is either "be careful what you measure for because it's often not representative of the result you really wanted," or "ha ha, look at how silly central planning of an economy is; we never had messes like that over here with Free Enterprise™." But it makes me wonder, did the Soviet Nail Factory ever truly exist?

BsAxUbx5KoQDEpCAqSffwGy554PSah
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Mason Wheeler
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    I can ensure you that a Soviet nail factory existed. – SIMEL Jul 17 '14 at 19:57
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    `We've all heard the story` -- I've never heard the story.... :( – Flimzy Jul 19 '14 at 01:25
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    So, is your question about why planned economy encouraged factories producing useless items (as in the header), or is it about `did the Soviet Nail Factory ever truly exist`, as in the final sentence? – Be Brave Be Like Ukraine Jul 20 '14 at 21:18
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    Here's a link to a site that says the nail story was described by economist Robert Heilbroner in a 9/10/90 article in New Yorker magazine. The story is behind a paywall, but maybe someone can find it and see if Heilbroner actually says it's true. http://www.econlife.com/government-guidelines-and-unintended-consequences/ – Mark Sep 06 '15 at 20:05
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    [Meyer Kron's memoirs](http://migs.concordia.ca/memoirs/kron/chpt_8.html) describes a Russian factory labelling "cut and unassembled leather" as "complete shoes" (in effect producing useless shoes to improve metrics) in order to meet their production targets. This, while not directly related to the nail issue, shows the problem did exist. – March Ho Sep 06 '15 at 23:18
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    The actually applicable moral of the story is, "don't use the same metric for measuring *and* regulating". Because *anyone* will start gaming the system if he thinks he can get away with it. Happens in capitalism all the time as well. – DevSolar Aug 28 '19 at 11:28
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    @DevSolar If no individual with authority is on the hook for making crap instead of products, it will happen *everywhere*. Getting employees to not cut corners is 90% of what lower management does. Economic system is only relevant here when considering the scope of management and who potentially could be on the hook. –  Aug 28 '19 at 16:00
  • Central planning can make spectacular mistakes. about 25 yr ago I was in a Russian steel mill that produced casing for oil/gas wells. On the tour we went though a giant warehouse , the casing ( pipe) was stacked about 10 ft high throughout the building : AND the mill was busy making casing because that is what they were told to do . I have been to many mills around the world and never saw anything approaching that mountain of pipe. – blacksmith37 Aug 29 '19 at 18:58
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    I don't know about the nails story, but there is a lot of anecdotal evidence that factories in the Soviet Union camp were gaming the system. Some authors attribute that to inadequate salaries - people felt that the only way to make livable wage is by being awarded production bonuses. That was easy to do because the whole system was disorganized and chaotic and so you could claim that you produced the article but don't have trucks to ship it, or there is no gas for the trucks, or that you are waiting for boxes from the box factory so you can package it ... – ventsyv Aug 30 '19 at 17:00
  • @Mark: I edited the OP's title to say "uselessly oversized nails" to ask the actual underlying question. – smci Aug 30 '19 at 19:09
  • @DevSolar: but that's too vague and non-specific a claim to be falsifiable, and it doesn't pose any specific question; skeptics.SE isn't just a chat forum. I restated the title to contain a specific question. – smci Aug 30 '19 at 19:11
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    @blacksmith37 They could have been stocking up for fulfilling a major order. Especially given the location of many northern oil and gas operations in Siberia can only receive heavy equipment for a few months a year, they have to have all the piping for the construction season ready to go before the season starts. – jwenting Sep 09 '19 at 05:03
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    @DevSolar *"Because anyone will start gaming the system if he thinks he can get away with it."* that's a fun thing to read in a SE site =) – jean Nov 29 '19 at 19:58
  • @Mark Your link rotted, and is not backed up on Internet Archive. The paywall killed the information, it seems. Isn't it paradoxal like the Nail Problem in a sort of way? The paywall supposely was to make sure the company had enough money to keep the information available, but the focus on the paywall killed the information in the end. – BsAxUbx5KoQDEpCAqSffwGy554PSah Jan 03 '23 at 17:10
  • @blacksmith37 Sorry, but I couldn't understand which mistake you saw on that factory. Can you clarify, please? – BsAxUbx5KoQDEpCAqSffwGy554PSah Jan 03 '23 at 17:15
  • They were making pipe they could not sell . They may have had a one year supply sitting in a warehouse ( Taganrog Russia) – blacksmith37 Jan 04 '23 at 15:56
  • This phenomenon isn't restricted to Soviet stupidity. I know a professional software company, where there was a competition to see which department could donate the most food for the local food-bank. The winners? Those whose donation included a large number of cases of bottled water (at less than 20¢/500mL bottle ($.40/kg), the same money can buy a lot more "food" when it's measured by weight). – Ray Butterworth Jan 04 '23 at 18:55
  • @DevSolar "Don't use the same metric for measuring and regulating" A metric is something that you use to measure. That's like saying "don't use the same variable for both representing a value and solving an equation." – Acccumulation Jan 05 '23 at 03:43
  • @Acccumulation: The general idea is that if you measure your success in one way, an effort to improve your success should *not* be along the lines of that metric you measure your success by -- because *you lose your ability to tell whether you're successful*. All you're doing is *fulfilling the metric*. The nail factory here is one example. Another is e.g. a software company measuring "success" by lines of code per day, and *telling* their coders they need to increase LoC/day. You will see a marked increase of LoC/day, but your software will be crap. – DevSolar Jan 06 '23 at 11:27
  • They more frequently just didn't work, but punched in (or whatever "proved" they worked that day). This was usually because they weren't being paid regularly. "We pretend to work and they pretend to pay". Kind of like when unions "work to rule", but more serious and not about protest. –  Jan 07 '23 at 04:39

3 Answers3

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I can't find examples of nails, but there's a concrete example of chemical equipment where a factory avoided switching to producing superior models because they were lighter... and their output was measured by weight.

