” ‘I, Pencil’ for Today”

Thoughts on a Free Market Economy…

“’I, Pencil’ for Today”

By Phyllis Hunsinger

October 1, 2020

                Are you wondering why the economy is sputtering, trying to restart, after the tremendous interruption to our collective lives by the COVID-19 virus? 

                Perhaps the best explanation for this exists in an essay published in 1958 by Leonard E. Read, entitled “I, Pencil.”  The essay is written from the point of view of the pencil, who acknowledges that because of his simplicity, the pencil is taken for granted. Yet, as the pencil states, “not a single person on the face of this earth knows how to make me.”  Wood, lacquer, printed labeling, graphite lead, a bit of metal, and an eraser is all that meets the eye upon examination of the wooden pencil.

                As Mr. Read explains, the family tree of the pencil begins with a cedar tree from Northern California and Oregon. He describes the countless people making saws, trucks, rope, and other gear necessary for harvesting the cedar logs. It takes many more people with numberless skills that go into the mining of ore, making of steel, shipping the product, fabrication, graphite from Sri Lanka mixed with clay from Mississippi, and the rubber-like product, “factice,” made from rapeseed oil from Indonesia mixed with sulfur chloride and pumice from Italy to make the essential parts of the pencil. The detail with which Mr. Read identifies the creativity, skills, and labor is astounding.

                What is even more astounding, Mr. Read writes, is that all of the cooperation in the manufacturing of a pencil is done without any central planning.  There is no mastermind directing actions. None of the people performs a task because they want to buy or to own a pencil. Each individual is operating in his own interest. Each of the millions of people involved in the pencil creating industry exchange their abilities and knowledge for goods and services he or she may want or need.

                The lesson from “I, Pencil,” is universal and can be seen in action throughout our free market economy.  People, when left to their own creativity and labor, can exchange resources and small amounts of knowledge for goods and services. When these exchanges are uninterrupted, the resulting commerce expands as if the work of an “invisible hand,” of which Adam Smith wrote in “The Wealth of Nations.” This is true of uninterrupted supply chains, voluntary exchange, and the division of knowledge.

                Restarting an economy is far more difficult than turning one off.  “I, Pencil” shows how the pencil is created by millions of creative people, each contributing their abilities and knowledge, despite not knowing how to produce the final product.  This division of labor is what makes the incredibly diverse economy we enjoy today.  The relationships among the various producers must be developed, resources identified,  market analysis completed, appropriate workers hired, and a myriad of other factors will determine production.  When this process is interrupted, as it was with the introduction of COVID-19, the economy must build again.  It is impossible to shut everything down and then expect to say the word and everything will be as before. 

                The lesson from “I, Pencil” is that faith in a free people allows the creative know-how and productive patterns to respond automatically to the needs of humanity.  The lesson from COVID-19 is that the engine of voluntary exchange and the freedom to respond to needs has been crippled by governments’ unprecedented overreaction to a health crisis.

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