“Now, in the absence of faith in free people — in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity — the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental ‘masterminding.'” – Leonard E. Read
Leonard E. Read’s short but profound work, “I, Pencil” was originally published in, “Anything That’s Peaceful: The Case for the Free Market” by Read in 1964. “I, Pencil” is the ultimate introduction to the idea of spontaneous order and to the truly awe-inspiring processes that manifest into markets. It is written in the point of view of a pencil who boldly suggests,
…I am seemingly so simple… Yet, not a single person on the face of this earth knows how to make me.
Of course, we can research and find out how pencils are produced in factories and how the production of pencils works. But, the pencil has a broader point:
Just as you cannot trace your family tree back very far, so is it impossible for me to name and explain all my antecedents.
So, while we can look up the production process for a pencil, no one person can name and explain every single action, event, process, human interaction, etc., that takes place in the creation of something so simple and common as a pencil. The pencil explains the enormous array of processes that culminate in the production of a pencil:
My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods. Why, untold thousands of persons had a hand in every cup of coffee the loggers drink! The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto? …Consider the millwork in San Leandro. …How many skills went into the making of the tint and the kilns, into supplying the heat, the light and power, the belts, motors, and all the other things a mill requires? …Yes, and included are the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydroplant, which supplies the mill’s power! …Don’t overlook the ancestors present and distant who have a hand in transporting 60 carloads of slats across the nation.
All these processes and we are now just arriving at the start of the factory production process. The pencil continues:
Once in the pencil factory – $4,000,000 in machinery and building, all capital accumulated by thrifty and saving parents of mine – …seven brothers and I are mechanically carved…
Now, what about the lead that goes in the pencil?
My “lead” itself – it contains no lead at all – is complex. The graphite is mined in Ceylon. Consider these miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships. Even the lighthouse keepers along the way assisted in my birth – and the harbor pilots.
The graphite requires:
…clay from Mississippi…
…candelilla wax from Mexico.
The pencil continues:
My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are. Why, even the processes by which the lacquer is made a beautiful yellow involve the skills of more persons than one can enumerate!
Much is involved in creating the metal on the end of the pencil. As for the eraser:
It is a rubberlike product made by reacting rapeseed oil from the Dutch East Indies with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment that gives “the plug” its color is cadmium sulfide.
Now the reader should have an understanding of the enormity of processes across the globe that go into the creation of a simple pencil. The pencil explains the significance of this:
I shall stand by my claim. There isn’t a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how… …each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants. I may or may not be among these items.
So, millions of people with little skill are able to benefit by contributing to the production of a pencil they may or may not desire. Yet, without each individual’s little skill or know-how, the production of pencils couldn’t take place to satisfy the wants of the masses of people who do desire pencils. This is a great lesson on how the division of labor across the globe is so important for the production of all kinds of goods.
All of these various processes in the creation of a pencil, from the picking of coffee beans that loggers will drink to the transportation of wooden slats to a factory, all occur without a master mind or central authority. The process where all these independent processes come together without a central authority is known as spontaneous order. This is a bottom-up system of organization that occurs naturally, rather than a top-down system of organization that is a government or central authority.
No trace of such a person can be found. Instead, we find the Invisible Hand at work. …I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles that manifest themselves in nature an even-more-extraordinary miracle has been added: the configuration of creative human energies — millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding! …For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand — that is, in the absence of governmental or any other coercive masterminding — then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith. Once government has had a monopoly of a creative activity such, for instance, as the delivery of the mails, most individuals will believe that the mails could not be efficiently delivered by men acting freely. And here is the reason: each one acknowledges that he himself doesn’t know how to do all the things incident to mail delivery. He also recognizes that no other individual could do it. …No individual possesses enough know-how to perform a nation’s mail delivery any more than any individual possesses enough know-how to make a pencil. Now, in the absence of faith in free people — in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity — the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental “masterminding.”
The pencil admits that its existence itself isn’t quite sufficient evidence to advocate for a free market in all goods and services. However, the pencil explains how something that government is responsible for, such as delivering mail, pales in comparison to the feats private industry is responsible for. These testimonies are all around us. The pencil points to:
…making of an automobile… calculating machine… grain combine… milling machine… …they deliver the human voice around the world in less than one second; they deliver an event visually and in motion to any person’s home when it is happening; they deliver 150 passengers from Seattle to Baltimore in less than four hours…
So, is it not perfectly logical to say that private industry can provide any good or service that government is able to? We must heed the pencil’s important lesson:
Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.