Firms Run By The Power-Mad

"In a recent biography Eleanor Dulles reports on her experience in a New York hairnet factory circa 1920. 'The owner of the factory never came out there, he just sat in New York and took the money ... The manager was a very sharp type. I told him I could increase production, so I worked out an incentive scheme whereby for a 50 percent increase in production they could make 30 to 40 percent more in wages ... The girls really began to put out. They got very much interested in their work, and the good ones were soon earning 16 dollars and more a week.'

To her astonishment, the manager didn't like it.

'"I'm not going to have those girls thinking they are good," he said. "I'm going to get rid of the good girls. I didn't pay them to get above themselves."'

'He deliberately slowed down supplies and made things awkward for the smarter girls, so they just lost spirit and left.'" -- Harvey Leibenstein (1981) "Microeconomics and X-Efficiency Theory: If There Is No Crisis, There Ought to Be", in The Crisis in Economic Theory (ed. by D. Bell and I. Kristol), Basic Books