Question

Read, analyze, and comment on the following readings which include the classic:

I, Pencil: “Eloquent. Extraordinary. Timeless. Paradigm-shifting. Classic. Half a century after it first appeared, Leonard Read’s ‘I, Pencil’ still evokes such adjectives of praise. Rightfully so, for this little essay opens eyes and minds among people of all ages. Many first-time readers never see the world quite the same again.” ~ Lawrence W. Reed Hundreds of thousands of Americans of all ages continue to enjoy this simple and beautiful explanation of the miracle of the “invisible hand” by following the production of an ordinary pencil. Read shows that none of us knows enough to plan the creative actions and decisions of others. Leonard E. Read (1898–1983) established the Foundation for Economic Education in 1946. For the next 37 years he served as FEE’s president and labored tirelessly to promote and advance liberty. He was a natural leader who, at a crucial moment in American history, roused the forces defending individual freedom and private property. His life is a testament to the power of ideas. As President Ronald Reagan wrote: “Our nation and her people have been vastly enriched by his devotion to the cause of freedom, and generations to come will look to Leonard Read for inspiration.” Read was the author of 29 books and hundreds of essays. “I, Pencil,” his most famous essay, was first published in 1958. Although a few of the manufacturing details and place names have changed, the principles endure.

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Introduction

By Lawrence W. Reed Eloquent.

Extraordinary. Timeless. Paradigm-shifting. Classic. Six decades after it first appeared, Leonard Read’s “I, Pencil” evokes such adjectives of praise. Rightfully so, for this little essay opens eyes and minds among people of all ages. Many first-time readers never see the world quite the same again. Ideas are most powerful when they’re wrapped in a compelling story. Leonard’s main point—economies can hardly be “planned” when not one soul possesses all the know-how and skills to produce a simple pencil—unfolds in the enchanting words of a pencil itself. Leonard could have written “I, Car” or “I, Airplane,” but choosing those more complex items would have muted the message. No one person—repeat, no one, no matter how smartor how many degrees follow his name—could create from scratch a small, everyday pencil, let alone a car or an airplane. This is a message that humbles the high and mighty. It pricks the inflated egos of those who think they know how to mind everybody else’s business. It explains in plain language why central planning is an exercise in arrogance and futility, or what Nobel laureate and Austrian economist F. A. Hayek aptly termed “the pretence of knowledge.” Indeed, a major influence on Read’s thinking in this regard was Hayek’s famous 1945 article, “The Use of Knowledge in Society.” In demolishing the spurious claims of the socialists of the day, Hayek wrote,“This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.” Maximilien Robespierre is said to have blessed the horrific French Revolution with this chilling declaration: “On ne saurait pas faire une omelette sans casser des oeufs.” Translation: “One can’t expect to make an omelet without breaking eggs.” A consummate statist who worked tirelessly to plan the lives of others, he would become the architect of the Revolution’s bloodiest phase—the Reign of Terror of 1793–94. Robespierre and his guillotine broke eggs by the thousands in a vain effort to impose a utopian society with government planners at the top and everybody else at the bottom. That French experience is but one example in a disturbingly familiar pattern. Call them what you will—socialists, interventionists, collectivists, statists—history is littered with their presumptuous plans for rearranging society to fit their vision of the common good, plans that always fail as they kill or impoverish other people in the process. If socialism ever earns a final epitaph, it will be this: Here lies a contrivance engineered by know-it-alls who broke eggs with abandon but never, ever created an omelet. None of the Robespierres of the world knew how to make a pencil, yet they wanted to remake entire societies. How utterly preposterous, and mournfully tragic! But we will miss a large implication of Leonard Read’s message if we assume it aims only at the tyrants whose names we all know. The lesson of “I, Pencil” is not that error begins when the planners plan big. It begins the moment one tosses humility aside, assumes he knows the unknowable, and employs the force of the State against peaceful individuals. That’s not just a national disease. It can be very local indeed. In our midst are people who think that if only they had government power on their side, they could pick tomorrow’s winners and losers in the marketplace, set prices or rents where they ought to be, decide which forms of energy should power our homes and cars, and choose which industries should survive and which should die. They should stop for a few moments and learn a little humility from a lowly writing implement. While “I, Pencil” shoots down the baseless expectations for central planning, it provides a supremely uplifting perspective of the individual. Guided by Adam Smith’s “invisible hand” of prices, property, profits, and incentives, free people accomplish economic miracles of which socialist theoreticians can only dream. As the interests of countless individuals from around the world converge to produce pencils without a single “master mind,” so do they also come together in free markets to feed, clothe, house, educate, and entertain hundreds of millions of people at ever higher levels. With great pride, FEE publishes this new edition of “I, Pencil." Someday there will be a centennial edition, maybe even a millennial one. This essay is truly one for the ages. —Lawrence W. Reed, President Foundation for Economic Education ***

