“I, Pencil’s” Point

by Don Boudreaux on January 18, 2023

in Complexity & Emergence, Myths and Fallacies

Here’s a letter to a new correspondent:

Mr. K__:

You upbraid me for rejecting the claim that, in writing “I, Pencil,” Leonard Read “put God at the center of the explanation” of how the worldwide division of labor and trade results in the production of pencils.

I stand by my insistence that the message Read meant to convey is that the market economy and its pattern of prices incite and inform individuals each to act in ways that give rise to a complex pattern of production not only that no one (not even God) designed, but also one with details so numerous that no human mind can begin to comprehend them in full. And by conveying this message using as an example a simple pencil, Read also drove home the reality that the achievements – the human achievements – enabled by the market are far more remarkable than most people realize.

But even if, contrary to fact, Read wrote “I, Pencil” to describe the capitalist handiwork of God, the practical importance of this counterfactual ‘fact’ would be almost nil. The reason is that almost no one who supports the market order interprets “I, Pencil” in that manner. All of the many references to “I, Pencil” of which I’m aware (and I’ve been in this business a very long time) understand that essay to present pencils as one of the myriad marvelous products of the market order – a product that, although simple in comparison to automobiles, skyscrapers, and electric lighting, could not possibly be produced by the sort of conscious central economic planning that socialists endorse.

Look at the famous use made of “I, Pencil” by Milton Friedman. Consider the Competitive Enterprise Institute’s beautiful 2012 video on “I, Pencil.” Find any of the countless textbooks and essays in which “I, Pencil” is mentioned or alluded to. You’ll discover in all of these the use of “I, Pencil” as a celebration of the ability, not of God, but of humans interacting in the market to incite and inform each other to act in ways that bring about productive results the details of which no human mind could begin to comprehend.

“I, Pencil” was first published more than 64 years ago. In that time, with the curious exception of persons far more hostile to the market order than was Read, it has almost never been interpreted as a description of the handiwork of God. As such, “I, Pencil’s” firmly established legacy, and its continuing role, is as a description of the vast complexity and silent yet soaring productivity of the free market.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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