How Market-Driven Economies Create Community and Work Better

Meet a Pencil

“I, Pencil” is an essay written by Leonard Read, an American businessman and scholar. ,In what has become a classic overview of market-driven economics, and the miracle of capitalism, Reed used a pencil to illustrate the genius of free markets in relation to “command economies,” which depend on centralized government controls.

Read devoted 37 years of his life to heading up the Foundation for Economic Education. Sensing the danger that socialist ideals posed to the liberties enshrined in the United States Constitution, he used his expertise and influence to form a think-tank which was to become the model for many other foundations in the United States and abroad.

Accompanied by members of his senior staff, Leonard Read traveled millions of miles, giving speeches and lectures to eager audiences. He authored twenty-seven books, eighteen of which remain in print and are marketed by the Foundation.

Mr. Reed summarized the idea behind “I, Pencil” in this way:

“None of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil. Some among them never saw a pencil and would not know what it is for. Each saw his work as a way to get the goods and services he wanted – goods and services we produced in order to get the pencil we wanted…. It is even more astounding that the pencil was ever produced. No one sitting in a central office gave orders to these thousands of people. No military police enforced the orders that were not given. These people live in many lands, speak different languages, practice different religions, and may even hate one another – yet none of these differences prevented them from cooperating to produce a pencil.”

By meeting a pencil, you will learn or be reminded of key principles of capitalism: Connectivity, Spontaneous Order, Creative Destruction, Trade, and Specialization.

Here is the animated version of “I, Pencil.”