Original article is at I, Pencil
"I, Pencil" is an essay written by Leonard E. Read in 1958 that personifies a simple pencil to illustrate the complexity and interdependence of the global market system. The essay emphasizes the importance of voluntary cooperation and the division of labor in creating products that most people take for granted.
The pencil narrates its own creation story, explaining that no single person knows how to make a pencil from scratch. The process involves countless individuals performing specialized tasks, such as harvesting cedar trees for the wooden casing, mining graphite for the core, and refining petroleum for the eraser. Each component has its own intricate supply chain, which extends across multiple countries and industries.
The pencil emphasizes that it is a testament to human cooperation, achieved without any central planning or authority. Its creation relies on the price system, which coordinates the allocation of resources, labor, and capital to bring together all necessary components. Prices act as signals, enabling individuals to make informed decisions about production, consumption, and investment. The market system allows people to specialize in particular tasks and trade their goods and services for the products of others, leading to greater efficiency and wealth creation.
"I, Pencil" highlights the power of market processes in fostering cooperation among diverse and decentralized individuals, who unknowingly contribute to the creation of something as simple as a pencil. The essay serves as a reminder of the importance of economic freedom and the limitations of central planning. By allowing individuals to pursue their self-interest within the framework of the market, society benefits from a vast array of products and services that could not be produced otherwise.