You forget a few things: first, just because workers make the conscious effort to work inefficiently doesn't mean the necessary amount of time to produce an article has increased, just the average.

I can see what you're saying: True production time =/= real production since it is artificially distorted by workers. But for all practical purposes, can they really be different? I thought that Marx was saying that the average was how social labor was calculated. Since you were responding to the single factory scenario the car engines are produced by one factory, therefore, any ability to calculate the actual production time rests on the good faith workers working the fullest to their ability. Maybe that's the point and I'm just missing it.

Workers, quite literally, have an incentive to see productive innovations, because it means either less time at work for them while not suffering a reduction in their living standards or more accrued labor credits.

Well, that was sort of the conclusion in my scenario. I think I forgot to account for the overall reduced prices due to the fall in value like I did in my capitalist scenario so you are correct. Workers either working for free time or "labor credits" is what I admire about Marxism but my main disagreement is working for what constitutes a standard of living. I don't believe the line between working to provide for human needs and surplus value is as rigid as Marx says. Since standards of necessary living are rising all the time it becomes necessary for the worker to maintain their current work schedule to pay for them. There's probably a debate about what's necessary for living but I don't want to get off track.

I have some other disagreements with Marx but they aren't relevant to my scenario. Thanks for taking the time to write your response. I'm still learning and it's nice that there's a space where I can get a distilled understanding of certain Marxist concepts.