I, Pencil — By Leonard Read

In December of 1958, an American thinker named Leonard Read wrote a remarkable essay entitled “I, Pencil: My Family Tree as told to Leonard E. Read.”

In this essay, Mr. Read walks us step-by-step through the entire process of how a single pencil is produced; I recapitulate it here because it is the only argument you’ll ever need in support of the absolute economic superiority of laissez-faire capitalism.

In the beginning of the essay, we are shown the many materials needed to make a single pencil, among them: wood, rubber, paint, lacquer, graphite, metal, zinc, and many other things.

We are then shown how these materials are really only the beginning of the process; for a whole industry is in turn required to produce each of those materials.

There is, for example, the lumber industry needed to produce the wood; the mining industry to mine and mill and smelt the zinc and lead and metal; the rubber industry, of course, and the paint and graphite, and so on.

Then, within each of these industries, there are numerous sub-divisions, such as chemical industries, which make up the groundwork for paint and lacquer, and the engineering companies to supply all the tools, and even the lighthouse workers to guide the ships safely into port.

Of course there is also the singular fact that our solitary pencil could neither be manufactured nor produced without all the various other forms of transportation required to get the products from place to place, and of course this transportation requires its own set of industries (not just oil), and on and on, all of which industries, in turn, are no less involved than the manufacturing of the wood or graphite or rubber.

So that when everything is said and done, the making of one pencil requires thousands of people, most of whom have specialized knowledge and specialized jobs, in hundreds of different industries.

Furthermore, these people come from all over the world. No centralized government imaginable, even with an army of super-genius planners, could organize the countless factors that go into the making of that one small pencil.

And yet in this country, as in all developed countries, pencils are so cheap and abundant that nobody thinks twice about them. How is this so?

The answer is deceptively simple: private property and free markets.

The free market, and its corollary, the profit motive, are what bring these thousands of people from these hundreds of different industries the wide-world over, into peaceful and mutually beneficial cooperation with one another.

The free market instantly and smoothly organizes this entire process of complexity, and the free market does so without any bureaucratic coercion or political force.

Indeed, this singular fact is what the word “free” refers to in the term “free markets.” That is the beauty of capitalism at work: the free and voluntary exchange of goods and services, which presupposes the inalienable right to your own life and your own property.

This process, outlined eloquently in Leonard Read’s pencil example, is precisely what our peace-loving greens wish to subvert.

It is also what our peace-loving greens, like all proponents of mercantilism, think that they themselves can achieve – and do so by means of a massive centralized planning bureau.

They cannot.

It is a literal impossibility, as history has demonstrated time and again.

It is also an exercise in governmental compulsion.

It is, finally, anti-freedom and anti-private property, which is exactly what environmentalism as a political philosophy is and always will be.

The green party can indeed try to organize all this industry, as they have tried many times before, but the result will be the same result as always: chaos and poverty. The free market will then be called upon to bail them out, and the free market will bail them out, just as it always has, and then the free market and all its big bad corporations will be maligned, just as the free market and corporations always are.

And so it goes.

But the next time an environmentalist tells you to “bicycle more and save the planet” think of I, Pencil, by Leonard Read.

Because I promise you that all the filthy, hardcore industry that goes into the manufacturing of one simple pencil is multiplied a thousandfold just to make and transport a single bicycle to you there in Boulder, Colorado, or wherever.


  • Redmond

    March 10, 2010

    Great Post Ray

    if antone is interested, I just posted the full text of I, Pencil

    Well worth the read

  • Redmond

    March 10, 2010

    Yes If Antoine is interested – Antoine – are you interested?

  • Tarquino

    August 31, 2015

    In what way is this a glowing testimony to laissez-faire capitalism? It’s simply a statement that human beings create, organise, adapt, invent, improve, communicate, trade and co-operate. They were doing this for millenia before the standardisation of the capitalist model, the only reason they do it more efficiently now is through the utilisation and squandering of fossil fuels. Just because capitalism is built on trade it does not mean that trade is not possible without capitalism! Just nonsense.

  • Ray

    September 4, 2015

    In what way? In the exact way you say:

    “It’s simply a statement that human beings create, organise, adapt, invent, improve, communicate, trade and co-operate.”

    Governments, by definition, can only impede this process.

    The rest is just an elaboration.

    Thank you for dropping by.

  • father time, PhD

    September 6, 2015

    The Good Father likes your post, as usual. I’d be interested in your take on what Marx and others thought of as pre-capitalist economies. I’m thinking of the American Indian Potlatch or Trobriander gift economies explicated by Economic Anthropologists. These gifts did not legally bind the receiver to any sort of recompense. But there were social incentives for the receiver to respond in kind.

    There was even the interesting practice of giving a gift of more value than the one received in order to promote the inter-tribal status of the ‘Big Man’ as opposed to seeking a profit in trade goods. This can be explained by the displacement of what we think of as monetary profit with social status.

    In any case I don’t think that there was profit offered at each stage of production; collection of shells, etc. Perhaps it could be seen as a tax for membership in the tribe.

    There may also be something to be said about the economic considerations of the historical practice of gifting women, while carefully acknowledging the barbarity of the custom. But that will probably take us down the rabbit hole.

    At any rate, I think of these systems as generally free markets. But perhaps you could make the case that even these early systems were constrained by what the tribal ‘government’ enforced as standards of value.

    I recognize there are still some stages of production for goods as implied barter in such a system. In this sense, the distinction from your example may be more quantitative than qualitative. That is, the comparison may turn on the number of levels of production rather than the absence of central control which I think is your key point.

  • Ray

    September 7, 2015

    Hello there!

    Awesome comment, Father Time.

    I absolutely agree that the systems you describe are free market, and I’ve even discussed such systems before — or, at any rate, I’ve touched upon them.

    Barter and indirect exchange and all such related things are totally compatible with free markets. There’s nothing wrong with them. They will exist, to varying degrees, in laissez-faire societies, where humans are free to interact with one another without government intervention.

    But barter in any of its many forms cannot support complex economies — which is to say, it cannot support division of labor or specialization.

    Money, which is nothing more or less than a medium of exchange, allows for long-term savings (unlike crops or cattle, which are perishable), and long-term savings are what make possible that thing called Capital, which in turn makes possible the division of labor and specialization.

    Specialization is the crux of human progress: without it, we’re all essentially yoked to the job of day-to-day physical survival.

  • Dog

    December 11, 2016

    Marky, clever rebuttal, its too bad you’re sexually frustrated

  • Ray

    December 14, 2016

    Yeah, Dog.

    Thank you for dropping by.


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