There's also articles on the subject of rolled metal products.

From the book "Planning Problems in the USSR" there are some specific examples.

A factory in Tambov,

enter image description here enter image description here

It's also noted that there was a general problem with rolled metal products.

enter image description here enter image description here enter image description here

I can't speak russian but tracking down Zakruzhnyi [1966] may be worthwhile for anyone who can.

Murphy
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The book Social Problems in a Free Society: Myths, Absurdities, and Realities by Myles J. Kelleher (alt link) documents many of the idiosyncrasies of Soviet planned economy. It mentions the nail story and points to the cartoon in Krokodil, but it gives references for similar anecdotes.

Production managers frequently met their output goals in ways that were logical within the bureaucratic system of incentives, but bizarre in their results. If the success of a nail factory's output was determined solely by numbers, it would produce extraordinary numbers of pinlike nails; if by weight, smaller numbers of very heavy nails. (A cartoon in the satiric magazine Krokodil featured a proud factory manager displaying his record gross output - a single gigantic nail lifted by a crane.) One Soviet shoe factory manufactured 100,000 pairs of shoes for young boys instead of more useful men's shoes in a range of sizes because doing so allowed them to make more shoes from the allotted leather and receive a performance bonus.19

Oddthinking
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Ketil Malde
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    Which reference is "19"? – BsAxUbx5KoQDEpCAqSffwGy554PSah Jan 03 '23 at 17:31
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    @BsAxUbx5KoQDEpCAqSffwGy554PSah I borrowed this book at https://archive.org/details/socialproblemsin0000kell/page/334/mode/2up. Reference 19 is "Meltdown: Inside the soviet economy", by Paul Craig Roberts and Karen LaFollette, listed on page 288. You can read it here: https://archive.org/details/meltdowninsideso0000robe – isaacg Apr 20 '23 at 19:49
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Seems pretty clearly a joke grown into an urban legend.

See, e.g., this memoir by Pail Craig Roberts:

A famous Soviet cartoon depicted the manager of a nail factory being given the Order of Lenin for exceeding his tonnage. Two giant cranes were pictured holding up one giant nail.

The cartoon in question may be the one pictured here:

enter image description here Click to enlarge. Image Source

Of course, the problem of which this is an exaggerated example was, indeed, real.

Oddthinking
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szarka
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    Please improve the clarity of the last sentence. –  Jul 18 '14 at 15:57
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    Tsvetelin M. Tsonevski has kindly provided me with the following translation of the text in the cartoon: The worker asks: "Who needs this nail?" and the factory bureaucrat answers "This is irrelevant. It's important that we fulfilled the plan immediately." – szarka Jul 18 '14 at 16:27
  • Sorry, for my lack of clarity. :) Do you mean in the last sentence that this actually occurred? –  Jul 18 '14 at 16:29
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    I mean that, while a Soviet nail factory probably never produced a single nail to fulfill a quota based on tonnage, it's certainly the case that--divorced from information about and incentives to provide nails of the sizes and weights actually needed by their comrades--actual Soviet nail factories may have produced too few, too heavy nails. – szarka Jul 18 '14 at 16:34
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    See also this passage in the Roberts essay I linked: _The Soviet manager’s success indicator was a measure of gross output, such as weight, quantity, square feet, or surface area. Gross output indicators played havoc with assortments, sizes, quality, and so on. Nikita Khrushchev complained of chandeliers so heavy “that they pull the ceilings down on our heads”..._ – szarka Jul 18 '14 at 16:35
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    Add all this information to your answer. Your current answer throws in a link to a PDF, the noteworthiness of which has not been established, then a joke, and then concludes that "Of course the problem was indeed real". –  Jul 18 '14 at 17:47
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    -1 This does not actually answer the question. It cites a joke cartoon, but the cartoon itself has nothing to do with whether such a factory existed or not. – March Ho Sep 06 '15 at 23:15
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    What was the point of the cartoon? Where was it published? Who drew it and why? – jjack Sep 07 '15 at 20:48
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    I once saw a similar Soviet cartoon of a crane holding up a giant button, with the caption "With this one button, we have over-fulfilled our part of the Five Year Plan." It seems to have been a common trope in the USSR. Of course that was probably because there was a lot of truth in it. – Paul Johnson Aug 29 '19 at 17:16
  • @jjack Have you tried Google Reverse Image Search? – BsAxUbx5KoQDEpCAqSffwGy554PSah Jan 03 '23 at 17:31
  • There is a story about the "Cola wars". Apparently some 30 years ago the Coca Cola company measured their success by number of bottles sold, while Pepsi Cola measured litres or revenue (can't remember which). When Pepsi Cola found out, they put all their effort into selling large bottles. So they started beating the other company which didn't notice because they gained the small bottle market. Lots of bottles sold with less revenue and profit. – gnasher729 Jan 04 '23 at 18:13
  • From a former manager: "Any decent software developer can double their output in any measurement without any effort or increase in productivity. " – gnasher729 Jan 04 '23 at 18:16