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Human Creativity

In my most-recent column for AIER I do my best to extend Leonard Read’s account of “I, Pencil” beyond its important lesson of vast and unplanned yet productive cooperation. I note that each of the countless steps in making pencils abundant is the product of human creativity – creativity that cannot be planned or even foreseen and, hence, that always disrupts some plans. A slice:

Literally every aspect of a pencil is the result of human creativity. The materials out of which the pencil is made, each of the many processes for fashioning those materials into a pencil, and the financing that makes those processes feasible first had to be thought of by a human mind. Without human creativity there is no paint to cover the pencil and no dyes to color that paint yellow, no rubber used as an eraser and no aluminum for making the ferrule that attaches the eraser to the pencil, no tires and internal-combustion engines and diesel fuel for transporting inputs to pencil factories and pencils to office-supply stores, no saw blades for felling trees, no liability insurance and commercial credit for making the operation of mining and manufacturing firms feasible; there’s no anything. Each and every one of these products and processes exists only because individuals were led to creatively think each one up and to figure out how to apply the idea in reality.

Each pencil, seemingly so simple and obvious, is a monument not only to human cooperation coordinated by the price system, but also to human creativity and innovation.

This creativity and innovation are indispensable to our way of life. Without them, most of us would be dead, and the few of us alive would be mired in poverty unimaginable. As Deirdre McCloskey emphasizes, the great triumph of capitalism – what she appropriately calls “innovism” – is the unleashing of human creativity, and the testing of this creativity in competitive markets in which individuals spend their own money as they choose. Only in the past 300 years has human creativity been tapped in a way that has turned it from a slow trickle into a gushing torrent. It’s no coincidence that only in the past 300 years have human living standards skyrocketed.

But here’s another fact about creativity: by its nature it is unpredictable. It cannot be planned. While this observation, so stated, sounds trite, it is a fact ignored by those who call for the government to superintend commerce.

Because economic growth is overwhelmingly a process of entrepreneurial creativity, economic growth is overwhelmingly a process of unpredictable and unplannable change. Proponents of using protectionism and industrial policy to channel economic growth along some pre-conceived path do not understand the source of economic growth. They do not understand that their schemes for consciously directing growth according to their bureaucratic blueprints and academic fancies will unavoidably, by reducing creativity, reduce economic growth and over the long run harm the very people whom they wish to help.