Answer 1

The passage is an excellent personification, if we may generously use this grammatical term, of ‘Capitalism’—the essence of market economy. The market forces of demand and supply operate freely to determine the prices both in the goods and services market as well as the equally important factor market. This mechanism also brings out the essence of ‘valuation’ of a commodity in terms of its purchasing power—in case of barter system, it could mean that the commodity is weighed against various other commodities available to be exchanged , while in case of money economy , the whole process of valuation is much simplified and accurate. The forces of demand and supply interact with each other and determine the price at which the commodity has to be bought or sold. In case of a factor input—like land, labor, capital or entrepreneur, the respective demand for their services determines their price.

    The book, ‘I, pencil’. By Leonard Read, is an excellent application of the most important concept of ‘capitalism’, which symbolises ‘economic interests’ of profit motive , gaining assets, competition and so on in their real sense. Read was an avid propagator of the tenets of capitalism, he understood the importance of ‘freedom’, not just in its subjective sense but in an completely different ‘economic perspective’. This ‘ new view’, allows for the term ‘freedom’ to be expanded to wider horizons and greater arenas where man can gain the true spirit of entrepreneurship by enjoying the various activities which give in joy as well as monetary welfare (meaning profits !!). The ability to discover and enjoy such activities , is in itself, according to Read, the essence of freedom.

Highlighting an object, a pencil, that though in comparison with greater technological and scientific inventions is but an everyday regular commodity, the author aims at proving how falsified the pride of the intelligentsia is , which aims at ‘showing off’ or creating a ‘snobbish’ effect upon their community around. There could be many a complicated invention around but the ‘pencil’ is the most important of all. It acts as a medium for flow of ideas which are in the true sense , the spirit of ‘economy’.

The book is an excellent tool to depict the demerits of a system where spontaneity and freedom are sacrificed for the larger interests of the community, surprisingly and in a paradoxical way, the community welfare arises only when the individuals who form a part of the community are gaining welfare on their own individual level, the book showcases how welfare cannot be achieved by sacrificing ‘freedom’ and the ‘spirit’ to explore and take ‘entrepreneurial risks’, prosperity brings welfare and economic prosperity cannot be planned and directed, it comes with circumstantial instances and with the need for economic activities –consumption, production, exchange and distribution.

No single individual or a body of individuals can claim to bring about the welfare of the society—since man is a vulnerable and highly volatile being himself, no one man or a small group can bring the voluminous change in the society . It could in effect lead to a situation of dissatisfaction to many because of the thoughts of a few.

The great leaders who claimed themselves to be path breakers, in effect did not know the actuality of the planning nor did they achieve efficiency in its administration, they merely proved themselves to be mere people of words – especially when they found it difficult to execute simple ordinary day to day business activities of life yet aimed to bigger goals , apparently , aimed at the larger interests of the society.

Future is abstract and highly unpredictable, keeping this in mind, the individuals undertake various economic actions that are related to them gaining their individual prosperity and ultimately leading to the community’s prosperity. However, if the future is planned then it would lead to stagnation of economic spontaneity which would lead to lower levels of growth and prosperity. Just as how semi skilled or even unskilled labourers learn and produce hundreds of pencils , so also many people throughout the world should strive to give importance to capitalism and its tenets to enjoy greater efficiency and competitiveness.